Finnair Oyj — Earnings Release 2020

Feb 18, 2021

Finnair Financial Statements Release 1 January–31 December 2020

Finnair Financial Statements Release 1 January–31 December 2020

Finnair Plc        Financial Statement Release      18 February 2021 at 9.00
a.m. EET

Healthy financial position secured through extensive recapitalisation and cost
reset

October–December 2020

· Earnings per share were -0.01 euros (0.03)*.
· Revenue decreased by 86.8% to 102.0 million euros (774.9).
· Comparable operating result was -162.9 million euros (31.2). Operating
result was -14.6 million euros (34.7). The difference is mainly explained by a
one-off effect of 132.8 million euros related to changes in Finnair pension
fund’s defined benefit plans.
· Net cash flow from operating activities was -178.6 million euros (120.1),
and net cash flow from investing activities was 135.3 million euros (-185.7).**
· Number of passengers decreased by 92.1% to 0.3 million (3.5).
· Available seat kilometres (ASK) declined by 89.2%.
· Passenger load factor (PLF) was 29.2% (79.0).

January–December 2020

· Earnings per share were -0.51 euros (0.09).
· Revenue decreased by 73.2% to 829.2 million euros (3,097.7).
· Comparable operating result was -595.3 million euros (162.8). Operating
result was -464.5 million euros (160.0). The difference mainly relates to the
changes in defined benefit plans.
· Cash funds were 823.7 million euros (952.7) and equity ratio was 24.6 per
cent (24.9).
· Financial net expenses were 216.5 million euros (78.8) and they increased
significantly, with c. 136 million euros of the increase related to jet fuel and
foreign exchange hedging that was reclassified from other comprehensive income.
· Net cash flow from operating activities was -1,043.1 million euros (564.5),
and net cash flow from investing activities was 351.6 million euros (-513.2).**
· Number of passengers decreased by 76.2% to 3.5 million (14.7).
· ASK declined by 72.6%.
· PLF was 63.0% (81.7).
· The Board of Directors proposes to the Annual General Meeting that no
dividend be distributed for 2020.

*     Unless otherwise stated, comparisons and figures in parentheses refer to
the comparison period, i.e. the same period last year.

**   In Q4, net cash flow from investing activities includes 57.3 million euros
of redemptions in money market funds or other financial assets (maturity over
three months). In 2020, the investments decreased in net terms by 439.9 million
euros. They are part of the Group’s liquidity management.

Outlook

Guidance issued on 28 October 2020:

Due to the continued strict travel restrictions, the comparable operating loss
in Q4 will be of a similar magnitude as in Q2 and Q3.

As Finnair has announced today, certain amendments to the terms of Finnair’s
pension fund have been approved and these and potential other similar changes
are expected to have a significant positive one-off impact on Finnair's
operating result in Q4. This impact is not included in the expected comparable
operating result.

Based on the current assumptions, the revenue and capacity (measured in ASKs)
will both decrease more than 70% in 2020 compared to 2019.

Finnair updates its outlook and guidance in connection with the financial
statements bulletin for 2020.

New guidance on 18 February 2021:

Due to the continued strict travel restrictions, the comparable operating loss
in Q1 2021 will be of a similar magnitude as in Q2, Q3 and Q4 2020.

In Q1 2021, Finnair continues to operate a limited network. As the visibility
thereafter is weak and there are several scenarios of the timing of the recovery
in demand, the company will not provide guidance on full year revenue.

Finnair will update its outlook and guidance in connection with the Q1 2021
interim report.

CEO Topi Manner:

The year 2020 will go down in history as the most difficult peacetime year in
commercial aviation’s 100 years of existence. The COVID-19 pandemic has been
first and foremost a human crisis and health crisis that has touched hundreds of
millions of people. It has also been a severe crisis for aviation and for the
tens of millions of people globally whose livelihoods depend on international
travel, including us at Finnair. Yet in this uncharted territory we have built a
path for ourselves through the pandemic. For that, I’m deeply grateful to the
entire Finnair team. The commitment and resilience of our people during this
year of challenges is a source of inspiration and hope.

Amid lockdowns and exceptional restrictions to travel across countries and
continents, airlines suffered massive losses as passenger flows diminished.
During the year, we carried 3.5 million passengers (14.7) and our revenue for
the year shrank to 829.2 million euros (3,097.7); a drop of more than 70 per
cent on both measures. Our result for the year was -523.2 million euros (74.5).
Thanks to the rights issue of nearly the same size, our balance sheet and cash
reserves remained at a healthy level. Our equity ratio was 24.6% (24.9) and our
cash reserves amounted to 823.7 million euros at year end (952.7).

During the year, we focused on securing the continuation of operations and our
long-term competitiveness in a post-pandemic market that will be different from
what it was before the pandemic. Our financing measures were timely and
comprehensive, and we secured approximately 1.8 billion euros of new financing,
which included an oversubscribed rights issue of over 500 million euros. In
addition, together with the State of Finland, we are preparing a hybrid loan of
up to 400 million euros, which awaits EU approval. The support from the State of
Finland and other shareholders has been critically important in this situation.

As the pandemic situation continued to be challenging in the latter part of the
year, we operated a limited network of approximately 50 destinations with 75
daily flights. Cargo, supported by shortage of capacity and increased prices in
the market, played a significant role in our revenue. During 2020, we operated
over 1,300 cargo-only flights.

In 2020, we paid over 460 million euros in refunds to customers. Our health
-related measures and flexible booking terms enabled travelling for those who
needed to travel. Customers appreciated our actions and our net promoter score
(NPS) rose to record heights during the year. In the last quarter, our NPS was
52. We are grateful for the trust and loyalty our customers have shown us.

We made overarching adjustments to our operations and processes during the year
and reduced costs by over 1.5 billion euros compared to 2019. Of this, 30 per
cent was fuel related. Almost all our personnel were furloughed for a part of
the year and, unfortunately, furloughs continue for a large share of our
personnel. Our savings programme, targeting a permanent reduction of 140 million
euros of costs with full run-rate impact in 2022, proceeded well as we sought
savings from all parts of our operations. With these decisions, the number of
personnel at Finnair decreases altogether by 1,100 persons through reductions,
ending of fixed-term contracts, retirements, and natural attrition. The job
losses are saddening, but necessary. To support redundant employees find new
jobs, we have collaborated with employment authorities and training
organisations to build a comprehensive NEXT programme that has started with
encouraging results.

During the pandemic year, our focus has been on social and economic aspects of
sustainability, but we have not forgotten our environmental targets. Our long
-term target to reach carbon neutrality remains intact, and we will pay special
attention to reducing emissions, especially through fuel efficiency, as our
traffic gradually starts to grow.

We expect travel to begin to recover from summer 2021 onwards as vaccination
coverage increases and countries start lifting their travel restrictions. We
intend to come out stronger and serve our customers even better when the market
starts moving. We have enhanced the agility of our operations so that we can act
fast when our customers are again ready to travel.

Dividend policy and the Board’s proposal for the distribution of profit

The aim of Finnair’s dividend policy is to pay, on average, at least one-third
of the earnings per share as a dividend over an economic cycle. The aim is to
take into account the company’s earnings trend and outlook, financial situation
and capital needs in the distribution of dividends.

In 2020, earnings per share were -0.51 euros (0.09). Finnair Plc’s distributable
equity amounted to 361,672,701.47 euros on 31 December 2020. The Board of
Directors proposes to the Annual General Meeting that no dividend be distributed
for 2020.

Financial reporting in 2021

The publication dates of Finnair’s financial reports in 2021 are the following:

· Interim Report for January–March 2021 on Tuesday 27 April 2021
· Half-year Report for January–June 2021 on Thursday 15 July 2021
· Interim Report for January–September 2021 on Tuesday 26 October 2021

This text is a summary of Finnair's Financial Statements Release 1 January–31
December 2020. The full report is available as an attachment to this report.

FINNAIR PLC
Board of Directors

Briefings

Finnair will hold a results press conference (in Finnish) on 18 February 2021 at
11:00 a.m. via a live webcast: https://finnairgroup.videosync.fi/2021-0218-press

An English-language telephone conference and webcast will begin at 1:00 p.m.
Finnish time. The conference may be attended by dialling your local access
number +358 (0)9 8171 0310 (Finland), 08 5664 2651 (Sweden), 033 3300 0804 (UK)
or +44 (0)33 3300 0804 (all other countries). The confirmation code is
26638231#. To join the live webcast, please register at:
https://finnairgroup.videosync.fi/2020-q4

For further information, please contact:

Chief Financial Officer Mika Stirkkinen, tel. +358 9 818 4960
mika.stirkkinen@finnair.com

Director, Investor Relations Erkka Salonen, tel. +358 9 818 5101,
erkka.salonen@finnair.com

FINNAIR PLC
Further information:
Finnair communications, 358 9 818 4020, comms@finnair.com

Distribution:
NASDAQ OMX Helsinki
Principal media

Finnair is a modern premium network airline, specialising in passenger and cargo
traffic between Asia and Europe. Helsinki’s geographical location gives Finnair
a competitive advantage, since the fastest connections between many European
destinations and Asian megacities fly over Finland. Sustainability is at the
heart of everything we do –  Finnair intends to reduce its net emissions by 50%
by the end of 2025 from the 2019 baseline and achieve carbon neutrality latest
by the end of 2045. Finnair is a member of the oneworld alliance. Finnair Plc’s
shares are quoted on the Nasdaq Helsinki stock exchange.

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