2007-05-04 08:00:00 CEST
2007-05-04 08:00:00 CEST
REGULATED INFORMATION
Finnair Oyj - Quarterly report
FINNAIR GROUP INTERIM REPORT 1 JANUARY - 31 MARCH 2007
FINNAIR OYJ STOCK EXCHANGE RELEASE 4 MAY 2007 AT 09:00
FINNAIR GROUP INTERIM REPORT 1 JANUARY - 31 MARCH 2007
An encouraging start to the year
Summary of the first quarter's key figures
- Turnover rose 10.0% to 528.5 million euros
- Passenger traffic grew 9.3% from the previous year, passenger load factor rose
1.2 percentage points to 75.8%
- Unit revenues from flight operations rose by 1.8%, unit costs fell by 2.1%
- Operating profit was 13.7 million euros (operating loss 5.2 million euros).
- Operational result ie. EBIT, excluding capital gains, changes in the fair
value of derivatives, was 5.8 million euros (5.1 million loss)
- Profit before taxes was 13.4 million euros (5.2 million loss)
- Gearing at the end of the quarter was 16.6% (-10.6%) and gearing adjusted for
leasing liabilities was 116.5% (85.0%)
- Balance sheet cash and cash equivalents totalled 221.5 million euros (306.7
million)
- Equity ratio 36.9% (40.7%)
- Equity per share 6.93 euros (7.39)
- Earnings per share 0.11 euros (-0.05)
- Return on capital employed -0.1% (8.3%)
Comparisons made to Q1 in 2006
President and CEO Jukka Hienonen on the first-quarter result:
Demand is now strong both in Asian traffic and on European routes, and our
market share in Europe-Asia traffic is growing. Development of unit revenues in
all types of traffic is positive and unit costs are decreasing, so profitability
is improving.
We will continue to further expand our Europe-Asia traffic, which will be shown
in the improvement of cost structure and operating terms and conditions. An
example of this is the Memorandum of Understanding we recently signed with
Norwegian Air Shuttle on sale of the FlyNordic subsidiary to the Norwegian
company and the deepening of cooperation between the companies to increase
traffic between the Nordic countries and Asia.
We are making new openings in Asia and Europe. We will quadruple our India
traffic when we begin flights to Mumbai in June. Slots are now being awarded at
many busy Asian airports and we want to ensure that Finnair's colours are seen
among the ranks of aircraft at these destinations. In Europe we have already
opened five new destinations this year.
We have worked hard to improve efficiency and profitability of the company, and
in this work we have not been able to avoid painful solutions. Through our own
actions we have, however, managed to turn last year's weak financial performance
into a clearly better effort this year.
I believe that everyone in Finnair will want to be part of the success story
that we have on our hands. In the light of current forecasts, we have the
potential to exceed the level of operational result achieved in 2005.
General Review
Finnair began 2007 with strong growth in travel demand. Growth was especially
good in Europe-Asia traffic. As this traffic passes through Helsinki, strong
growth was seen on both Asian and European routes. European network airlines'
performance improved on average by a good five per cent, while Finnair's revenue
passenger kilometres in scheduled traffic increased by around 20 per cent,
representing the absolute best performance in the sector.
The price of jet fuel price remained high, but did not continue its rise;
operational efficiencies, however, reduced unit costs of flight operations by
around three per cent in January-March. Unit revenues rose at the same time by
slightly under two per cent. This improved profitability in the first quarter,
which is generally the weakest of the year in terms of profitability.
Profitability has improved, particularly in Aviation Services. The booking
situation at Finnair Technical Services' Aircraft Heavy Maintenance, which has
suffered from weak utilisation capacity, improved during the early part of the
year. The order book is also strong for the latter part of the year.
The 80 million euro efficiency programme initiated in 2006 is being implemented
and it is expected to yield around 40 million euros in savings in the cost
structure during the current year. Savings weighted towards end of the year. The
reduction of workforce by 670 announced last May will be mainly implemented by
the end of this year.
A long-haul fleet renewal programme, which will see the present Boeing MD-11
fleet replaced by Airbus A330/A340 wide-bodied aircraft by the end of 2010, was
announced in March 2007. At the same time, the order for the new generation
A350XWB type of aircraft, announced earlier, was increased from nine to eleven.
The value of confirmed orders is nearly two billion euros in the period
2007-2016.
At the end of April, Finnair signed a Memorandum of Undestanding on the sale of
its Swedish subsidiary FlyNordic to the Norwegian budget airline Norwegian Air
Shuttle. As a result of the deal, Finnair will get over five per cent of the
shares in Norwegian, and an option to increase its ownership to approximately
ten per cent. During the first Quarter Flynordic´s result was slightly negative,
but clearly better than during previous year.
Finnair and Norwegian Air Shuttle have also agreed to deepen cooperation between
the companies. Norwegian Air Shuttle's Scandinavian route network will be linked
to Finnair's increasing Asian connections, which means that growing demand in
Asia for tours in the Nordic countries and Central Europe can be met better.
Financial Result, 1 January - 31 March 2007
Turnover rose in the first quarter by 10.0 per cent to 528.5 million euros. The
Group's operating profit on operations, excluding capital gains and changes in
the fair value of derivatives, rose to 5.8 million euros (5.1 million loss)
Adjusted operating profit margin was 1.1 per cent (-1.1). Profit before taxes
was 13.4 million euros (5.2 million loss). Changes in the fair value of
derivatives improved the first quarter result by
6.0 million euros, but this
has no effect on cash flow.
In January-March, passenger traffic capacity (ASK) rose 9.5 per cent and demand
grew 11.2 per cent, while Asian traffic rose by 35.4 per cent. Passenger load
factor rose 1.2 percentage points from the previous year to 75.8 per cent. The
amount of cargo carried grew by 0.5 per cent to 21.7 million kilos.
In scheduled passenger and leisure traffic, total unit revenues per passenger
kilometre rose by 2.0 per cent. Yield per passenger rose by 9.5 per cent. Unit
revenues per tonne kilometre for cargo traffic declined by 4.9 per cent.
Weighted unit revenue for passenger and cargo traffic rose by 1.7 per cent.
Euro-denominated operating costs rose during the period by 6.1 per cent. Unit
costs for flight operations fell by 2.1 per cent. Fuel costs increased in the
first quarter by 15.6 per cent as whole, but per available tonne kilometre only
by 3.6 per cent. Unit costs, excluding fuel costs, fell by 3.7 per cent.
Earnings per share for the quarter amounted to 0.11 euros (-0.05). The Group's
result improvement in year-on-year comparison is mostly due to better financial
performance in Finnair Technical Services and FlyNordic.
Investment, financing and risk management
First-quarter investments totalled 52.3 million euros (48.7 million) and
included one Embraer 190 aircraft. Including advance payments, the cash flow
impact of investments was -57.5 million euros. The investments in new aircraft
in the years 2007-2009 exceed 300 million euros per year.
At the end of March, the Group had balance sheet cash and cash equivalents
amounting to 221.5 million euros, in addition to which there was a total of
300
million euros in unused committed credit facilities.
Operational net cash flow was 0.6 million euros, compared with -32.9 million
euros a year earlier. Gearing increased from 6.7 per cent at the beginning of
the year to
16.6 per cent at the end of March. Gearing adjusted for leasing
liabilities was
116.5 per cent (85.0%). Various options for strengthening the
capital structure are being studied. The equity ratio fell by 9.3 percentage
points from the corresponding point in the previous year to stand at 36.9 per
cent.
According to the financial risk management policy approved by Finnair's Board of
Directors, the company has hedged about 70 per cent of scheduled traffic's jet
fuel purchases during the next six months and thereafter for the following 30
months with a decreasing level of hedging. At the end of 2006 Finnair adjusted
its hedging policy so that the hedging horizon for jet fuel was extended from
two to three years. Finnair Leisure Flights has price hedged more than 60 per
cent of the fuel consumption of its agreed traffic programme for the summer
season.
Derivatives linked to the jet fuel price are mainly used as the fuel price
hedging instrument. Due to the extension of the hedging horizon and derivatives
market efficiency differences, Finnair also uses other oil derivatives.
Under IFRS rules, a change during the financial period in the fair value of
derivatives that mature in future is recognised in the Finnair income statement
item ‘Other expenses'. The change in the fair value of derivatives is not a
realised hedging gain nor does it have an effect on cash flow; it is a valuation
gain in accordance with IFRS reporting practice. During the first quarter, the
change in the fair value of derivatives was 6.0 million euros.
A weakening of the US dollar against the euro has a positive impact on Finnair's
operational result. At the end of March, the degree of hedging for a dollar
basket over the following 12 months was 64 per cent.
Shares and Share Capital
The company's market value on 31 March 2007 was 1,152.1 million euros (1,131.9
million) and the closing share price 12.98 euros. During the period
January-March the highest price for the Finnair Plc share on the Helsinki Stock
Exchange was 14.35 (15.00) euros, while the lowest price was 12.02 (11.50) euros
and the average price 13.37 (13.22) euros. During the quarter, some 6.4 million
(15.3 million) of the company's shares, with a value of 85.6 million euros
(202.8 million), were traded on the Helsinki Stock Exchange. At the end of the
period under review, the Finnish State owned 55.78 per cent (56.56%) of the
company's shares, while 33.79 per cent (34.3%) were held by foreign investors or
in the name of a nominee.
At the beginning of the financial period, the company held 151,903 of its own
shares, which it had purchased in previous years. On 22 March 2007 the Annual
General Meeting authorised the Board of Directors to purchase the company's own
shares up to a maximum of 3,500,000 shares and dispose of the company's own
shares up to a maximum of 3,651,903 shares. The authorisation applies to shares
amounting to less than five per cent of the company's share capital. The company
has not acquired nor disposed of its own shares in the first quarter, and on 31
March 2007 the company held a total of 151,903 own shares, i.e. 0.17 per cent of
all shares.
Board of Directors and Senior Management
At the Annual General Meeting held on 22 March 2007, the following former
members were elected as Members of the Board of Directors for a term lasting
until the end of the next Annual General Meeting: Christoffer Taxell (Chairman),
Kalevi Alestalo, Satu Huber, Markku Hyvärinen, Kari Jordan, Ursula Ranin and
Veli Sundbäck. In addition, a new member, Sigurdur Helgason, was elected.
PricewaterhouseCoopers Oy, Authorised Public Accountants and Jyri Heikkinen APA
were elected as the company's regular auditors. For PricewaterhouseCoopers Oy,
Eero Suomela, Authorised Public Accountant, is the auditor with main
responsibility. Tuomas Honkamäki APA and Timo Takalo APA were elected as deputy
auditors.
As of 1 February 2007, the Senior Vice President, Human Resources is Anssi
Komulainen, who moved to the position from his duties as Managing Director of
Finnair Catering Oy. Kristina Inkiläinen has been appointed to replace
Komulainen as Managing Director of Finnair Catering Oy and SVP, Catering as of
30 April 2007. Inkiläinen was formerly Managing Director of Select Service
Partner Finland Oy.
Finnair's Legal Counsel Sami Sarelius was appointed Vice President and General
Counsel as of 1 February 2007. He will also act as secretary to the company's
Board of Directors and Board of Management.
Personnel
During the first three months of the year, the Finnair Group had an average
number of 9,412 employees, which was 0.9 per cent fewer than a year earlier.
Scheduled Passenger Traffic had 4,121 employees and Leisure Traffic 355
employees. The total number of personnel in technical, catering and ground
handling services was 3,649 and in travel services 1,131. A total of 156 people
were employed in other functions.
Personnel expenses have risen by 9.3 per cent from the previous year. The
increase is mainly due to higher pension expenses as well as reserves for
incentive programmes based on better financial performance. Personnel expenses
per available tonne kilometre remained on the previous year's level.
The number of scheduled passenger traffic personnel grew in the early part of
the year by 2.6 per cent. The increase has occurred in Flight Operations,
particularly for the needs of growing Asian traffic. The number of personnel in
other business areas has declined or remained as before. The trend is in
accordance with the Finnair Group's restructuring plan.
Finnair has collective employment agreements valid at least until 30 September
2007 with six labour unions and with pilots until the end of April 2008. In
March, an efficiency agreement was signed with the Finnish Airline Pilots
Association (SLL). The agreement will help improve work productivity and achieve
significant cost savings.
Fleet changes
Finnair Group's fleet is managed by Finnair Aircraft Finance Oy, which belongs
to the Scheduled Passenger Traffic business area. On 31 March 2007, the Finnair
fleet had 67 aircraft. The average age of the entire fleet was 5.6 years. In
European traffic, the average age of the fleet is less than four years. Finnair
has at its disposal the most modern fleet in European air traffic, which brings
both cost savings and eco-efficiency.
The present Boeing MD-11 long-haul traffic fleet will be replaced by Airbus A340
and A330 wide-bodied aircraft by 2010. Six Airbus wide-bodied aircraft will be
acquired in 2009-10 in addition to one present A340 and four new A340 aircraft,
which are already ordered. In addition, options arranged in March 2006 can be
exercised for four aircraft.
According to the agreement with Airbus, both the orders and the options can be
flexibly confirmed according to need for either the A340 or A330 model. The
programme means that the Finnair long-haul fleet can be increased from the
present eight aircraft to 11-15 aircraft by the end of 2010.
Both the four-engine A340 and the two-engine A330 have around 270 seats, but the
A340 aircraft's range with a large cargo load is longer. The A330 aircraft is
more attractive than the A340 in terms of acquisition price and operating costs.
It can be used economically on, for example, the shorter India routes or
correspondingly on longer Asia routes where cargo demand does not require an
A340 aircraft.
Beginning in 2014, Finnair will also start the acquisition of new technology
A350XWB aircraft. In March 2006 Finnair ordered nine new Airbus wide-bodied
aircraft and arranged options for four more. Now two more of the A350 aircraft
have been ordered, bringing the maximum number of A350 aircraft to 15. All of
the A350 aircraft will have Rolls-Royce Trent XWB engines installed.
The four Airbus A340 aircraft ordered by Finnair earlier will be delivered in
the years 2007-08. The terms of the wide-bodied aircraft acquisition programme
take into account the difficulties caused to Finnair's operations as a result of
the delay in the A350 production schedule. The total value of confirmed aircraft
orders is around two billion euros.
The orders made will accelerate the fleet renewal. The present seven Boeing
MD-11 aircraft will be withdrawn from Finnair's ranks in 2008-10. Thereafter the
company's scheduled passenger traffic fleet will consist solely of modern Airbus
A320, A330 and A340 aircraft as well as Embraer 170 and 190 aircraft. The
commonality of the fleet will boost the efficiency of crew utilisation and
maintenance work. The lower fuel consumption of the new aircraft will improve
eco-efficiency and cut emissions. The fleet renewal will create a good framework
for lowering operating costs and improving profitability.
The Embraer aircraft acquisition programme, which began in autumn 2005,
continues. The number of Embraer aircraft ordered to date is 20, of which ten
are the 76-seat 170 model and ten the 100-seat 190 model. All ten Embraer 170
aircraft and the two Embraer 190s have already been delivered to Finnair. During
2007, four more Embraer 190s will arrive, and the remaining four will be
delivered in 2008-9, two each year.
By the end of 2007, winglets will be fitted to all seven Boeing 757 aircraft
used by Finnair Leisure Flights. They improve an aircraft's aerodynamics and
thus reduce fuel consumption and emissions. Fuel consumption falls by an
estimated four per cent.
The Estonian subsidiary Aero Airlines AS operates with three ATR 72 aircraft
instead of the previous seven aircraft. A decision has been made to sell four
aircraft. The intention is to sell the aircraft during spring 2007.
Performance of business areas
The primary segment reporting of the Finnair Group's financial statements is
based on business areas. The reporting business areas are Scheduled Passenger
Traffic, Leisure Traffic, Aviation Services and Travel Services.
Scheduled Passenger Traffic
This business area is responsible for sales of scheduled passenger traffic and
cargo, service concepts, flight operations and procurement and financing of
aircraft. Scheduled Passenger Traffic leases to Leisure Traffic the crews and
aircraft it requires. The business area consists of the following units and
companies: Finnair Scheduled Passenger Traffic, Aero Airlines, FlyNordic,
Finnair Cargo Oy and Finnair Aircraft Finance Oy.
In January-March the business area's turnover grew 10.9 per cent to 391.2
million euros. The adjusted EBIT ie. operational result was -0.3 million euros
(4.4 million loss).
Scheduled Passenger Traffic carried 1.9 million passengers in the first quarter.
Scheduled Passenger Traffic demand grew by 18.6 per cent, while capacity grew by
14.3 per cent, leading to an improvement in passenger load factor by 2.6
percentage points to 70.6 per cent.
In January-March Scheduled Passenger Traffic's unit revenue declined by 1.6 per
cent. Unit revenues increased in all types of traffic, but growth in the
relative share of Asian traffic, characterised by lower unit revenues, reduced
the average for scheduled traffic as a whole. In long-haul traffic, passenger
kilometre-based unit revenue and cost is lower than in European and domestic
traffic.
The total quantity of cargo carried in scheduled passenger traffic grew by 4.9
per cent. Leased cargo capacity has been reduced in North American traffic. The
quantity of cargo carried in Asian traffic increased 19.7 per cent from the
previous year.
Unit revenues for cargo in scheduled traffic declined 4.6 per cent during the
first three months of the year, as a result of a fall in prices due to
overcapacity in the Nordic market. A positive factor is strong cargo demand in
the Indian market. The Mumbai route beginning in June will serve this demand
well.
In international scheduled traffic, Finnair has slightly increased its market
share relative to its main competitors. In domestic traffic, no significant
changes have occurred in Finnair's market share in the early part of the year.
Finnair and the Norwegian company Norwegian Air Shuttle have agreed on the sale
of Finnair's Swedish subsidiary FlyNordic to Norwegian Air Shuttle during the
second quarter of 2007. The deal will be implemented as a share swap through
which Finnair's ownership of Norwegian Air Shuttle will exceed five per cent. In
addition, Finnair has the option to increase its holding to ten per cent.
FlyNordic posted slightly negative result for the first quarter. The result was,
however, clearly better than a year before.
During the January-March, the arrival punctuality of scheduled passenger flights
fell by 5.5 per cent to 77.1 per cent (82.6%). Late arrivals in the first
quarter were particularly caused by the Helsinki-Vantaa Airport terminal's
capability of handling the increased passenger and baggage streams of
Europe-Asia traffic during extension work. Finnair and CAA Finland-Finavia are
working together to find solutions to ease the situation. The extension of the
Asia terminal will be completed in 2009.
Leisure Traffic
This business area consists of Finnair Leisure Flights as well as the
Aurinkomatkat-Suntours package tour group, which is the biggest in its field in
Finland with a market share of more than 37 per cent. Finnair Leisure Flights
also enjoys a strong market leadership in leisure travel flights. The company
has ten tour operators as customers.
In January-March Finnair Leisure Flights carried nearly 290,000 passengers.
Performance calculated in passenger kilometres was 3.1 per cent lower than a
year earlier. Capacity was reduced by 3.1 per cent, so the passenger load factor
of Leisure Flights remained at the previous year's level, at 91.9 per cent.
Customer numbers of Aurinkomatkat-Suntours grew 3.6 per cent in winter season
2006-7. As the price level remained at the previous year's level, profitability
improved compared to year 2006. Aurinkomatkat-Suntours launched in January the
takeOFF brand, specialised in youth destinations. The inexpensive takeOFF trips
are only sold on the internet. At the end of 2006, Aurinkomatkat-Suntours agreed
to buy Estonia's second biggest tour operator, Oü Horizon Travel. The deal was
finalised at the beginning of April. The company will be reported for the whole
year as part of Aurinkomatkat's result. The company increases Aurinkomatkat's
tour capacity by more than five per cent.
The business area's turnover grew during the first quarter by seven per cent to
116.6 million euros. Operating profit on operations remained at the previous
year's level and was 5.6 million euros (6.2 million).
Finnair has agreed fixed flight prices with tour operators and provided for the
fuel risk with price hedging in accordance with the Group's financial policy.
Aviation Services
This business area comprises aircraft maintenance services, ground handling and
the Group's catering operations. In addition, the Group's property holdings, the
procurement of office services, and the management and maintenance of properties
related to the Group's operational activities also belong to the Aviation
Services business area.
Turnover for Aviation Services rose in January-March by 8.4 per cent to 110.8
million euros. The operational result improved by 6.9 million euros and was in
profit,
3.3 million euros (3.6 million loss).
The utilisation of Technical Services' Aircraft Heavy Maintenance unit in
particular has been low, and operations have been loss-making. Utilisation of
the Aircraft Heavy Maintenance unit in spring 2007 is clearly better than the
previous year.
At the beginning of 2006, Finnair Technical Services initiated a competitiveness
project that examined the entire organisation's revenue and cost structure. The
goal is to return the business to profit by specialising as well as by
developing processes and operating models. Operations for which there is no
commercial justification will be discontinued. As a result of operational
efficiencies, Finnair Technical Services' operating result returned to profit in
January-March.
Around 300 jobs will be cut in Finnair Technical Services' in 2006-7. The
reduction in jobs will be implemented through various early retirement
solutions, outsourcing of functions as well as redundancies, in a manner agreed
earlier.
The ground handling company Northport Oy expanded its operations to Oslo's
Gardemoen Airport in October 2006.
As part of the Finnair Group's restructuring and profitability improvement,
opportunities for the reorganisation of Northport Oy and its subsidiaries are
being investigated. Various ownership and partnership options for the company or
its parts are being explored. In respect of Finnish airports, excluding
Helsinki-Vantaa, the transfer of ground handling services to the responsibility
of the RTG Group was agreed in March. Decisions regarding Helsinki-Vantaa are
pursued during the second quarter.
At the turn of the year, the Finnair Group's real-estate and facilities
management services were outsourced to the YIT Group. Around 50 Finnair
Facilities Management employees transferred to the service of YIT under their
existing conditions of employment.
FTS Financial Services Oy was formed at the beginning of 2007 by integrating the
Finnair Oyj´s financial services unit together with the Travel agents´shared
service center FTS Oy.
Travel Services
This business area consists of the Group's domestic and foreign travel agency
operations, including Finland Travel Bureau (FTB), its subsidiary Estravel and
Area, as well as the operations of the travel reservations systems supplier
Amadeus Finland Oy.
In 2007, the business area's turnover fell 8.4 per cent to 20.7 million euros.
The decline was due to a down-sizing of the business area's own package tour
production. Restructuring implemented last year and the combining of travel
agencies located in various localities under FTB are beginning to produce
results. Sales via the internet doubled from the previous year. Customers have
given a good reception to the opportunity to tailor their leisure trips
themselves on the internet. Travel Services' operating profit improved to 1.3
million euros (0.3 million euros).
Flight Traffic Services and Products
Finnair is increasingly an airline engaged in traffic between Europe and Asia,
and nearly half of scheduled passenger traffic revenue is linked to Asian
traffic. From summer 2007, Finnair will have a total of 59 direct flight
connections per week to ten Asian destinations. To China alone, the company will
fly more than 100 flights per month.
Finnair's entire route network, which benefits from Helsinki's ideal location on
flight routes between Asia and Europe, has been built particularly to serve this
type of traffic. Flights covering 50 European and 15 domestic destinations
connect into Finnair's Asia network. At the same time, a wide selection of
direct connections are offered from Finland to the rest of Europe.
Growing passenger streams between Europe and Asia have enabled opening of new
routes in Europe. The expansion of the European network also provides an
excellent service to Finnish customers, who can utilise Finnair's
morning-evening concept in their European connections.
In spring 2007 Finnair's Asian route network will be revised so that all
destinations are served by direct flights, with no intermediate stops. The
objective is to fly daily to as many Asian destinations as possible, so that
business passengers are offered as competitive a product as possible. Product
improvement is expected to increase also average revenues.
The shorter flight connections also improve the eco-efficiency of travelling;
when flying with Finnair from Europe to Asia, passengers travel the most direct
route, and connections via Central Europe that increase travel time and fuel
consumption are not needed.
From summer 2007 the daily destinations will be Bangkok, Delhi, Hong Kong,
Osaka, Beijing and Shanghai. In addition, Finnair will fly to Guangzhou in China
and to Tokyo and Nagoya in Japan. A new destination, Mumbai in India, will open
in summer 2007 with five flights per week.
A fleet consisting of aircraft of different sizes allows routes and flights to
be added to the route network flexibly as the demand base varies. This year,
five new destinations, serving local demand as well as the needs of Asian
traffic, will be added to the European route network. The new destinations are
Bucharest, Gdansk, Lisbon, Ljubljana and Nuremberg. In addition, the Madrid and
Manchester flights will fly direct, without an intermediate stop in Stockholm.
The changes mean that all European routes will be served by non-stop flights.
From first of April oneworld completed the biggest expansion in its history with
Japan Airlines, Malév Hungarian Airlines and Royal Jordanian Airlines, all now
offering the alliance´s services and benefits as full members.
Finnair Leisure Flights carries the customers of ten tour operators to 66
holiday destinations in 33 countries. In addition, flights only can be purchased
on the internet to dozens of Leisure Flights' destinations.
Leisure Flights' fleet consists of seven Boeing 757 aircraft and Airbus capacity
leased from Scheduled Passenger Traffic. At the beginning of 2007, Leisure
Flights launched extra services that customers can pay for. Before their trip,
customers can order on the internet a special meal or a more spacious seating
place, for example. Child passengers have their own meal service.
Future prospects
Finnair's strength is to operate as a network company in scheduled passenger
traffic between Europe and Asia. The chosen strategy is to diversify operational
risk, because Finnair's European flights serve both a local and a transit travel
function. In addition, Finnair operates in Asia with passenger and cargo traffic
in a number of different types of market.
China has become in recent years the most important target market; air traffic
there is growing at more than ten per cent annually. Japan is an established
market where the price level is good and demand is growing through increased
capacity.
India is a new opening and has already proved its attraction. A new route, to
Mumbai, served by five flights a week, will open in June. It is expected that
new flight slots at Mumbai airport will become more difficult to obtain in the
future. Immediate utilisation of the new slots is strategically important even
though the upcoming summer season forms a short-term challenge in load factors.
Demand in Finnair's scheduled passenger traffic has risen strongly, particularly
through growth in Asian traffic. Transit traffic has also boosted passenger
numbers on European routes. The strong growth is expected to continue. Asian
traffic is forecast to grow by over 30 per cent this year.
Despite increased capacity, passenger load factors have remained high, based not
only on demand but also on flexible fleet utilisation. For each route, Finnair's
fleet can provide an aircraft suitable for the demand.
Goal-oriented work will be continued to change Finnair's structure and operating
conditions to serve the needs of Europe-Asia traffic. Terms of employment have
been adjusted to the needs of long-haul traffic in collaboration with personnel
groups. A cabin staff group specialised in long-haul traffic, founded at the end
of last year, will facilitate more flexible crew utilisation. Significant cost
savings will be achieved with flight personnel as a whole by developing work
shift arrangements. Six out of the seven Finnair Group's agreements with labour
unions are due to expire at the end of the September 2007. Negotiations for the
new terms have already started.
The plan is to further improve operational efficiency through advanced
technology in Aviation Services and administrative support functions.
Partnership arrangements, of which some have already been implemented, are being
sought in the provision of ground handling services. In Finnair Technical
Services, operating models aimed at increasing productivity will continue to be
developed. In terms of improving profitability, positive results are already at
sight.
The company's financial performance in 2007 is expected to improve significantly
compared to previous year, owing to strongly growing demand, stabilised price
levels as well as operational efficiencies.
FINNAIR PLC
Board of Directors
Press conference
Finnair will hold briefings for media representatives (11 a.m.) and analysts
(12.30 p.m.) on 4 May 2007 at the address Toimistotorni, Lentäjäntie 3 at
Helsinki-Vantaa Airport. Further information and registrations: Hanna-Kaisa
Nurmi, tel. +358 9 818 4951 or hanna-kaisa.nurmi@finnair.com.
Finnair Plc
Communications
Christer Haglund
SVP Corporate Communications
For further information, please contact:
SVP and CFO Lasse Heinonen
tel. +358 9 818 4950
lasse.heinonen@finnair.fi
SVP Communications, Christer Haglund
tel. +358 9 818 4007
christer.haglund@finnair.fi
Director, Investor Relations, Taneli Hassinen
tel. +358 9 818 4976
taneli.hassinen@finnair.fi
http://www.finnair.com/investor
FINNAIR GROUP INTERIM REPORT FOR JANUARY 1 - MARCH 31, 2007
The interim report has been prepared in accordance with accounting and valuation
principles of IFRS standards, but all requirements of IAS 34 has not been
followed to full extend.
KEY FIGURES EUR mill.
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| | | | | Dec |
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| Turnover | 528.5 | 480.3 | 10.0 | 1 989.6 |
--------------------------------------------------------------------------------
| Profit before depreciation and | 54.8 | 40.9 | 34.0 | 206.8 |
| lease payments, EBITDAR * | | | | |
--------------------------------------------------------------------------------
| Lease payments for aircraft | 21.7 | 22.6 | -4.0 | 90.8 |
--------------------------------------------------------------------------------
| Operating profit, EBIT* | 5.8 | -5.1 | - | 11.2 |
--------------------------------------------------------------------------------
| Fair value changes of | 6.0 | -0.1 | - | -8.8 |
| derivatives | | | | |
--------------------------------------------------------------------------------
| Profit from disposal of capital | 1.9 | 0.0 | - | 2.0 |
| assets | | | | |
--------------------------------------------------------------------------------
| Operating profit, EBIT | 13.7 | -5.2 | - | -10.8 |
--------------------------------------------------------------------------------
| Profit for the financial year | 9.3 | -4.0 | - | -13.6 |
| (share attributable to | | | | |
| shareholders of parent company) | | | | |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Operating profit, EBIT, % of | 1.1 | -1.1 | - | 0.6 |
| turnover * | | | | |
--------------------------------------------------------------------------------
| EBITDAR, % of turnover * | 10.4 | 8.5 | - | 10.4 |
--------------------------------------------------------------------------------
| Unit revenues of flight | 72.8 | 71.5 | 1.8 | 74.0 |
| operations c/RTK | | | | |
--------------------------------------------------------------------------------
| Unit costs of flight operations | 44.9 | 45.8 | -2.1 | 46.0 |
| c/ATK | | | | |
--------------------------------------------------------------------------------
| Earnings per share EUR (basic) | 0.11 | -0.05 | - | -0.16 |
--------------------------------------------------------------------------------
| Earnings per share EUR (diluted) | 0.11 | -0.05 | - | -0.16 |
--------------------------------------------------------------------------------
| Equity per share EUR | 6.93 | 7.39 | -6.2 | 6.77 |
--------------------------------------------------------------------------------
| Gross investment EUR mill. | 52.3 | 48.7 | - | 252.2 |
--------------------------------------------------------------------------------
| Gross investment, % of turnover | 9.9 | 10.1 | - | 12.7 |
--------------------------------------------------------------------------------
| Equity ratio % | 36.9 | 40.7 | -9.3 | 37.2 |
--------------------------------------------------------------------------------
| Gearing % | 16.6 | -10.6 | | 6.7 |
--------------------------------------------------------------------------------
| Adjusted gearing % | 116.5 | 85.0 | | 112.3 |
--------------------------------------------------------------------------------
| Rolling 12-month ROCE % | -0.1 | 8.3 | | -0.1 |
--------------------------------------------------------------------------------
| Rolling 12-month ROE % | 2.0 | 7.4 | | -2.0 |
--------------------------------------------------------------------------------
* Excluding capital assets, fair value changes of derivatives and reorganization
expenses.
Unit costs of flight operations c / ATK = Operating expenses (excluding fair
value changes of derivatives) of Scheduled Traffic business area and Leisure
Flights business unit / ATK of Group.
CALCULATION OF KEY RATIOS
Earnings / share:
Profit for the financial year/
Average number of shares at the end of the financial year adjusted for share
issues
Equity / share:
Shareholders' equity/
Number of shares at the end of the financial year
adjusted for share issues
Gearing %:
Net interest bearing liabilities*100/
Shareholders' equity + minority interest
Return on capital employed % (ROCE):
Profit before taxes + interest and other financial expenses *100/
Balance sheet total - non-interest-bearing liabilities (average)
Net interest-bearing liabilities:
Interest-bearing liabilities - interest-bearing assets - listed shares
Equity ratio %:
Shareholders' equity + minority interest*100/
Balance sheet total - advances received
Return on equity %: (ROE)
Result before extraordinary items - taxes*100/
Equity + minority interests (average)
Operating profit. EBIT = Operating profit excluding the disposal of the capital
assets, fair value changes of derivatives and reorganization expenses
Shareholders equity = To equity holders of the parent
The figures of interim report have not been audited.
CONSOLIDATED INCOME STATEMENT (EUR mill.)
--------------------------------------------------------------------------------
| | 2007 | 2006 | Change | 2006 |
--------------------------------------------------------------------------------
| | 1 Jan- | 1 Jan- | % | 1 Jan- |
| | 31 Mar | 31 Mar | | 31 Dec |
--------------------------------------------------------------------------------
| Turnover | 528.5 | 480.3 | 10.0 | 1 989.6 |
--------------------------------------------------------------------------------
| Work used for own purposes and | 0.8 | 0.1 | 700.0 | 3.7 |
| capitalized | | | | |
--------------------------------------------------------------------------------
| Other operating income | 5.9 | 5.7 | 3.5 | 17.9 |
--------------------------------------------------------------------------------
| Operating income | 535.2 | 486.1 | 10.1 | 2 011.2 |
--------------------------------------------------------------------------------
| Operating expenses | | | | |
--------------------------------------------------------------------------------
| Staff costs | 135.1 | 123.6 | 9.3 | 508.2 |
--------------------------------------------------------------------------------
| Fuel | 103.2 | 89.3 | 15.6 | 385.0 |
--------------------------------------------------------------------------------
| Lease payment for aircraft | 21.7 | 22.6 | -4.0 | 90.8 |
--------------------------------------------------------------------------------
| Other rental payments | 17.2 | 20.8 | -17.3 | 80.7 |
--------------------------------------------------------------------------------
| Fleet materials and overhauls | 22.2 | 25.8 | -14.0 | 100.6 |
--------------------------------------------------------------------------------
| Traffic charges | 43.7 | 38.7 | 12.9 | 161.9 |
--------------------------------------------------------------------------------
| Ground handling and catering | 36.5 | 33.2 | 9.9 | 139.4 |
| expenses | | | | |
--------------------------------------------------------------------------------
| Expenses for tour operations | 35.8 | 34.2 | 4.7 | 111.5 |
--------------------------------------------------------------------------------
| Sales and marketing expenses | 19.4 | 16.9 | 14.8 | 91.3 |
--------------------------------------------------------------------------------
| Depreciation | 27.3 | 23.4 | 16.7 | 104.8 |
--------------------------------------------------------------------------------
| Other expenses | 59.4 | 62.8 | -5.4 | 247.8 |
--------------------------------------------------------------------------------
| Total | 521.5 | 491.3 | 6.1 | 2 022.0 |
--------------------------------------------------------------------------------
| Operating profit EBIT | 13.7 | -5.2 | - | -10.8 |
--------------------------------------------------------------------------------
| Financial income | 3.6 | 2.7 | 33.3 | 11.0 |
--------------------------------------------------------------------------------
| Financial expenses | -3.9 | -2.7 | 44.4 | -15.0 |
--------------------------------------------------------------------------------
| Share of result in associates | 0.0 | 0.0 | - | 0.1 |
--------------------------------------------------------------------------------
| Profit before taxes | 13.4 | -5.2 | - | -14.7 |
--------------------------------------------------------------------------------
| Direct taxes | -4.1 | 1.4 | - | 1.7 |
--------------------------------------------------------------------------------
| Profit for financial year | 9.3 | -3.8 | - | -13.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share to | 9.3 | -4.0 | | -13.6 |
| shareholders of the parent | | | | |
| company | | | | |
--------------------------------------------------------------------------------
| Minority interest | 0.0 | 0.2 | | 0.6 |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Earnings per share calculated | | | | |
| from profit attributable to | | | | |
| shareholders of the parent | | | | |
| company | | | | |
--------------------------------------------------------------------------------
| Earnings per share EUR | 0.11 | -0.05 | | -0.16 |
--------------------------------------------------------------------------------
| Earnings per share EUR | 0.11 | -0.05 | | -0.16 |
| (diluted) | | | | |
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET (EUR mill.)
--------------------------------------------------------------------------------
| | 31 Mar 2007 | 31 Mar 2006 | 31 Dec 2006 |
--------------------------------------------------------------------------------
| ASSETS | | | |
--------------------------------------------------------------------------------
| Non-current assets | | | |
--------------------------------------------------------------------------------
| Intangible assets | 48.9 | 47.6 | 47.5 |
--------------------------------------------------------------------------------
| Tangible assets | 1 051.1 | 887.2 | 1 012.3 |
--------------------------------------------------------------------------------
| Investments in associates | 5.6 | 3.2 | 5.6 |
--------------------------------------------------------------------------------
| Financial assets | 15.3 | 17.1 | 15.4 |
--------------------------------------------------------------------------------
| Deferred tax receivables | 23.3 | 22.5 | 27.1 |
--------------------------------------------------------------------------------
| Total | 1 144.2 | 977.6 | 1 107.9 |
--------------------------------------------------------------------------------
| Short-term receivables | | | |
--------------------------------------------------------------------------------
| Inventories | 40.3 | 47.0 | 38.5 |
--------------------------------------------------------------------------------
| Trade receivables and other | 286.3 | 286.9 | 211.8 |
| receivables | | | |
--------------------------------------------------------------------------------
| Investments | 192.6 | 278.8 | 268.6 |
--------------------------------------------------------------------------------
| Cash and bank equivalents | 28.9 | 27.9 | 25.7 |
--------------------------------------------------------------------------------
| Total | 548.1 | 640.6 | 544.6 |
--------------------------------------------------------------------------------
| Non-current Assets held for | 7.6 | 0.0 | 7.6 |
| sale | | | |
--------------------------------------------------------------------------------
| Assets total | 1 699.9 | 1 618.2 | 1 660.1 |
--------------------------------------------------------------------------------
| SHAREHOLDERS´ EQUITY AND | | | |
| LIABILITIES | | | |
--------------------------------------------------------------------------------
| Capital and reserves | | | |
| attributable to equity holders | | | |
| of the parent company | | | |
--------------------------------------------------------------------------------
| Shareholders´equity | 75.4 | 74.4 | 75.4 |
--------------------------------------------------------------------------------
| Other equity | 538.4 | 568.9 | 524.5 |
--------------------------------------------------------------------------------
| Total | 613.8 | 643.3 | 599.9 |
--------------------------------------------------------------------------------
| Minority interest | 1.2 | 1.5 | 1.6 |
--------------------------------------------------------------------------------
| Equity, total | 615.0 | 644.8 | 601.5 |
--------------------------------------------------------------------------------
| Long-term liabilities | | | |
--------------------------------------------------------------------------------
| Deferred tax liability | 116.2 | 123.6 | 115.7 |
--------------------------------------------------------------------------------
| Financial liabilities | 280.0 | 207.6 | 286.9 |
--------------------------------------------------------------------------------
| Pension obligations | 8.4 | 9.8 | 7.0 |
--------------------------------------------------------------------------------
| Total | 404.6 | 341.0 | 409.6 |
--------------------------------------------------------------------------------
| Short-term liabilities | | | |
--------------------------------------------------------------------------------
| Current income tax liabilities | 4.6 | 0.0 | 3.0 |
--------------------------------------------------------------------------------
| Reserves | 9.5 | 0.0 | 10.0 |
--------------------------------------------------------------------------------
| Financial liabilities | 50.0 | 53.3 | 56.6 |
--------------------------------------------------------------------------------
| Trade payables and other | 616.2 | 579.1 | 579.4 |
| liabilities | | | |
--------------------------------------------------------------------------------
| Total | 680.3 | 632.4 | 649.0 |
--------------------------------------------------------------------------------
| Liabilities total | 1 084.9 | 973.4 | 1 058.6 |
--------------------------------------------------------------------------------
| Shareholders' equity and | 1 699.9 | 1 618.2 | 1 660.1 |
| liabilities, total | | | |
--------------------------------------------------------------------------------
SHAREHOLDERS´EQUITY EUR mill.
--------------------------------------------------------------------------------
| Equity attributable to shareholders of parent company | |
--------------------------------------------------------------------------------
| | Shar | New | Share | Bonu | Hedgi | Retain | Tota | Minor | Own |
| | e | iss | pre-m | s | ng | ed | l | -ity | equit |
| | capi | ue | ium | issu | reser | earnin | | inte- | y |
| | tal | | accou | e | ve | gs | | rests | total |
| | | | nt | | | | | | |
--------------------------------------------------------------------------------
| Sharehol | 73.8 | 0.6 | 18.3 | 147. | 20.9 | 411.1 | 672. | 1.6 | 674.0 |
| ders´ | | | | 7 | | | 4 | | |
| equity | | | | | | | | | |
| 1.1.2006 | | | | | | | | | |
--------------------------------------------------------------------------------
| Translat | | | | | | -0.1 | -0.1 | | -0.1 |
| ion | | | | | | | | | |
| differen | | | | | | | | | |
| ce | | | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | | | | | -21.8 | -21. | -0.3 | -22.1 |
| payment | | | | | | | 8 | | |
--------------------------------------------------------------------------------
| Option | 0.6 | -0. | 0.0 | | | | 0.0 | | 0.0 |
| right to | | 6 | | | | | | | |
| shares | | | | | | | | | |
--------------------------------------------------------------------------------
| Change | | | | | -3.2 | | -3.2 | | -3.2 |
| in fair | | | | | | | | | |
| value of | | | | | | | | | |
| hedging | | | | | | | | | |
| instrume | | | | | | | | | |
| nts | | | | | | | | | |
--------------------------------------------------------------------------------
| Profit | | | | | | -4.0 | -4.0 | 0.2 | -3.8 |
| for the | | | | | | | | | |
| period | | | | | | | | | |
--------------------------------------------------------------------------------
| Sharehol | 74.4 | 0.0 | 18.3 | 147. | 17.7 | 385.2 | 643. | 1.5 | 644.8 |
| ders´ | | | | 7 | | | 3 | | |
| equity | | | | | | | | | |
| 31.3.200 | | | | | | | | | |
| 6 | | | | | | | | | |
--------------------------------------------------------------------------------
SHAREHOLDERS´EQUITY EUR mill.
--------------------------------------------------------------------------------
| Equity attributable to shareholders of parent company | |
--------------------------------------------------------------------------------
| | Share | New | Share | Bon | Hedgin | Retain | Tota | Mino | Own |
| | capit | iss | pre-m | us | g | ed | l | -rit | equit |
| | al | ue | ium | iss | reserv | earnin | | y | y |
| | | | accou | ue | e | gs | | inte | total |
| | | | nt | | | | | -res | |
| | | | | | | | | ts | |
--------------------------------------------------------------------------------
| Sharehol | 75.4 | 0.0 | 20.4 | 147 | -21.1 | 377.5 | 599. | 1.6 | 601.5 |
| ders´ | | | | .7 | | | 9 | | |
| equity | | | | | | | | | |
| 1.1.2007 | | | | | | | | | |
--------------------------------------------------------------------------------
| Translat | | | | | | -0.3 | -0.3 | | -0.3 |
| ion | | | | | | | | | |
| differen | | | | | | | | | |
| ce | | | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | | | | | -8.9 | -8.9 | -0.4 | -9.3 |
| payment | | | | | | | | | |
--------------------------------------------------------------------------------
| Optio | 0.0 | 0.0 | 0.0 | | | | 0.0 | | 0.0 |
| right to | | | | | | | | | |
| shares | | | | | | | | | |
--------------------------------------------------------------------------------
| Change | | | | | 13.8 | | 13.8 | | 13.8 |
| in fair | | | | | | | | | |
| value of | | | | | | | | | |
| hedging | | | | | | | | | |
| instrume | | | | | | | | | |
| nts | | | | | | | | | |
--------------------------------------------------------------------------------
| Profit | | | | | | 9.3 | 9.3 | 0.0 | 9.3 |
| for the | | | | | | | | | |
| period | | | | | | | | | |
--------------------------------------------------------------------------------
| Sharehol | 75.4 | 0.0 | 20.4 | 147 | -7.3 | 377.6 | 613. | 1.2 | 615.0 |
| ders´ | | | | .7 | | | 8 | | |
| equity | | | | | | | | | |
| 31.3.200 | | | | | | | | | |
| 7 | | | | | | | | | |
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT
--------------------------------------------------------------------------------
| EUR mill. | 1 Jan - 31 | 1 Jan - 31 | 1 Jan - 31 |
| | Mar 2007 | Mar 2006 | Dec 2006 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Cash flow from operating | | | |
| activities | | | |
--------------------------------------------------------------------------------
| Profit for the financial year | 9.3 | -3.8 | -13.0 |
--------------------------------------------------------------------------------
| Operations for which a payment is | 24.2 | 18.9 | 100.2 |
| not included 1) | | | |
--------------------------------------------------------------------------------
| Interest and other financial | 3.9 | 2.7 | 15.0 |
| expenses | | | |
--------------------------------------------------------------------------------
| Interest income | -2.4 | -2.4 | -9.1 |
--------------------------------------------------------------------------------
| Other financial income | -1.2 | -0.3 | -1.8 |
--------------------------------------------------------------------------------
| Dividend income | 0.0 | 0.0 | -0.1 |
--------------------------------------------------------------------------------
| Taxes | 4.1 | -1.4 | -1.7 |
--------------------------------------------------------------------------------
| Changes in working capital: | | | |
--------------------------------------------------------------------------------
| Change in trade and other | -74.2 | -44.4 | 10.2 |
| receivables | | | |
--------------------------------------------------------------------------------
| Change in inventories | -1.9 | -1.9 | 6.7 |
--------------------------------------------------------------------------------
| Change in accounts payables and | 44.8 | -2.7 | 13.4 |
| other liabilities | | | |
--------------------------------------------------------------------------------
| Interest paid | -3.5 | -2.3 | -11.0 |
--------------------------------------------------------------------------------
| Paid financial expenses | -0.2 | -0.3 | -3.4 |
--------------------------------------------------------------------------------
| Received interest | 1.8 | 1.5 | 9.9 |
--------------------------------------------------------------------------------
| Received financial income | 1.0 | 3.5 | 1.6 |
--------------------------------------------------------------------------------
| Taxes paid | -5.1 | 0.0 | -21.1 |
--------------------------------------------------------------------------------
| Net cash flow from operating | 0.6 | -32.9 | 95.8 |
| activities | | | |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Cash flow from investing | | | |
| activities | | | |
--------------------------------------------------------------------------------
| Sell of subsidiarys, net of cash | 0.0 | 0.0 | 0.0 |
| sold | | | |
--------------------------------------------------------------------------------
| Investments in intangible assets | -3.6 | -5.5 | -12.6 |
--------------------------------------------------------------------------------
| Investments in tangible assets | -64.7 | -64.0 | -273.0 |
--------------------------------------------------------------------------------
| Net change of financial interest | 9.8 | 48.9 | 53.2 |
| bearing assets at fair value | | | |
| through profit and loss | | | |
--------------------------------------------------------------------------------
| Sales of tangible fixed assets | 0.8 | 0.4 | 2.3 |
--------------------------------------------------------------------------------
| Received dividends | 0.0 | 0.0 | 0.1 |
--------------------------------------------------------------------------------
| Change in non-current receivable | 0.2 | 0.5 | 2.3 |
--------------------------------------------------------------------------------
| Net cash flow from investing | -57.5 | -19.7 | -227.7 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing | | | |
| activities | | | |
--------------------------------------------------------------------------------
| Loan withdrawals and changes | 6.9 | 2.3 | 108.3 |
--------------------------------------------------------------------------------
| Loan repayments | -13.0 | -8.8 | -25.9 |
--------------------------------------------------------------------------------
| Optio right to shares | 0.0 | 0.0 | 5.4 |
--------------------------------------------------------------------------------
| Dividends paid | 0.0 | 0.0 | -21.8 |
--------------------------------------------------------------------------------
| Net cash flow from financing | -6.1 | -6.5 | 66.0 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash flows | -63.0 | -59.1 | -65.9 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Change in liquid funds | | | |
--------------------------------------------------------------------------------
| Liquid funds, at beginning | 273.5 | 339.4 | 339.4 |
--------------------------------------------------------------------------------
| Change in cash flows | -63.0 | -59.1 | -65.9 |
--------------------------------------------------------------------------------
| Liquit funds, in the end | 210.5 | 280.3 | 273.5 |
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT
--------------------------------------------------------------------------------
| EUR mill. | 1 Jan - 31 | 1 Jan - 31 | 1 Jan - 31 |
| | Mar 2007 | Mar 2006 | Dec 2006 |
--------------------------------------------------------------------------------
| Notes to consolidated cash flow | | | |
| statement | | | |
--------------------------------------------------------------------------------
| 1) Operations for which a payment is | | | |
| not included | | | |
--------------------------------------------------------------------------------
| Depreciation | 27.3 | 23.4 | 104.8 |
--------------------------------------------------------------------------------
| Employee benefits | -1.6 | -2.9 | -2.8 |
--------------------------------------------------------------------------------
| Finance lease | -1.2 | -1.2 | -5.0 |
--------------------------------------------------------------------------------
| Other adjustments | -0.3 | -0.4 | 3.2 |
--------------------------------------------------------------------------------
| Total | 24.2 | 18.9 | 100.2 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Financial asset at fair value | 192.6 | 278.8 | 268.6 |
--------------------------------------------------------------------------------
| Cash and bank equivalents | 28.9 | 27.9 | 25.7 |
--------------------------------------------------------------------------------
| Short-term cash and cash equivalents | 221.5 | 306.7 | 294.3 |
| in balance sheet | | | |
--------------------------------------------------------------------------------
| Shares held to trading purposes | -2.9 | -4.2 | -2.9 |
--------------------------------------------------------------------------------
| Maturing after more than 3 months | -8.1 | -22.2 | -17.9 |
--------------------------------------------------------------------------------
| Total in cash flow statement | 210.5 | 280.3 | 273.5 |
--------------------------------------------------------------------------------
SEGMENT INFORMATION
The business segments, Scheduled Passenger Traffic, Leisure Traffic, Aviation
Services and Travel Services, are the primary reporting format. The geographical
segments, Finland, Europe, Asia, North America and Others, are the secondary
reporting format. Segment information will based on the corresponding
information reported in the financial statement.
PRIMARY REPORTING FORMAT - BUSINESS SEGMENT DATA 1 January - 31 March 2007
--------------------------------------------------------------------------------
| | Schedu | Leisu | Aviati | Travel | Group | Un-allo | Group |
| | led | re | on | Servic | eliminat | cated | |
| | Passen | Traff | Servic | es | ions | items | |
| | ger | ic | es | | | | |
| | Traffi | | | | | | |
| | c | | | | | | |
--------------------------------------------------------------------------------
| EUR mill. | | | | | | | |
--------------------------------------------------------------------------------
| External | 361.5 | 115.4 | 32.3 | 19.3 | | | 528.5 |
| turnover | | | | | | | |
--------------------------------------------------------------------------------
| Internal | 29.7 | 1.2 | 78.5 | 1.4 | -110.8 | | 0.0 |
| turnover | | | | | | | |
--------------------------------------------------------------------------------
| Turnover | 391.2 | 116.6 | 110.8 | 20.7 | -110.8 | 0.0 | 528.5 |
--------------------------------------------------------------------------------
| Operating | 0.7 | 5.6 | 4.1 | 1.3 | | 2.0 | 13.7 |
| profit | | | | | | | |
--------------------------------------------------------------------------------
| Share of | | | | | | 0,0 | 0.0 |
| results of | | | | | | | |
| associated | | | | | | | |
| undertaking | | | | | | | |
| s | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | 3.6 | 3.6 |
| income | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | -3.9 | -3.9 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Income tax | | | | | | -4.1 | -4.1 |
--------------------------------------------------------------------------------
| Minority | | | | | | 0.0 | 0.0 |
| interest | | | | | | | |
--------------------------------------------------------------------------------
| Result for | | | | | | | 9.3 |
| the period | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| Other items | | | | | | | |
--------------------------------------------------------------------------------
| Investments | 41.0 | 0.1 | 9.1 | 1.0 | 0.0 | 1.1 | 52.3 |
--------------------------------------------------------------------------------
| Depreciatio | 20.1 | 0.1 | 6.4 | 0.4 | 0.0 | 0.3 | 27.3 |
| n | | | | | | | |
--------------------------------------------------------------------------------
PRIMARY REPORTING FORMAT - BUSINESS SEGMENT DATA 1 January- 31 March 2006
--------------------------------------------------------------------------------
| | Schedu | Leisu | Aviati | Travel | Group | Un-allo | Group |
| | led | re | on | Servic | eliminati | cated | |
| | Passen | Traff | Servic | es | ons | items | |
| | ger | ic | es | | | | |
| | Traffi | | | | | | |
| | c | | | | | | |
--------------------------------------------------------------------------------
| EUR mill. | | | | | | | |
--------------------------------------------------------------------------------
| External | 324.0 | 108.4 | 26.5 | 21.4 | | | 480.3 |
| turnover | | | | | | | |
--------------------------------------------------------------------------------
| Internal | 28.8 | 1.0 | 75.7 | 1.2 | -106.7 | | 0.0 |
| turnover | | | | | | | |
--------------------------------------------------------------------------------
| Turnover | 352.8 | 109.4 | 102.2 | 22.6 | -106.7 | 0.0 | 480.3 |
--------------------------------------------------------------------------------
| Operating | -4.4 | 6.2 | -3.5 | 0.3 | | -3.8 | -5.2 |
| profit | | | | | | | |
--------------------------------------------------------------------------------
| Share of | | | | | | 0.0 | 0.0 |
| results of | | | | | | | |
| associated | | | | | | | |
| undertaking | | | | | | | |
| s | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | 2.7 | 2.7 |
| income | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | -2.7 | -2.7 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Income tax | | | | | | 1.4 | 1.4 |
--------------------------------------------------------------------------------
| Minority | | | | | | -0.2 | -0.2 |
| interest | | | | | | | |
--------------------------------------------------------------------------------
| Result for | | | | | | | -4.0 |
| the period | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| Other items | | | | | | | |
--------------------------------------------------------------------------------
| Investments | 39.7 | 0.5 | 7.6 | 0.3 | 0.0 | 0.6 | 48.7 |
--------------------------------------------------------------------------------
| Depreciatio | 16.3 | 0.1 | 5.9 | 0.4 | 0.0 | 0.7 | 23.4 |
| n | | | | | | | |
--------------------------------------------------------------------------------
TURNOVER
--------------------------------------------------------------------------------
| | 2007 | 2006 | Change | 2006 |
--------------------------------------------------------------------------------
| | 1 Jan- | 1 Jan- | % | 1 Jan- |
| | 31 | 31 | | 31 |
| | Mar | Mar | | Dec |
--------------------------------------------------------------------------------
| EUR mill. | | | | |
--------------------------------------------------------------------------------
| Scheduled Passenger | 391.2 | 352.8 | 10.9 | 1 522.1 |
| Traffic | | | | |
--------------------------------------------------------------------------------
| Leisure Traffic | 116.6 | 109.4 | 6.6 | 386.8 |
--------------------------------------------------------------------------------
| Aviation Services | 110.8 | 102.2 | 8.4 | 407.5 |
--------------------------------------------------------------------------------
| Travel Services | 20.7 | 22.6 | -8.4 | 87.4 |
--------------------------------------------------------------------------------
| Group eliminations | -110.8 | -106.7 | 3.8 | -414.2 |
--------------------------------------------------------------------------------
| Total | 528.5 | 480.3 | 10.0 | 1 989.6 |
--------------------------------------------------------------------------------
OPERATING PROFIT EXCLUDING THE DISPOSAL OF THE CAPITAL ASSETS AND FAIR VALUE
CHANGES OF DERIVATIVES AND REORGANIZATION EXPENSES
--------------------------------------------------------------------------------
| | 2007 | 2006 | Change | 2006 |
--------------------------------------------------------------------------------
| | 1 Jan- | 1 Jan- | % | 1 Jan- |
| | 31 | 31 | | 31 |
| | Mar | Mar | | Dec |
--------------------------------------------------------------------------------
| EUR mill. | | | | |
--------------------------------------------------------------------------------
| Scheduled Passenger | -0.3 | -4.4 | -93.2 | 28.6 |
| Traffic | | | | |
--------------------------------------------------------------------------------
| Leisure Traffic | 5.6 | 6.2 | -9.7 | 18.6 |
--------------------------------------------------------------------------------
| Aviation Services | 3.3 | -3.6 | -191.7 | -24.5 |
--------------------------------------------------------------------------------
| Travel Services | 1.3 | 0.3 | 333.3 | 2.3 |
--------------------------------------------------------------------------------
| Unallocated items | -4.1 | -3.6 | 13.9 | -13.8 |
--------------------------------------------------------------------------------
| Total | 5.8 | -5.1 | - | 11.2 |
--------------------------------------------------------------------------------
EMPLOYEES AVERAGE BY SEGMENT
--------------------------------------------------------------------------------
| | 2007 | 2006 | Change |
--------------------------------------------------------------------------------
| | 1 Jan- | 1 Jan- | % |
| | 31 Mar | 31 Mar | |
--------------------------------------------------------------------------------
| Scheduled Passenger Traffic | 4 121 | 4 017 | 2.6 |
--------------------------------------------------------------------------------
| Leisure Traffic | 355 | 351 | 1.1 |
--------------------------------------------------------------------------------
| Aviation Services | 3 649 | 3 734 | -2.3 |
--------------------------------------------------------------------------------
| Travel Services | 1 131 | 1 162 | -2.7 |
--------------------------------------------------------------------------------
| Other functions | 156 | 229 | -31.9 |
--------------------------------------------------------------------------------
| Finnair Group Total | 9 412 | 9 493 | -0.9 |
--------------------------------------------------------------------------------
SECONDARY REPORTING FORMAT - GEOGRAPHICAL SEGMENTS
TURNOVER OUTSIDE THE GROUP BY SALES DESTINATION
--------------------------------------------------------------------------------
| | 2007 | 2006 | Change | 2006 |
--------------------------------------------------------------------------------
| | 1 Jan- | 1 Jan- | % | 1 Jan- |
| | 31 Mar | 31 | | 31 Dec |
| | | Mar | | |
--------------------------------------------------------------------------------
| EUR mill. | | | | |
--------------------------------------------------------------------------------
| Finland | 108.2 | 118.2 | -8.5 | 436.7 |
--------------------------------------------------------------------------------
| Europe | 232.9 | 214.8 | 8.4 | 936.5 |
--------------------------------------------------------------------------------
| Asia | 148.0 | 105.3 | 40.6 | 482.0 |
--------------------------------------------------------------------------------
| North America | 11.3 | 12.4 | -8.9 | 66.4 |
--------------------------------------------------------------------------------
| Others | 28.1 | 29.6 | -5.1 | 68.0 |
--------------------------------------------------------------------------------
| Total | 528.5 | 480.3 | 10.0 | 1 989.6 |
--------------------------------------------------------------------------------
AIR TRAFFIC 1 January - 31 March 2007
--------------------------------------------------------------------------------
| | Tota | Euro | North | Asia | Domest | Schedul | Leisu | Cargo |
| | l | pe | Amer | | ic | ed | re | |
| | traf | | ica | | | Traffic | | |
| | fic | | | | | Total | | |
--------------------------------------------------------------------------------
| Passengers | 2 | 1 | 27 | 257 | 555 | 1 902 | 288 | |
| (1000) | 190 | 063 | | | | | | |
--------------------------------------------------------------------------------
| %-change | 2.5 | 5.5 | -5.8 | 29.9 | -8.2 | 3.4 | -3.3 | |
--------------------------------------------------------------------------------
| Cargo and | 21 | 5 | 1 546 | 12 | 930 | 19 707 | 119 | 21 659 |
| mail | 659 | 134 | | 097 | | | | |
| (tonnes) | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | 0.5 | -13. | -10.8 | 19.7 | -9.3 | 4.9 | 5.2 | 0.5 |
| | | 2 | | | | | | |
--------------------------------------------------------------------------------
| Available | 6 | 1 | 227 | 2 281 | 496 | 4 981 | 1 614 | |
| seat-kilom | 595 | 976 | | | | | | |
| etres mill | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | 9.5 | 6.0 | -9.5 | 35.9 | -12.1 | 14.3 | -3.1 | |
--------------------------------------------------------------------------------
| Revenue | 5 | 1 | 180 | 1 784 | 301 | 3 517 | 1 484 | |
| passenger | 001 | 252 | | | | | | |
| kilometres | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | 11.2 | 10.0 | -5.8 | 35.4 | -5.4 | 18.6 | -3.1 | |
--------------------------------------------------------------------------------
| Passenger | 75.8 | 63.4 | 79.3 | 78.2 | 60.6 | 70.6 | 91.9 | |
| load | | | | | | | | |
| factor % | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | 1.2 | 2.3 | 3.1 | -0.3 | 4.3 | 2.6 | 0.0 | |
--------------------------------------------------------------------------------
| Available | 975 | | | | | | | 278 |
| tonne-kilo | | | | | | | | |
| metres | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | 11.6 | | | | | | | 45.2 |
--------------------------------------------------------------------------------
| Revenue | 564 | | | | | | | 116 |
| tonne-kilo | | | | | | | | |
| metres | | | | | | | | |
| mill | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | 10.3 | | | | | | | 5.6 |
--------------------------------------------------------------------------------
| Overall | 57.8 | | | | | | | 41.7 * |
| load | | | | | | | | |
| factor % | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | -0.7 | | | | | | | -15.6 |
--------------------------------------------------------------------------------
* Operational calculatory capacity
CONTINGENT LIABILITIES AND DERIVATIVE CONTRACTS EUR mill.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 31 Mar 2007 | 31 Mar 2006 | 31 Dec 2006 |
--------------------------------------------------------------------------------
| Other contingent liabilities | | | |
--------------------------------------------------------------------------------
| Pledges on own behalf | 234.7 | 254.5 | 236.9 |
--------------------------------------------------------------------------------
| Guarantees on group | 663.9 | 412.4 | 536.3 |
| undertakings | | | |
--------------------------------------------------------------------------------
| Total | 898.6 | 666.9 | 773.2 |
--------------------------------------------------------------------------------
| Aircraft lease obligations | 367.3 | 459.3 | 389.8 |
--------------------------------------------------------------------------------
| Total | 1 265.9 | 1 126.2 | 1 163.0 |
--------------------------------------------------------------------------------
CONTINGENT LIABILITIES AND DERIVATIVE CONTRACTS EUR mill.
--------------------------------------------------------------------------------
| Derivative | 31 Mar 2007 | 31 Mar 2006 | 31 Dec 2006 |
| contracts | | | |
--------------------------------------------------------------------------------
| Currency | Nominal | Fair | Nominal | Fair | Nominal | Fair |
| derivatives | value | value | value | value | value | value |
| | (EUR | (EUR | (EUR | (EUR | (EUR | (EUR |
| | mill.) | mill.) | mill.) | mill.) | mill.) | mill.) |
--------------------------------------------------------------------------------
| Hedge | | | | | | |
| accounting | | | | | | |
| items | | | | | | |
--------------------------------------------------------------------------------
| Forward | 270.0 | -8.5 | 154.5 | 3.8 | 260.2 | -8.2 |
| contracts. | | | | | | |
| Jet Fuel | | | | | | |
| currency | | | | | | |
| hedging | | | | | | |
--------------------------------------------------------------------------------
| Forward | 455.6 | -9.5 | 211.3 | 3.2 | 324.7 | -9.1 |
| contracts. | | | | | | |
| Hedging of | | | | | | |
| Aircraft | | | | | | |
| purchace | | | | | | |
| price | | | | | | |
--------------------------------------------------------------------------------
| Forward | 59.0 | -1.4 | 54.5 | 0.5 | 63.8 | -1.9 |
| contracts. | | | | | | |
| Currency | | | | | | |
| hedging of | | | | | | |
| lease | | | | | | |
| payments | | | | | | |
--------------------------------------------------------------------------------
| | 784.6 | -19.4 | 420.3 | 7.5 | 648.6 | -19.2 |
--------------------------------------------------------------------------------
| Currency | | | | | | |
| derivatives | | | | | | |
| at fair value | | | | | | |
| through | | | | | | |
| profit or | | | | | | |
| loss | | | | | | |
--------------------------------------------------------------------------------
| Operating | 9.4 | -0.4 | 72.6 | 1.6 | 26.7 | -1.3 |
| cash flow | | | | | | |
| hedging | | | | | | |
--------------------------------------------------------------------------------
| Balance sheet | 83.6 | -0.3 | 88.6 | -1.1 | 94.1 | -0.6 |
| hedging | | | | | | |
--------------------------------------------------------------------------------
| Currency call | 41.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Currency put | 41.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Total | 175.6 | -0.7 | 161.2 | 0.5 | 120.9 | -2.0 |
--------------------------------------------------------------------------------
| Currency | 960.2 | -20.1 | 581.5 | 8.0 | 769.5 | -21.2 |
| derivatives, | | | | | | |
| total | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 31 Mar 2007 | 31 Mar 2006 | 31 Dec 2006 |
--------------------------------------------------------------------------------
| | Nominal | Fair | Nominal | Fair | Nominal | Fair |
| | value | value | value | value | value | value |
| | (tonnes) | (EUR | (tonnes) | (EUR | (tonnes) | (EUR |
| | | mill.) | | mill.) | | mill.) |
--------------------------------------------------------------------------------
| Commodity | | | | | | |
| derivatives | | | | | | |
--------------------------------------------------------------------------------
| Hedge | | | | | | |
| accounting | | | | | | |
| items | | | | | | |
--------------------------------------------------------------------------------
| Jet Fuel | 534 800 | 4.1 | 320 200 | 18.1 | 510 400 | -12.8 |
| swaps | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | |
--------------------------------------------------------------------------------
| Commodity | | | | | | |
| derivatives | | | | | | |
| at fair value | | | | | | |
| through | | | | | | |
| profit or | | | | | | |
| loss | | | | | | |
--------------------------------------------------------------------------------
| Jet Fuel | 51 400 | -1.1 | 69 600 | 0.1 | 79 300 | -5.1 |
| Forward | | | | | | |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Gasoil | 15 000 | 0.7 | 0 | 0.0 | 0 | 0.0 |
| forward | | | | | | |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Jet | 184 500 | 0.0 | 0 | 0.0 | 112 500 | 0.0 |
| differential | | | | | | |
| forward | | | | | | |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Options | | | | | | |
--------------------------------------------------------------------------------
| Jet Fuel call | 47 000 | 0.5 | 25 000 | 1.0 | 35 000 | 0.3 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Jet Fuel put | 94 000 | -0.4 | 46 000 | -0.7 | 70 000 | -0.5 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Gasoil call | 45 000 | 0.8 | 0 | 0.0 | 9 000 | 0.0 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Gasoil put | 81 000 | -0.7 | 0 | 0.0 | 18 000 | 0.0 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Total | | 3.9 | | 18.5 | | -18.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 31 Mar 2007 | 31 Mar 2006 | 31 Dec 2006 |
--------------------------------------------------------------------------------
| | Nominal | Fair | Nominal | Fair | Nominal | Fair |
| | value | value | value | value | value | value |
| | (EUR | (EUR | (EUR | (EUR | (EUR | (EUR |
| | mill.) | mill.) | mill.) | mill.) | mill.) | mill.) |
--------------------------------------------------------------------------------
| Interest rate | | | | | | |
| derivatives | | | | | | |
--------------------------------------------------------------------------------
| Cross | | | | | | |
| currency | | | | | | |
| Interest rate | | | | | | |
| swaps | | | | | | |
--------------------------------------------------------------------------------
| Hedge | 38.5 | -14.1 | 55.9 | -14.4 | 42.5 | -15.2 |
| accounting | | | | | | |
| items | | | | | | |
--------------------------------------------------------------------------------
| Cross | 20.6 | -10.3 | 27.9 | -10.2 | 22.1 | -10.7 |
| currency | | | | | | |
| interest rate | | | | | | |
| swaps at fair | | | | | | |
| value through | | | | | | |
| profit or | | | | | | |
| loss | | | | | | |
--------------------------------------------------------------------------------
| Total | 59.1 | -24.4 | 83.8 | -24.6 | 64.7 | -25.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest rate | | | | | | |
| swaps | | | | | | |
--------------------------------------------------------------------------------
| Hedge | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| accounting | | | | | | |
| items | | | | | | |
--------------------------------------------------------------------------------
| Interest rate | 20.0 | 1.0 | 20.0 | 0.8 | 20.0 | 1.0 |
| swaps at fair | | | | | | |
| value through | | | | | | |
| profit or | | | | | | |
| loss | | | | | | |
--------------------------------------------------------------------------------
| Total | 20.0 | 1.0 | 20.0 | 0.8 | 20.0 | 1.0 |
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