Finnair Group Financial year January 1-December 31, 2001
State of the airline industry Business travel dropped dramatically Events of September 2001 From beauty contest to fight for survival Production cuts 10-25%, aircraft grounded Over 150 000 in personnel layoffs Result estimates crumble, cash flow becomes critical Bankruptcies - slow adjusters with weak balance sheets fall Industry structural changes begin Insurance premiums Subsidies distort competition
Finnair 2001 New Group organisation After good first two months, spring brings downward turn in demand Dramatic drop in business travel Investments at record level Taking control of September situation Quick - and successful - cuts in production Additional costs from safety 115 million Euro costs savings plan Strong growth in Asian traffic (+17,2 %) High quality level maintained Market share has grown Profitability in sharp decline
% 20,0 Premium travel vs. non premium Scheduled international traffic 15,0 10,0 5,0 0,0-5,0-10,0-15,0-20,0-25,0 01.00 02.00 03.00 04.00 05.00 06.00 07.00 08.00 09.00 10.00 11.00 12.00 01.01 02.01 03.01 04.01 05.01 06.01 07.01 08.01 09.01 10.01 11.01 12.01 01.02 Premium class Non premium
Q4 in short Result excl. capital gains dropped from 4.4 mill. Euro to -21.3 mill. Euro Result includes 18.4 mill. Euro in additional depreciation As result of quick adjustment measures, operating expenses fell 5.9%, without extra depreciation -10.1% Fuel costs declined by 21.8% Positive cash flow Earnings before depreciation, aircraft leasing payments and capital gains (EBITDAR) 43.8 (47.5) mill. Euro Excellent improvement in cabin factors Dec 2001-Feb 2002
Group Key figures EUR mill. Q4 Q4 12 mth 12 mth 2001 2000 2001 2000 Turnover 379.9 436.2 1631.0 1658.1 EBITDAR, excluding capital gains 43.8 47.5 195.6 228.0 % of turnover 11.5 % 10.9 % 12.0 % 13.8 % EBIT -21.7 28.6 13.3 110.7 % of turnover -5.7 % 6.6 % 0.8 % 6.7 % EBIT, excluding capital gains -22.4 4.0-8.3 51.2 % of turnover -5.9 % 0.9 % -0.5 % 3.1 % Profit/loss before extraordinary items and -20.6 29.0 8.9 120.1 taxes % of turnover -5.4 % 6.6 % 0.5 % 7.2 % Earnings per share, EUR -0.15 0.20 0.08 0.95 Equity per share, EUR 7.29 7.60 Net Debt, EUR mill. 212 74 Equity ratio, % 41.7 % 42.6 % Gearing % 34.3 % 11.5 %
Development of Group Business Areas TURNOVER Q1 Q2 Q3 Q4 Total EUR mill. Scheduled traffic 295,9 313,3 269,0 261,9 1140,1 Leisure Traffic 93,9 71,0 90,4 79,3 334,6 Cargo 28,6 33,5 28,4 25,1 115,6 Aviation Services 116,6 129,2 123,6 111,9 481,3 Travel Services 22,5 26,5 21,7 23,0 93,7 Support Services 24,2 22,3 22,8 28,0 97,3 less internal items -161,7-155,5-165,1-149,3-631,6 Total 420,1 440,2 390,8 379,9 1631,0 Previous year 398,8 414,2 408,9 436,2 1658,1 Change % 5,3 6,3-4,4-12,9-1,6
Development of Group Business Areas EBIT Q1 Q2 Q3 Q4 Total EUR mill. Scheduled traffic 18,1 18,4-20,1-35,1-18,7 Leisure Traffic 0,4-0,8 4,3-0,2 3,7 Cargo -1,1-0,1-4,3 0,3-5,2 Aviation Services 1,3 11,8 8,1 4,3 25,6 Travel Services 1,0 2,1-1,9 2,6 3,8 Support Services -5,1-1,0 3,8 6,4 4,1 Total 14,7 30,3-10,1-21,7 13,3 Previous year -11,3 55,2 38,2 28,6 110,7
Yield and unit cost development 15 Airline operations, year on year change 10 5 % 0-5 -10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1999 2000 2001 Yield Unit costs
EBIT per quarter EUR mill. 60 50 EBIT from operations Capital gains 40 30 20 10 0-10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4-20 -30 1998 1999 2000 2001
EUR mill. 30 20 10 0-10 -20-30 -40-50 Change in EBIT per quarter Excluding capital gains from asset disposals Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1998 1999 2000 2001
Jet fuel development in 2001 Index Index 100 = 2000 200 180 160 140 120 100 80 60 I II III IV V VI VII VIII IX X XI XII
EBITDAR, excluding capital gains 70 60 50 EUR mill. 40 30 20 2000 2001 10 0 Q1 Q2 Q3 Q4 Year 2001: EBITDAR / net financial costs and aircraft lease payments = 2.6
Operational cash flow and capex EUR mill. 300 250 200 150 100 50 0 1997/98 1998/99 1999/00 2000 2001 Cash flow Investments
EUR mill. 300 250 Record capex in 2001 New funding solutions for 2002-2003 200 150 100 50 0 1997/98 1998/99 1999/00 2000 2001 2002 2003 Other investments Buildings Flight equipment
EUR mill. 500 Net Debt EUR 212 million at December 31,2001 400 300 200 100 0-100 1997/98 1998/99 1999/00 2000 2001 Interest bearing debt Liquid funds Net Debt
Finnair has a sound balance sheet Equity ratio and gearing % 50 45 40 35 30 25 20 15 10 5 0-5 -10 1997/98 1998/99 1999/00 2000 2001 Equity ratio Gearing
Adjusted Gearing % 140 120 100 80 60 40 20 0-20 1997/98 1998/99 1999/00 2000 2001 * * Including year 2001 aircraft lease payments of EUR 71.7 million multiplied by seven
ROCE and ROE Rolling 12 months 18 15 12 % 9 6 3 0 Q4 1999 Q1 2000 Q2 2000 Q3 2000 Q4 2000 Q1 2001 Q2 2001 Q3 2001 Q4 2001 ROE ROCE
EUR mill. 40 Dividend pay-out % of EPS 100 30 80 60 20 40 10 20 0 1997/98 1998/99 1999/00 2000 2001* * Proposal to the AGM 0
Finnair ebusiness evolves Online sales increased by 178% in 2001 Online share was 2,1 % of total sales, but close to 10 % on domestic traffic Finnair s automatic departure gate, egate, won the International Information Technology Excellence Award The pan-european travel portal Opodo, in which Finnair is a minority shareholder together with 8 other European flag carriers, started its operations last year in Germany, in January in the United Kingdom and in March in France.
Better connections 1. Helsinki-Skavsta route opening in October speeded up connections between Finland and Southern Stockholm s business centres, avoiding Stockholm s bottle necks 2. Helsinki-Milan route made non-stop offering quick morning and evening connections 3. Helsinki-Bangkok daily service 4. Helsinki-Beijing adding service from three times a week to four in February and five in September 5. Helsinki-Hong Kong new route operated three times a week 6. Helsinki-Paris route gets fourth daily flight 7. Helsinki-Dublin route made nonstop
Better service for core customers 1. Renewed and 50% larger Business Class on all long haul flights 2. Even more Airbus aircraft preferred by business passengers - more room (total 17 aircraft in 2002) 3. Finnair has nonstop flights to almost all of its international destinations 4. 30 nonstop international destinations from Helsinki 5. Most punctual in Europe, customer service at top level in Europe
From crisis to growth Focus on core businesses Succesful damage control during Q4/2001 Implementation of costs savings program Fleet renewal with flexibility of financing Strong growth in Asian traffic Start of Aero Airlines Promising recovery in demand Target set for better operational result than previous year
Total annual market CANADA UNITED STATES New York Tokyo Beijing 50 mill. +3.5% London Paris Helsinki EUROPE 25 mill. RUSSIA +5.5% Hong Kong Bangkok CHINA Singapore AFRICA Ow-passengers/year (2000) Average estimated growth/year (2001-2010) Source: Boeing/Airbus
Feeder market to Asia HEL has a bigger natural market than CPH CPH HEL Asia
Most trusted airlines in Nordic countries European Trusted Brands 2002, Readers Digest Finland Finnair 97 % Sweden SAS 85 % Norway SAS 57 % Denmark SAS 48 %
Most trusted airlines in Europe Finnair SAS (Sweden) Air France KLM LOT Aeroflot TAP Lufthansa Iberia Swissair Alitalia Malev SAS (Norway) CSA Sabena British Airways SAS (Denmark) Air Slovakia 17 52 51 48 57 57 63 79 77 76 76 75 74 74 70 68 85 97 0 25 50 75 100 Lähde: European Trusted Brands 2002/ Reader s Digest