Finnair Oyj - Company Announcement

Finnair and Flybe to set up Flybe Nordic and acquire Finnish Commuter Airlines

FINNAIR PLC          STOCK EXCHANGE RELEASE         1 July 2011 AT 09:00


Finnair and the largest European regional airline Flybe of UK announced today
that the companies will jointly acquire Finnish Commuter Airlines (FCA), a
Finnish regional carrier owned by Finncomm Oy. The companies will create a new
joint venture called Flybe Nordic AB, to be split 60 % Flybe and 40 % Finnair.
Flybe Nordic AB's board will comprise three representatives from Flybe, and two
from Finnair. 

Flybe Nordic AB will acquire FCA for a total consideration of 25 million euro
plus net cash in the acquired business at completion. Under the terms of the
joint venture, Flybe will pay 12 million euro cash and Finnair 13 million euro
cash. Completion is expected to take place within four weeks from signing. FCA
will continue operating FCA's existing domestic routes under the Flybe brand.
Flybe plans to take over the day-to-day operation and management of the airline
from August 1, 2011. "The joint venture with Flybe and the acquisition of FCA are 100% in line with
the Finnair strategy. Our target is to partner with the industry best to create
added value to our customers and shareholders. FCA's current network is a
tremendous asset when we continue to further develop our regional network. We
believe that Flybe's point-to-point experience and their unique business model
will complement Finnair's international network competencies in an optimal
manner and enables us to build a true Nordic regional champion", says Finnair
CEO Mika Vehviläinen. "We are excited about the co-operation with Flybe", notes Vehviläinen. "Finnair
and Flybe have complementing competencies and we believe that Flybe's
experience in regional flying combined with Finnair's local knowledge and
international operations will be a winning combination. We look forward working
together and building a new strong player in the Nordic and Baltic markets."

Finnair to purchase FCA fleet and lease it on market terms

The FCA fleet will transfer to Finnair: Finnair will buy the FCA fleet of nine
ATR 72 aircraft at market price and lease them to FCA, owned by Flybe Nordic.
In addition, Finnair has committed to purchase the three Finncomm ordered,
high-demand ATR 72s, to be delivered autumn 2011 and autumn 2012. The aircraft
will be leased directly to FCA at a market price. 

The remaining four ATR 42 aircraft owned by Finncomm Oy will be leased to FCA
for certain predefined periods. This FCA fleet of modern and cost effective
turbo-prop planes allows FCA operate value-adding regional flights in the
target markets. In addition, FCA will continue leasing of two Finnair owned
E170 aircraft. 

Finnair's investment in these nine ATR 72's will be approximately 104 million
euro including 70 million euro debt liabilities for the ATR fleet. "There's a huge demand and undersupply in the industry for the ATR aircrafts.
Due to the fuel efficiency they are optimal for regional flying. For Finnair
this is a great opportunity to strengthen our fleet and as such it is a smart
investment and ensures that our new venture will have the required capacity
from day one", continues Vehviläinen. 

Finnair has partnered with FCA for over 10 years to provide point to point and
feeder traffic services in various Finnish and Baltic markets. FCA is Finland's
largest domestic airline by operations, currently flying approximately 900,000
passengers annually.  It currently has 15 regional aircraft and an annual
turnover of approximately €90 million. The company employs approximately 400
people. 

FCA will continue to operate its current routes under Flybe brand but the
intention of Finnair and Flybe is to develop the joint venture to become the
leading regional airline for the Nordic and Baltic countries in the coming
years. 

The acquisition is subject to approval of the relevant competition authorities.


Note to the editors:
The companies will shed more light to the future visions of the company in a
press conference to be held today at 11 am Finnish time at Vip President
-terminal, Liikelentotie 10, Vantaa. 


Finnair Plc
Communications
1.7.2011

Further information:
Erno Hildén, Chief Financial Officer
tel. +358 9 818 8550

Arja Suominen, Senior Vice President, Communications and Corporate
Responsibility 
tel. +358 9 818 4028

Kati Kaksonen, Investor Relations Officer
tel. +358 9 818 2780


Finnair
Finnair is the fast boutique airline between Asia and Europe. Established in
1923, Finnair is one of the world's longest continuously operating airlines.
Following its strategy, Finnair has in recent years emerged as a major player
in connecting East and West. Finnair's route network has the fastest
connections between 10 destinations in Asia and 50 in Europe making Helsinki a
significant hub between Asia and Europe. The company has determinately invested
in a new fleet which consumes significantly less fuel than older aircrafts.
Finnair Plus program serves Finnair's frequent flyers, who will also benefit
from Finnair's membership in the quality oneworld alliance and its cooperation
with other industry partners. 

Flybe
Headquartered in Exeter, UK, Flybe is Europe's largest regional airline and the
UK's largest domestic airline, supported by one of Europe's leading regional
aircraft maintenance, repair and overhaul (‘‘MRO'') businesses, trading as
Flybe Aviation Services and a developing training business, trading as the
Flybe Training Academy. 

The Group currently operates 69 aircraft from 14 UK domestic airport bases and
serves 73 airports in total over the UK and twelve other European countries.
Last year Flybe flew 7.2 million passengers, with business travel making up 45%
of its customers. 

Flybe floated on the London Stock Exchange in December 2010.