Finnair Oyj - Company Announcement

Finnair and Flybe to expand cooperation for cost efficient European connections

Companies have signed MoU transferring 12 Finnair Embraer aircraft to Flybe

FINNAIR PLC     STOCK EXCHANGE RELEASE      22 MAY 2012   AT 08.30 AM (EET)

Finnair and the largest European regional airline Flybe of UK today announced
that the companies plan to extend their cooperation to offer cost efficient
European connections for Finnair's passengers. 

Last year Finnair and Flybe formed Flybe Nordic AB, of which Flybe owns 60 %
and Finnair 40 %. The companies have now signed a Memorandum of Understanding
(MoU) according to which Finnair will transfer twelve 100 seat Embraer
aircraft, to Flybe. Starting October 2012 Flybe will operate these aircraft on
Finnair routes for Finnair. The move is a part of Finnair's efforts to improve
the profitability of its European network, and it offers a platform for growth
for Flybe Nordic. 

“This move is a part of our strategy to restore Finnair's profitability”, says
Mika Vehviläinen, Finnair CEO. “The MoU covers approximately one third of our
European flights. Flybe offers a cost efficient platform for operating this
traffic, and enables us to continue to offer a wide network and multiple
frequencies to both our Finnish customers and our customers flying between
Europe and Finnair's Asian destinations.” 

“Today's announcement marks another step in our journey of growth, as we extend
further our contract flying operations for Finnair. The extension of the
contract flying business is a key part of Flybe Finland's strategy, providing
the business with a good balance of risk”, Mike Rutter, Managing Director of
Flybe Europe. 

From the customer point view, the change will be virtually unnoticed. Finnair
continues to be responsible for sales, marketing and customer support, but the
flights are operated by Flybe. 

Once the agreement is completed, 12 Embraer aircraft and the traffic operated
with them transfers from Finnair to Flybe.  In connection with this business
transfer, cabin attendants and pilots for this traffic will transfer with the
business, unless otherwise agreed in negotiations with personnel. Negotiations
on cost savings between Finnair and the Finnish Airline Pilots' Association
have proceeded in a constructive manner during the spring. If the savings
agreement under preparation is completed, pilots transferring to operate Flybe
flights would return to Finnair in stages to be trained as Airbus pilots for
Finnair's growing Asian traffic. 

Finnair is proceeding on track with its transformation program that targets 140
million euro annual savings to restore profitability and improve
competitiveness. Finnair continues to seek to improve the profitability of the
rest of its European traffic. Alternatives include, as has been previously
communicated, decreasing the costs together with own personnel or forming
additional partnerships. 

Finnair announced on August 5, 2011 that it targeted decreases in its annual
costs of 140 million euros by 2014. Finnair has already announced that it: 

• has chosen Swissport as its partner for  baggage and apron services
• is optimizing the size of its fleet in European air traffic, has discontinued
the leases of four Airbus 320 series aircraft, and subleased five Embraer 170
aircraft 
• has signed an Memorandum of Understanding on the sales of its catering
business to LSG Services 
• has signed a Memorandum of Understanding with SR Technics on engine and
component services 
• seeks solutions to improve the profitability of its European traffic• has improved its route planning and aircraft utilisation
• is streamlining its support functions as well as  marketing and distribution
activities 
• has initiated  numerous other savings measures throughout the company.

Further information: Finnair Communications, tel +358 9 818 4020,
comms(at)finnair.com