Group Report 2008 www.finnair.com/group 1 Financial Report - PDF document

Financial Report Group Report 2008 www.finnair.com/group

1 Financial Report CONTENTS Finnair Group Key Figures ....................................................... 2 Board of Directors’ Report ..................................................... 4 Shares and Shareholders .......................................... 13 Financial Indicators 2006–2008 ............................ 18 Calculation of Key Indicators .................................. 19 Financial Statements, 1 January–31 December 2008 ... 21 Consolidated Income Statement ........................... 22 Consolidated Balance Sheet .................................... 23 Consolidated Cash Flow Statement ...................... 24 Shareholders’ Equity ................................................. 26 Notes to the Financial Statements ........................ 27 Board of Directors’ Proposal on the Dividend ... 79 Auditors’ Report ......................................................... 80 Corporate Governance .......................................................... 81 Risk Management .................................................................... 84 Stock Exchange Releases in 2008 ....................................... 87 The Brokerage Firms analysing Finnair Equity ................ 89 Information for Shareholders .............................................. 90 Contact Information .............................................................. 92

2 Financial Report Finnair Group Key figures FINNAIR GROUP KEY FIGURES 2008 2007 2006 Turnover EUR mill. 2,263 2,181 1,990 Operating profit (adjusted), EBIT 1) EUR mill. 7 97 11 Operating profit (adjusted), EBIT 1) % of turnover % 0.3 4.4 0.6 Operating profit, EBIT EUR mill. -52 142 -11 Result before taxes EUR mill. -56 139 -15 Unit revenues on flight operations c/RTK 70.1 72.6 74.0 Unit costs on flight operations c/ATK 43.5 43.5 46.0 Earning per share EUR -0.33 1.04 -0.14 Equity per share EUR 6.04 7.70 6.14 Gross investment EUR mill. 233 326 252 Interest-bearing net debt EUR mill. -90 -222 43 Equity ratio % 38.1 47.1 37.2 Gearing % -11.6 -22.5 7.1 Adjusted gearing % 63.2 35.1 112.8 Return on capital employed (ROCE) % -2.5 14.2 -0.1 Average number of employees 9,595 9,480 9,598 1) Excluding capital gains, non recurring items and change in fait value of derivatives.

Finnair Group Key Figures 3 FINNAIR GROUP FLEET 31 DECEMBER 2008 Seats Number Owned Leased Average age Airbus A319 105–123 11 7 4 7.2 Airbus A320 111–159 12 6 6 6.4 Airbus A321 136–196 6 4 2 7.9 Airbus A340 269 5 5 0 3.6 Boeing MD-11 282 6 1 5 14.2 Boeing B757 227 7 0 7 9.6 Embraer 170 76 10 6 4 2.7 Embraer 190 100 8 4 4 1.4 Total 65 33 32 6.4 FINNAIR TRAFFIC PERFORMANCE 2004–2008 2008 2007 2006 2005 2004 Flight hours 232,389 228,487 211,813 202,070 196,795 Flight kilometres 1,000 155,300 147,094 133,890 125,410 121,027 Available seat kilometres mill. 29,101 26,878 23,846 23,038 21,907 Revenue passenger kilometres mill. 21,896 20,304 17,923 16,735 15,604 Passenger load factor % 75.2 75.5 75.2 72.6 71.2 Available tonne kilometres mill. 4,485 4,074 3,602 3,400 3,162 Revenue tonne kilometres mill. 2,545 2,365 2,100 1,940 1,791 Overall load factor % 56.7 58.0 58.3 57.0 56.6 Passengers 1,000 8,270 8,653 8,792 8,517 8,149 Cargo and mail 1,000 kg 102,144 98,684 93,807 90,242 86,245

4 Financial Report Board of Directors’ Report for the Financial year 1 January–31 December 2008 Market and General Review A study for the full year revealed that In leisure traffic, 2008 was a peak year in In 2008 Finnair’s profitability clearly fell the business cycle. Due to good demand, Lei- revenue passenger kilometres of Europe- from the previous year, despite strong vol- an airlines (AEA) grew by little more than sure Flights’ capacity was increased by 10 per ume growth. The operational result re- one per cent from the previous year. Capac- cent. For winter season 2008/09, a wide-bod- mained weak. The key reasons were record ity growth was around three per cent. The ied aircraft plus crew was leased from Spain prices for fuel during the year and a sharp change from early-year growth figures to late- for direct, non-stop flights to Phuket, Thai- year declines in traffic volume and capacity land. As Aurinkomatkat-Suntours managed decline in average yield per passenger kilo- metre at the end of the year. was very marked. to sell its own production almost completely Attempts to increase prices during the Last year Finnair traffic grew clearly more at brochure prices without last-minute re- spring had a strongly adverse effect on the strongly than the European average due to the ductions, the business area’s result rose to passenger load factors of Finnair’s scheduled company’s investment in Asia. Finnair’s passen- the best in its history, despite oil prices ris- flights. A reduction of business travel and a ger load factor remained, at the previous year’s ing to record levels. Aurinkomatkat’s own shift to cheaper price classes rapidly under- level, however, despite capacity additions. package tour production, sales and market- mined the average yield from flight tickets. In 2008 Finnair carried more than 1.3 ing began in Russia. It was not possible to adjust the cost struc- million passengers in Asian traffic. Asian traf- The price of fuel, which remained at a ture to a corresponding degree. The generally fic growth was more than 16 per cent from record high until the autumn, increased strong second and third quarters suffered the previous year. Scheduled passenger traffic Finnair’s fuel costs by nearly 26 per cent, from these factors. Declining profitability overall grew by more than six per cent, and despite an effective hedging policy. Lower jet development continued in the final quar- leisure flights by more than 12 per cent. In fuel prices, which have fallen from their peak, ter and sent the operational result clearly terms of traffic volumes, Finnair remains a will reduce fuel costs with delayed effect. into the red. growth company. Air cargo traffic on Finnair’s Asian flights In 2008 air transport followed the gener- Scheduled passenger traffic capacity has grew along with increased capacity until Sep- al economic trend, if in a slightly more pro- already been cut from original plans by nearly tember of last year, at which time the world- nounced way. The early part of the year was ten per cent. The 2009 passenger kilometre wide decline in cargo demand that had begun a time of strong growth, but development of capacity will be at least three per cent below in the spring was also reflected in Finnair’s demand weakened both quantitatively and the 2008 level. If the present trend in demand cargo demand in the final quarter. The air continues, capacity cuts will continue. structurally towards the end of the year. cargo market fell by around 20 per cent in Revenue tonne kilometers Number of passengers Passenger load factor domestic international mill. tnkm mill. passengers % 3,000 10.0 100 2,250 7.5 75 1,500 5.0 50 750 2.5 25 04 05 06 07 08 04 05 06 07 08 04 05 06 07 08