Finnair Oyj - Company Announcement

Finnair and Flybe sign agreement on transfer of Finnair's Embraer traffic

Finnair PLC      STOCK EXCHANGE RELEASE 12 october 2012 at 9.00 am EET

Finnair and Flybe have signed a definitive agreement according to which
Finnair's Embraer 190 aircraft will be operated by Flybe Finland Oy from
October 28, 2012 onwards. The companies signed a Memorandum of Understanding on
the cooperation on May 22, 2012. This cooperation is a part of Finnair's
efforts to improve the profitability of its European network, and it offers,
when fully matured, potential savings in excess of 25% in cost categories
impacted by this cooperation. 

Under the agreement, Finnair will transfer the operation of its twelve 100-seat
Embraer aircraft to Flybe in a transfer of business. From October 28, 2012
onwards, Flybe will operate these aircraft for Finnair as contract flights,
which means that the commercial control and risk for these routes remains with
Finnair. Finnair continues to be responsible for sales, marketing and customer
support for these flights, which means that from the customer point view, the
change will be virtually unnoticeable. The cooperation is not expected to have
an impact on Finnair's revenues or balance sheet, but Finnair is looking for
significant cost savings through Flybe's more efficient operating model. 

“This contract flying agreement with Flybe covers approximately one third of
our European flights,” says Mika Vehviläinen, Finnair CEO. “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.” "We are delighted to have formally secured this contract, which we believe is
testament not only to our reputation for quality and efficiency of service but
also to the strong working relationship we enjoy with Finnair," says Mike
Rutter, Managing Director of Flybe Europe. 

Finnair and its pilot association have agreed that the Embraer pilots will
remain employed by Finnair in connection with the business transfer and that
they will be flying Embraer aircraft for Flybe under their current terms of
employment. Following Finnair cabin personnel's decision to give up their right
to transfer to Flybe's employment in connection of the business transfer, Flybe
is hiring new cabin personnel for the Embraer traffic. 

Finnair continues analysing opportunities to improve efficiency also in the
European Airbus traffic. 

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 signed a partnership agreement with LSG Sky Chefs Group according to
     which LSG assumed full managerial and operational responsibility for the
     inflight and catering service provider Finnair Catering Oy from August 1,
     2012 onwards,
  -- is sourcing Finnair's engine and component services from SR Technics from
     Q3 2012 onwards,
  -- is optimizing the size of its fleet in European air traffic, and has
     discontinued the leases of four Airbus 320 series aircraft in 2012, and
     subleased five Embraer 170 aircraft,
  -- has improved its route planning and aircraft utilisation,
  -- has chosen Swissport as its partner for  baggage and apron services from
     December 2011 onwards,
  -- is streamlining its support functions as well as  marketing and
     distribution activities, and
  -- has initiated numerous other savings measures throughout the company.


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

Distribution:

NASDAQ OMX Helsinki
Principal media



Flybe

Flybe of UK is the largest regional airline in Europe. Finnair and Flybe
established Flybe Nordic AB in 2011, and Flybe owns 60 per cent and Finnair 40
per cent of this company. Flybe Finland Oy is 100 per cent owned subsidiary of
Flybe Nordic AB. Before the cooperation announced today, Flybe Finland Oy has
operated 15 domestic and other short-haul routes for Finnair as contract
flying. In addition, the company flies several other routes at its own
commercial risk.