FINNAIR PLC INTERIM REPORT 28.4.2009 AT 0900
FINNAIR GROUP INTERIM REPORT 1 JANUARY - 31 MARCH 2009
First quarter clearly loss-making
Summary of first quarter 2009 key figures
- Turnover fell by 10.0 per cent to 515.7 million euros (572.9 million).
- Passenger traffic, i.e. revenue passenger kilometres, volume was the same as
the previous year, and passenger load factor rose from the previous year by 1.1
percentage points to 75.9% (74.8)
- Unit revenue per available tonne kilometre for flight operations declined
9.1%, units costs remained nearly at last year's level, rising 0.6%.
- The operating loss was 24.3 million euros (operating profit 8.8 million).
- The operational result, i.e. EBIT excluding non-recurring items, capital
gains and changes in the fair value of derivatives, was a loss of 47.5 million
euros
(7.8 million), i.e. -9.2% of turnover
- The result before taxes was a loss of 25.0 million euros (4.3 million loss)
- Gearing at the end of the period was 14.9% (-16.1%) and gearing adjusted for
leasing liabilities was 91.5% (43.1%)
- Balance sheet cash and cash equivalents at the end of the period totalled
374.8 million euros (461.1 million)
- Equity ratio 34.0% (43.0%)
- Equity per share 5.82 euros (7.42)
- Earnings per share -0.15 euros (0.03)
- Return on capital employed -5.4% (14.2%)
In this interim statement, figures for 2008 are presented in brackets after the
2009 figures.
President and CEO Jukka Hienonen on the interim result:
The figures for our sector make for sad reading wherever one looks. The demand
base and price levels have softened and it is proving difficult to find solid
ground underfoot. Airlines have adopted defence positions and are trying to
adjust to the situation as best they can.
Our results from the first quarter reflect the situation of the entire airline
industry regrettably well. The potential for profitability has run into sand due
to feeble demand and a collapse in price levels. The weak figures hold true for
both passenger and cargo traffic.
We initiated capacity cuts at the end of last year, but cost flexibility,
particularly in Scheduled Passenger Traffic, is poor. The 50 million euro
programme initiated last year and a second profit improvement programme of the
same magnitude launched this year will in time bring some relief on the cost
side.
In cutting personnel expenses we have used mainly lay-offs, whose impact on
costs is faster than redundancies. However, continuing structural reforms are
also need to allow to build future success. With our present structures, we will
not do well in the hard struggle ahead.
A long-lived airline has many operating practices that make the cost structure
inflexible. Breaking free from these structures requires long-term work. The
prolonged collective employment agreement negotiations with pilots are only one
example of the difficulty of change. Agreements that arose in a completely
different world are unsustainable in the present situation in terms of cost
level, productivity and flexibility.
Over the years and in many areas, good results have been achieved within Finnair
to improve work productivity. In Finnair Technical Services, for example, work
productivity and job satisfaction have increased.
2009 is a big year for Finnair in terms of investments. In practice, our
long-haul fleet will be completely renewed by the end of the year. Despite the
difficult situation in the financial markets, our funding for this year has been
safeguarded. Furthermore, flexibility is enhanced by the fact that all seven
lease agreements of our leisure traffic Boeing 757 fleet expire next year. We
can therefore consider whether we will extend the agreements or replace the
aircraft with an Airbus fleet.
We are adjusting to the present situation by cutting our capacity and costs
without, however, jeopardising our Asian strategy over the longer term. At the
same time, we are seeking areas of business where we have the opportunity even
in these conditions to fare better than our competitors. Our goal is to
safeguard and improve our competitiveness for a future upturn in prospects.
Market and General Review
The fall in demand that began last year continued in air traffic during the
first quarter of this year. The deterioration of the worldwide economic climate
reduced both passenger and cargo demand. During the first months of the year
European Airlines passenger traffic demand has reduced by over 5% and cargo
demand over 20% (AEA) compared to last year. The International Air Transport
Association IATA forecasts losses of more than five billion dollars for the
sector in 2009.
In Finnair the reduction in business travel, which began a year ago and
accelerated towards the end of 2008, has continued. Reduced travelling by
companies is evident not only as a fall in overall demand but also in a sharp
decline in average prices. The load factors of Finnair's scheduled traffic
aircraft have been defended through aggressive pricing. Revenue passenger
kilometres declined in scheduled traffic, however, by around five per cent and
the average price by more than 13 per cent.
Scheduled traffic capacity has been adjusted to strongly weakening demand. In
the first quarter, the capacity cut was six per cent from the previous year. In
Asian traffic, the cut has been even slightly larger. Other airlines, too, have
cut their capacity between Europe and Asia.
Leisure Traffic demand has been maintained better than in scheduled traffic. To
meet increased demand in the winter season just ended, a wide-bodied aircraft
plus crew was leased from Spain for direct, non-stop flights to Phuket,
Thailand.
The amount of cargo carried by Finnair began to decline in the autumn, whereas a
fall in global cargo demand was already being reported in spring 2008. Finnair's
cargo demand has fallen by around one fifth from the previous year. In addition
to cargo volumes, the average price of cargo has also fallen by nearly 20 per
cent.
The impact of the 100 million euro efficiency programmes initiated this year and
last is expected to be felt mainly in the current year. The programmes include
various operational efficiency measures as well as around 50 million euro
savings in personnel costs. Through lay-offs, over 6,000 Finnair employees are
affected by the reduction in labour resources. The number of jobs permanently
reduced has been around 600. Cost structure flexibility has not, however, been
improved at the same pace as the decline in revenues. The disparity between
revenue and cost trends was a significant reason for the collapse in the Finnair
Group's profitability in the first quarter.
Finnair's punctuality has improved significantly from last year. The company is
again among the most punctual European airlines. In sector research surveys,
Finnair's service is continually rated above the European average. Finnair has
been rated a four-star airline, for example, in the international Skytrax
classification. Skytrax is a well-known research company, which evaluates the
world's commercial airlines and their services.
The fleet modernisation now under way will bring to Finnair's long-haul fleet
this year five new Airbus A330 wide-bodied aircraft, of which the first arrived
in March. The amount of Finnair's investments for the whole year is expected to
rise to more than 400 million euros.
Financial Result, 1 January - 31 March 2009
In January-March, turnover fell by 10.0 per cent to 515.7 million euros
(572.9
million). The Group's operational result, i.e. EBIT excluding non-recurring
items, capital gains and changes in the fair value of derivatives, fell from the
previous year from a profit of 7.8 million euros to a loss of 47.5 million
euros. Adjusted operating margin was -9.2 per cent (1.4). The result before
taxes was a loss of 25.0 million euros (4.3 million profit). Changes in the fair
value of derivatives had a 23.4 million euro improving effect on the result
reported for first quarter. Net cash flow from operations fell from last year's
28.7 million euros to -73.4 million euros. In addition to the weak result, the
change was influenced by a weakening of net working capital, in which the
biggest factor was lower advance payments as a result of a decline in sales. In
the second quarter, the cash flow impact of net working capital is expected to
improve in accordance with seasonal variation.
Earnings per share for the first quarter were -0.15 euros (0.03).
In January-March, Finnair carried a total of 1.9 million passengers in scheduled
passenger and leisure traffic. Passenger traffic capacity was reduced by 1.4 per
cent and revenue passenger kilometre volume remained at the previous year's
level; Asia-traffic revenue passenger kilometres fell by 3.4 per cent. Due to
capacity cuts, passenger load factor for all traffic rose by 1.1 percentage
points from the previous year to 75.9 per cent, but weakened towards the end of
the period. The amount of cargo carried fell from the previous year by 19.6 per
cent.
In Group passenger traffic, total unit revenues per passenger kilometre fell by
11.1 per cent. Yield per passenger fell by 9.8 per cent. Unit revenues per tonne
kilometre for cargo traffic declined by 18.2 per cent. Weighted unit revenues
per tonne kilometre for passenger and cargo traffic fell by 9.1 per cent.
Euro-denominated operating expenses, excluding non-recurring items, capital
gains and changes in the fair value of derivatives, decreased last year by 0.3
per cent. Unit costs per available tonne kilometre for flight operations rose
from the first quarter of last year by 0.6 per cent.
Fuel costs fell in the first quarter by 2.5 per cent from January-March the
previous year. In the comparison, fuel costs also take into account realised
hedging gains and losses of hedge accounting, which have been recognised in the
income statement item 'Other expenses'.
Fleet material and maintenance expenses rose last year by 33.5 per cent. The
main reason for the growth in costs is three major engine overhauls. The ‘Other
lease payments' item rose 48.3 per cent, mainly as a result of an Airbus 330 and
crew leased from Air Europe, which flew leisure flights to Phuket, Thailand,
from November to April.
The non-recurring earnings impact caused by threat of industrial action in the
first quarter is estimated to be around four million euros.
Sales and marketing expenses fell in January-March by 23.9 per cent. Personnel
expenses overall fell by 3.8 per cent from the previous year, owing to
implemented personnel reduction measures and lay-offs.
The IFRS accounting practice for frequent-flyer programme bonus points changed
from the beginning of the year. The points liability is now valued at fair value
based on the selling price instead of an earlier valuation based on marginal
cost. Finnair's points liability now lowers shareholders' equity by around 42
million euros, compared with around 20 million euros before.
Investment, Financing and Risk Management
In January-March, investments totalled 128.2 million euros (64.4 million),
including two Embraer 190 and one Airbus A330 aircraft as well as one A330 spare
engine. Including advance payments, the cash-flow impact of fleet and auxiliary
investments was around 127 million euros in the first quarter. The cash-flow
impact of the new aircraft acquisition programme and auxiliary investments will
be more than 400 million euros this year and around 300 million euros next year.
The final investment sum will depend on how many of the aircraft are acquired on
operational leasing agreements.
At the end of March, balance sheet cash and cash equivalents totalled 374.8
million euros (461.1 million). The company's cash position has been kept strong
because of the investments that lie ahead. In addition to the share issue held
at the end of 2007, the company's financial position has been reinforced through
credit arrangements.
Agreed, but to date unused, credit facilities total 200 million euros. In
addition to this, Finnair has a 250 million euro credit facility from the
European Investment Bank and a more than 400 million euro option on the
loan-back of employment pension fund reserves from lmarinen Mutual Pension
Insurance Company, both of which require a bank guarantee. Flexibility in
financing will also be achieved through a 200 million euro commercial paper
programme.
The gearing was 14.9 per cent (-16.1%) at the end of March. Gearing adjusted for
leasing liabilities was 91.5 per cent (43.1%). The equity ratio was 34.0 per
cent (43.0%).
According to the financial risk management policy approved by Finnair's Board of
Directors, the company has hedged 75 per cent of scheduled traffic's jet fuel
purchases during the next six months and thereafter for the following 24 months
with a decreasing level of hedging. Finnair Leisure Flights price-hedges fuel
consumption according to its agreed traffic programme within the framework of
the hedging policy. Derivatives linked to jet fuel and gasoil prices are mainly
used as the fuel price hedging instruments.
Under IFRS rules, a change during a financial quarter in the fair value of
derivatives that mature in future is recognised in the Finnair income statement
item "Other expenses". The said change in the fair value of derivatives is not
realised nor does it have an effect on cash flow; it is a valuation loss in
accordance with IFRS reporting practice. In January-March, the change in the
fair value of derivatives improved the result by 23.4 million euros.
The operational result for January-March includes realised losses on derivatives
of 45 million euros, which appear in the fuel item of the income statement and
in the item "Other expenses". The figure includes both foreign exchange and fuel
derivatives.
Shareholders' equity includes, as a variable item, the hedging reserve, whose
value is directly affected by oil price and foreign exchange rate changes. The
size of the item on the closing date was -98 million euros, which includes
foreign exchange and fuel derivatives as well as, to lesser degree, other
financial items less deferred taxes.
Thanks to the currency hedging policy, the strengthening of the US dollar in
relation to the euro compared with the previous year did not significantly
influence Finnair's first quarter operational result. At the end of March, the
degree of hedging for a dollar basket over the following 12 months was 75 per
cent.
Shares and Share Capital
Finnair's market value at the end of March was 471.5 million euros (930.3
million) and the closing price 3.68 euros. During the period January-March, the
highest price for the Finnair Plc share on the NASDAQ OMX Helsinki Stock
Exchange was 5.24 (8.49) euros, while the lowest price was 3.52 (6.63) euros and
the average price 4.42 (7.29) euros. Some 3.4 million (28.4 million) of the
company's shares, with a value of 15.2 million (207.2 million), were traded on
the NASDAQ OMX Helsinki Stock Exchange.
The number of shares recorded in Finnair's Trade Register entry was 128,136,115
at the end of March. The Finnish State owned 55.8 per cent (55.8%) of Finnair's
shares, while 19.3 per cent (21.8%) were held by foreign investors or in the
name of a nominee.
In January-March, the company did no acquire or dispose of any of its own
shares. At the end of March, Finnair held 387,429 own shares (treasury shares)
acquired in previous years, representing 0.3 per cent of the total number of
shares on the last day of the quarter.
Board of Directors and Senior Management
At the Annual General Meeting held on 26 March 2009, the following former
members were elected as members of Finnair Plc's Board of Directors for a term
lasting until the end of the next Annual General Meeting: Christoffer Taxell
(Chairman), Sigurdur Helgason, Satu Huber, Kari Jordan, Ursula Ranin, Veli
Sundbäck and Pekka Timonen. In addition, a new member, Elina Björklund, was
elected.
The Annual General Meeting elected as the company's regular auditors Jyri
Heikkinen, Authorised Public Accountant, and PricewaterhouseCoopers Oy,
Authorised Public Accountants, in which Eero Suomela will serve as the auditor
with main responsibility. Tuomas Honkamäki APA and Timo Takalo APA were elected
deputy auditors.
The Finnair Group's Chief Financial Officer Lasse Heinonen was appointed
Executive Vice President and Finnair's Deputy CEO as of 13 January 2009.
Heinonen continues as the Group's CFO. In addition to financial units, the
business units of Aviation Services report to Heinonen: Northport Oy (ground
handling), Finnair Catering Oy and Finnair Technical Services as well as Finnair
Cargo Oy and Finnair Cargo Terminal Operations Oy, Finnair Aircraft Finance Oy
(fleet management) and Finnair Facilities Management Oy (property services).
As of 1 January 2009, Finnair's President & CEO Jukka Hienonen will lead the
Scheduled Passenger Traffic organisation together with the business area's
management group. SVP Flight Operations Division Veikko Sievänen will serve as
the Accountable Manager referred to in the Airline Operator's Certificate (AOC).
At the same time, Sievänen was also appointed member of the Group's executive
board. SVP Technical Services Kimmo Soini will serve as Accountable Manager for
technical areas of responsibility.
Personnel
During January-March, the average number of staff employed by the Finnair Group
totalled 9,230, which was 2.1 per cent less than a year before. Scheduled
Passenger Traffic had 4,159 employees and Leisure Traffic 499 employees. The
total number of personnel in technical, catering and ground handling services
was 3,429 and in travel services 997. A total of 146 people were employed in
other functions.
Finnair has collective employment agreements valid until spring 2010 with six
personnel organisations. During spring 2009, negotiations will be held with the
Finnish Aviation Union and Finnair's Technical Services personnel on a wage
solution for the final year of the agreement.
The pilots' collective employment agreement expired at the end of November 2008
and negotiations on a new agreement have been under way since the autumn. The
Finnish Airline Pilots' Association (SLL), which represents Finnair's pilots,
initiated industrial action on 24 January 2009 by announcing an overtime ban.
SLL also stated that it would continue industrial action with day-long strikes
in February. The union withdrew its strike threat before the strikes began. The
most significant points of contention between the employer and employees relate
to pension benefits, business management decision-making and working time
arrangements.
Statutory employer-employee (YT) negotiations initiated in June 2008 were
concluded in January this year, covering all personnel groups besides the
pilots, in respect of whom YT negotiations were concluded in March.
The objective of YT negotiations in Northport Oy, initiated in February-March,
is a reduction of around 90 man working years, which will be implemented as
part-time working arrangements and also as possible outsourcing of operations.
In March, YT negotiations on personnel lay-offs were initiated in Finnair
Catering Oy and Finnair Technical Services, and on personnel reductions in
Finnair Scheduled Passenger Traffic and Matkatoimisto Area.
Altogether, Finnair Group personnel cost-cutting measures affect over 6,000
employees in terms of temporary lay-offs. The duration of the temporary lay-offs
for the most part varies from two weeks to three months. Around 200 jobs have
been reduced through redundancies. In addition, around 400 fixed-term employment
contracts will end during the spring.
Fleet Changes
Finnair Group's fleet is managed by Finnair Aircraft Finance Oy, which belongs
to the Scheduled Passenger Traffic business area. At the end of March, the
Finnair Group had a total of 67 aircraft in flight operations. The average age
of the Finnair's entire fleet is 6.3 years, and in European traffic around five
years.
The European and domestic fleet grew in the first quarter by two 100-seat
Embraer 190 aircraft. The fleet has a total of 20 Embraer aircraft and 29 Airbus
A320 aircraft. The company's first Airbus A330-300 aircraft joined the Finnair
wide-bodied fleet in March. At the same time, one Boeing MD-11 aircraft was
withdrawn from the fleet. Finnair has a total of 11 long-haul aircraft.
The renewal of the wide-bodied fleet will continue this year with the
acquisition of a further four new Airbus A330-300 long-haul aircraft and next
year with at least three more. The Airbus aircraft will replace the five Boeing
MD-11 aircraft to be withdrawn from Finnair's fleet at the beginning of March
2010. Future sale of two MD-11s to Aeroflot Cargo has been agreed upon. The
aircraft are in Finnair's ownership, until the transaction is closed. The other
four MD-11 aircraft are leased and their agreements expire within a year.
The fleet modernisation will harmonise Finnair's scheduled traffic fleet. A
reduction of aircraft types will mean a more efficient cost structure due to
more simplified crew utilisation and maintenance activities.
The lease agreements of the Boeing 757 aircraft used by Finnair Leisure Flights
are valid until 2010, after which they can if necessary be extended on current
terms twice at two years at a time. Before a possible extension decision, the
company will assess the most efficient way of managing its leisure flight
commitments.
Environment and Social Responsibility
Finnair takes the environment into
consideration in all of its actions and decisions. Finnair's environmental and
social responsibility issues are outlined in more detail in the annual report
and on the Finnair website.
Last year the EU approved a model for the
implementation of emissions trading in air transport starting in 2012. The
emissions trading calculation principles take into account the performance
undertaken for the fuel consumed. Finnair will strive as part of the community
of European airlines to argue successfully that the system should be worldwide
and not distort competition in the sector. In addition, Finnair became a member
of the international Aviation Global Deal Group, which is proposing a model as
the basis of a sector agreement in international emissions trading.
Finnair has
been systematically modernising its fleet since 1999. The European and domestic
traffic's Airbus A320 and Embraer aircraft represent the latest technology. The
modern fleet is eco-efficient both in terms of carbon dioxide and noise
emissions. The modernisation of the long-haul fleet currently under way will
influence the amount of emissions significantly. The Airbus A330 reduces the
fuel consumption and emissions index by around twenty per cent compared with the
MD-11 aircraft.
Finnair is actively involved in environmental cooperation work
with interest groups. A new emissions calculator as well as a social
responsibility report will be published in May. In addition, Finnair has already
been reporting on its environmental impact in the international Carbon
Disclosure Project (CDP) for three years.
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 scheduled passenger traffic and cargo
sales, service concepts, flight operations and activity connected with the
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,
Finnair Cargo Oy, Finnair Cargo Terminal Operations Oy and Finnair Aircraft
Finance Oy.
In January-March, the business area's turnover fell by 15.7 per cent to 353.8
million euros (419.6 million). The operational result was a loss of 50.3 million
euros (3.7 million loss).
Scheduled Passenger Traffic carried more than 1.5 million passengers in
January-March. Scheduled Passenger Traffic's revenue passenger kilometres
declined by 4.9 per cent at the same time as capacity was cut by 6.0 per cent,
which improved passenger load factor from the previous year by nearly one
percentage point to 69.5 per cent.
In the first quarter, unit revenues for scheduled passenger traffic fell by 13.5
per cent. A 30 per cent collapse in business travel and the shifting of demand
to cheaper price classes contributed to the decline in unit revenues. When
examining quarterly earnings development, it is worth noting that Easter, which
reduces the volume of higher-priced business travel, falls this year in the
second quarter, when last year it was in the first quarter.
Cargo revenues account for over ten per cent of all Scheduled Passenger
Traffic's revenues. The profitability of Finnair's cargo business has weakened
quickly worldwide due to adverse global economic climate. In January-March,
cargo business unit revenues declined by 19.1 per cent. In scheduled traffic,
the number of cargo kilos carried fell by 19.3 per cent. In Asia traffic, the
amount of cargo carried fell from the previous year by 22,8 per cent.
On Finnair's route network, capacity cuts will be made by reducing the number of
flights on European and Asian routes. On the other hand, European summer
destinations have again been opened this summer, but with lower seating
capacities. Finnair will fly to Tokyo and New York three additional times per
week in the summer months. The Tokyo route will be operated daily and New York
ten times per week. Scheduled traffic capacity in passenger kilometres is with
the present traffic programme nearly eight per cent lower than last year.
In international scheduled passenger traffic, Finnair has increased its market
share compared with its main competitors. In domestic traffic, Finnair's market
share has fallen, primarily due to the discontinuation of short routes.
During January-March, the arrival punctuality of scheduled passenger flights
improved 16.6 percentage points from the previous year's level to 87.3 per cent
(70.7%). Finnair's punctuality is one of the best among European airlines.
Finnair's cargo companies, Finnair Cargo Oy and Finnair Cargo Terminal
Operations Oy, have also suffered from the economic downturn. Cargo demand has
collapsed worldwide by more than 20 per cent. As a consequence of increased
capacity, the price level has also fallen steeply. The export industry in
Scandinavia countries has declined by 25-35 per cent. Asian national economies,
moreover, are also suffering from a downturn in export business. For example,
Japan exports have fallen by more than 40 per cent and gross domestic product by
ten per cent.
Finnair's cargo companies have made major adjustments to their operations. The
terminal company especially has managed to reduce personnel resources to match
falling cargo volumes.
Leisure Traffic
This business area consists of Finnair Leisure Flights plus the
Aurinkomatkat-Suntours package tour company and its subsidiaries, the Estonian
tour operator Horizon Travel and the St. Petersburg Calypso travel agency, as
well as the Finnish takeOFF brand, which focuses on youth travel.
Aurinkomatkat-Suntours is Finland's largest tour operator, with a market share
of more than 35 per cent. Finnair Leisure Flights enjoys strong market
leadership in leisure travel flights and all of Finland's largest tour operators
are its customers. For their package tour production, tour operators buy the
flight series they need to holiday destinations for the summer and winter
seasons.
The business area's first quarter turnover rose by 6.8 per cent to 148.8 million
euros (139.3 million). The operational profit fell by 50.5 per cent and was 5.5
million euros (11.1 million).
In January-March, Finnair Leisure Flights carried over 360,000 passengers, which
is around five per cent more than in the previous year. In addition to its own
Boeing 757 fleet, Leisure Flights leased from Air Europe a 299-seat Airbus A330
wide-bodied aircraft with crew for flights to Phuket in Thailand for the winter
season 2008/09.
Available passenger kilometres grew by 12.0 per cent. Finnair Leisure Flights'
revenue passenger kilometres have been clearly higher than the previous year
throughout the entire winter season. As the proportion of winter season
long-haul traffic grew, performance calculated in revenue passenger kilometres
rose by 10.6 per cent from the previous year. Leisure Flights' passenger load
factor therefore fell by 1.2 percentage points to 91.7 per cent.
Due to the economic recession and uncertainty, consumers are buying their trips
closer to the date of travel. After a good early winter, demand for package
tours fell clearly in March. More than before, package tours were sold with
last-minute discounts, which weakened tour operators' earnings. Demand for
summer package tours is also more subdued than the previous year.
The tour operators' capacity cuts will weaken the efficient utilisation of
Leisure Flights' fleet in the second and third quarter. Also
Aurinkomatkat-Suntours has cut its summer production to meet the level of
demand. Sales of trips for the following winter season have just begun.
On the St. Petersburg market, Aurinkomatkat's own production has begun
promisingly. Winter destinations, such as Thailand, Israel, Egypt and India,
have sold well. Customer satisfaction is on a high level. Due the recession,
however, growth targets in the Russian market have been cut. In Estonia, demand
for holiday trips has clearly fallen.
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. Aviation Services' business consists mainly of
intra-Group service provision. Of the business area's turnover 25 per cent
consists of business outside of the Group.
Turnover for Aviation Services rose in January-March by 2.6 per cent to 112.8
million euros. The operational profit decreased from the previous year by 8.0
per cent to 2.3 million euros (2.5 million).
Aviation Services' financial and production situation and outlook have weakened
as the traffic of its main customers has contracted.
Finnair Catering's first quarter was still reasonable in terms of financial
performance. The number of flight passengers has declined, however, and the
structure of travel has changed decisively in the early part of the year, which
has significantly reduced, for example, sales of business class meals as well as
sales in shops. Operations are also expected to continue to be weaker. In
Finnair Catering Oy in March, YT negotiations were held on lay-offs affecting
all employees. The duration of the lay-offs for the most part varies from two
weeks to three months, depending on the job and the work situation.
Finnair Technical Services' financial situation has also weakened, as a result
of cuts in traffic by both Finnair and customer airlines from outside the Group.
In Finnair Technical Services, lower demand has resulted in lay-offs averaging
four weeks for all personnel.
The ground handling company Northport Oy is still loss-making. The quality of
ground handling operations has significantly improved, however, from the
previous year. YT negotiations were initiated in February. In Northport the
objective is a reduction of around 90 man years through possible redundancies,
part-time working and outsourcing of operations. In addition, possible temporary
lay-offs will affect all Northport Oy personnel.
Finnair Technical Services' and Northport Oy' operational results were slightly
loss-making in January-March. Finnair Catering Oy's operational result was in
profit due to effective adjustment to demand.
Travel Services
The business area consists of the Group's travel agencies: Area, the Finland
Travel Bureau and its subsidiary Estravel, which operates in the Baltic states,
as well as Amadeus Finland Oy, which sells information systems and travel
reservation systems. Finland Travel Bureau (FTB) and Area are Finland's leading
travel agencies, and Estravel is one of the leading travel agencies in the
Baltic states.
The business area's first quarter turnover fell by 28.0 per cent to 15.2 million
euros (21.1 million). The operating loss was 1.5 million euros (0.4 million
profit).
A steep 30 per cent contraction in business travel was reflected in the travel
agencies' sales and result. Personnel reductions and lay-offs did not yet manage
to affect the travel agencies' first quarter result. In Finland, travel agency
personnel with fall by the autumn by around 100 employees, corresponding to 17
per cent of all staff. In addition, 4-8 week lay-offs will also be implemented.
The recession is also clearly evident in the Baltic states market. Estravel,
which belongs to the FTB Group, has adjusted its operations through personnel
reductions. In Estonia the company's market share is 40 per cent.
The turnover of Travel Services' Amadeus Finland fell slightly as travel volume
contracted.
Air Traffic Services and Products
In recent years, the Finnair route network has been developed to serve traffic
between Europe and Asia passing through Helsinki. At the same time, Finns have
been offered efficient and diverse connections to destinations all over the
world.
In the winter season, Finnair has a total of 55 direct flights per week to ten
Asian destinations. Finnair's Asian destinations are Bangkok, Delhi, Hong Kong,
Mumbai, Nagoya, Osaka, Beijing, Shanghai, Seoul and Tokyo. The Mumbai route is
not flown in the summer season.
Flights covering 34 European and 12 domestic destinations connect into Finnair's
Asian network. At the same time, a wide selection of direct connections is
offered from Finland to the rest of Europe.
In January Finnair increased the number of its Brussels flights. A new service
that departs Helsinki in the evening and returns from Brussels in the morning is
particularly convenient for business travellers between the cities.
In March Finnair began direct flights to Istanbul, Turkey. The Istanbul route
provides good connections via Helsinki from Turkey to Scandinavia, the Baltic
states and Finnair's Asian network.
In the summer season Finnair also flies to Ljubljana, Krakow, Venice, Pisa and
Bergen. Flights to Ljubljana began at the end of March, and to Krakow and Venice
at the beginning of April. The Pisa and Bergen routes will start up in May. In
addition, Finnair will fly to Tokyo in June-September daily instead of its
normal four flights per week schedule, and to New York ten times per week.
The interior design of Finnair's scheduled fleet is currently being renewed. The
change will be made cost-effectively according to the normal material
replacement cycle. The new interior design was first introduced in a new Airbus
A330 aircraft, which departed on its first commercial flight on 4 April. This
year Finnair will receive four more A330 aircraft, all of which will have the
new interior. A redesign of uniforms was postponed owing to the economic
situation.
Leisure Flights' fleet consists of seven Boeing 757 aircraft. Due to increased
demand, Finnair Leisure Flights leased for the winter season one Airbus A330
wide-bodied aircraft, which flew non-stop to Phuket in Thailand. In the summer
season, Leisure Flights flies, in addition to charter flight traffic, certain
holiday routes, including Boston and Toronto.
Short-term Risks and Uncertainty Factors
The tightening of the financial markets has raised the cost of planned financing
higher than was anticipated. The availability of funding has deteriorated, but a
lack of sufficient funding is not considered to be a risk during 2009. The
financial crisis will be reflected in the financing of Finnair's fleet
modernisation primarily via the cost of borrowed capital and the price level of
lease agreements.
The risk in the acquisition of new aircraft is that demand will fall more
quickly than capacity can be meaningfully reduced. The lease agreements of
Finnair Leisure Flights' seven Boeing 757 aircraft will expire in 2010, at which
time the size of the scheduled traffic and leisure flight fleets can be
optimised according to demand forecasts.
Fuel costs constitute around one fifth of the Group's costs and are one of the
most significant uncertainty factors where costs are concerned. Foreign exchange
rate changes also represent a risk. Finnair provides against fuel price and
foreign exchange rate volatility by entering into option and future contracts.
The rising cost of hedging arrangements also poses a risk.
The hedging policy practised by Finnair dampens fuel price fluctuations.
Finnair's more than 70 per cent hedging level over the next six months will slow
the transfer of the benefit of the fall in market price of jet fuel to the
company's fuel costs. Hedging losses will be most evident in the first half of
the year. Finnair's relative competitive position in terms of costs is also
influenced by competitors' fuel price hedging policies. The company's main
competitors adhere to the same principles as Finnair in their hedging policies.
If the market price of fuel rises, Finnair's hedging losses will decline.
Globally, the airline industry is one of the sectors most sensitive to cyclical
changes in economic conditions. The development of gross domestic product and
international trade strongly affect the development of air transport passenger
and cargo demand. A weakening of domestic consumer confidence might also have an
adverse impact on demand for non-business travel in both leisure and scheduled
traffic services.
The financial difficulties of the customers increase the bad debt risk in the
future. Due to the short booking horizon in passenger and cargo traffic, it is
difficult to forecast demand far into the future.
A change of one percentage point in the load factor of scheduled passenger
traffic services affects the Group's operating profit by around 15 million
euros. A change of one percentage in the average yield of scheduled passenger
traffic services also affects the Group's operating profit by around 15 million
euros.
Negotiations to renew the collective employment agreement of pilots, which ended
on 30 November 2008, are under way. During spring 2009, negotiations are being
held with the Finnish Aviation Union and Finnair's Technical Services personnel
on a wage solution for the final year of an agreement. In the event of possible
industrial action, the halting of Finnair traffic will cause estimated daily
losses of around three million euros. In addition, the uncertainty caused by
traffic disruptions would also be reflected negatively in demand on the days
surrounding the strike.
Outlook
This year is expected to be a very difficult one for airlines' financial
development. Finnair will maintain its Asian strategy. The long-term goal of
scheduled passenger traffic is to grow in services between Europe and Asia,
utilising Helsinki as a geographically and logistically ideal transit location.
Finnair has secured credit facilities totalling 200 million euros as well as a
250 million credit facility requiring a bank guarantee from the European
Investment Bank, plus a more than 400 million euro option on the loan-back of
employment pension fund reserves. In addition, Finnair has credit facilities
totalling 200 million euros.
The introduction of the Airbus A330 fleet will continue in the second quarter.
Type training for pilots and the technical introduction of a new type of
aircraft will increase costs. The fifth aircraft of this type will arrive in the
final quarter of the year.
Finnair's fuel costs are expected to be lower this year than last due to a fall
in fuel prices and the improved fuel economy of aircraft. At the present price
level, fuel costs are expected to be around 23 per cent of Finnair's turnover in
2009 compared to 24.6 per cent in 2008.
The decline in business travel demand is expected to continue in the second
quarter. Through the adjustment decisions that have now been made, Finnair's
scheduled traffic capacity for the whole of 2009 will fall by around eight per
cent compared with 2008. In the second quarter, the capacity cut will be around
ten per cent. The additional cuts in capacity are expected to improve the
passenger load factor.
Demand for this summer's holiday trips is expected to contract from last year's
peak level. To avoid a weakening of price level, Aurinkomatkat-Suntours has
adjusted its capacity and its Finnair flight programme to the weakened demand.
Due to aircraft overcapacity, the leasing of aircraft and crew to foreign
operators does not seem probable this summer.
Cargo demand is dependent on industry investment levels and the durable consumer
goods market. Only a change of sentiment in the global economy will enable cargo
demand to turn to growth. Similarly, a pick-up in business travel will require a
clear change in international economic conditions.
Finnair Group has efficiency programmes totalling about 100 million euros with
expected cost savings impact occurring mainly in the current year. The
implementation of the programmes still requires additional savings in all areas
of operations, including personnel costs.
The second quarter is expected to remain clearly loss-making. The operational
result for the full year will substantially depend on the demand situation and
cost development. Visibility for the second half of the year is limited, but we
expect the full year operational result to be negative.
FINNAIR PLC
Board of Directors
Press conference
Finnair will hold briefings for media representatives (11 a.m.) and analysts
(12.30 p.m.) on 28 April 2009. The location is 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
Senior Vice President, Communications
For further information, please contact:
EVP and CFO Lasse Heinonen
tel. +358 9 818 4950
lasse.heinonen@finnair.fi
SVP Corporate Communications, Christer Haglund
tel. +358 9 818 4007
christer.haglund@finnair.fi
VP Financial Communications and Investor Relations, Taneli Hassinen
tel. +358 9 818 4976
taneli.hassinen@finnair.fi
http://www.finnair.fi/sijoittaja
FINNAIR GROUP INTERIM REPORT FOR JANUARY 1 -MARCH 31, 2009
KEY FIGURES EUR mill.
--------------------------------------------------------------------------------
| | 2009 | 2008 | Chan-ge | 2008 |
--------------------------------------------------------------------------------
| | 1 | 1 | % | 1 Jan- |
| | Jan- | Jan- | | 31 Dec |
| | 31 | 31 | | |
| | Mar | Mar | | |
--------------------------------------------------------------------------------
| Turnover | 515.7 | 572.9 | -10.0 | 2 255.8 |
--------------------------------------------------------------------------------
| Profit before depreciation and | -1.5 | 54.9 | - | 188.5 |
| lease payments, EBITDAR * | | | | |
--------------------------------------------------------------------------------
| Lease payments for aircraft | 19.3 | 20.4 | -5.4 | 82.6 |
--------------------------------------------------------------------------------
| Operating profit, EBIT* | -47.5 | 7.8 | - | 0.8 |
--------------------------------------------------------------------------------
| Fair value changes of | 23.4 | -0.1 | - | -57.4 |
| derivatives | | | | |
--------------------------------------------------------------------------------
| Profit from disposal of capital | -0.2 | 1.1 | - | -1.3 |
| assets | | | | |
--------------------------------------------------------------------------------
| Operating profit, EBIT | -24.3 | 8.8 | - | -57.9 |
--------------------------------------------------------------------------------
| Profit for the period (share | -18.6 | 3.1 | - | -46.3 |
| attributable to shareholders of | | | | |
| parent company) | | | | |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Operating profit, EBIT, % of | -9.2 | 1.4 | - | 0.0 |
| turnover * | | | | |
--------------------------------------------------------------------------------
| EBITDAR, % of turnover * | -0.3 | 9.6 | - | 8.4 |
--------------------------------------------------------------------------------
| Unit revenues of flight | 62.9 | 69.2 | -9.1 | 70.1 |
| operations c/RTK | | | | |
--------------------------------------------------------------------------------
| Unit costs of flight operations | 42.7 | 42.5 | 0.6 | 43.5 |
| c/ATK | | | | |
--------------------------------------------------------------------------------
| Earnings per share EUR (basic) | -0.15 | 0.03 | - | -0.36 |
--------------------------------------------------------------------------------
| Earnings per share EUR (diluted) | -0.15 | 0.03 | - | -0.36 |
--------------------------------------------------------------------------------
| Equity per share EUR | 5.82 | 7.42 | -21.6 | 5.87 |
--------------------------------------------------------------------------------
| Gross investment EUR mill. | 128.2 | 64.4 | - | 232.8 |
--------------------------------------------------------------------------------
| Gross investment, % of turnover | 24.9 | 11.2 | - | 10.3 |
--------------------------------------------------------------------------------
| Equity ratio % | 34.0 | 43.0 | | 36.9 |
--------------------------------------------------------------------------------
| Gearing % | 14.9 | -16.1 | | -12.0 |
--------------------------------------------------------------------------------
| Adjusted gearing % | 91.5 | 43.1 | | 65.1 |
--------------------------------------------------------------------------------
| Rolling 12-month ROCE % | -5.4 | 14.2 | | -3.0 |
--------------------------------------------------------------------------------
| Rolling 12-month ROE % | -7.6 | 12.4 | | -5.3 |
--------------------------------------------------------------------------------
* Excluding capital assets, fair value changes of derivatives and non-recurring
items.
Unit costs of flight operations c / ATK = Operating expenses (excluding fair
value changes of derivatives and non-recurring items) of Scheduled Traffic
business area and Leisure Flights business unit / ATK of Group.
In connection with the adoption of IAS 1 standard 1.1.2009 the figures of the
statement of comprehensive income have been reported in the appendix 15 and the
correspondence of the previous year's figures has been made.
CALCULATION OF KEY RATIOS
Earnings / share:
Profit for the period/
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 *100/
Equity + minority interests (average)
Operating profit, EBIT = Operating profit excluding the disposal of the capital
assets, fair value changes of derivatives and non-recurring items
Shareholders equity = To equity holders of the parent
The figures of interim report have not been audited.
CONSOLIDATED INCOME STATEMENT (EUR mill.)
--------------------------------------------------------------------------------
| | 2009 | 2008 | Change | 2008 |
--------------------------------------------------------------------------------
| | 1 Jan | 1 Jan | % | 1 Jan- |
| | 31 Mar | 31 | | 30 Dec |
| | | Mar | | |
--------------------------------------------------------------------------------
| Turnover | 515.7 | 572.9 | -10.0 | 2 255.8 |
--------------------------------------------------------------------------------
| Work used for own purposes and | 0.4 | 0.1 | 300.0 | 1.6 |
| capitalized | | | | |
--------------------------------------------------------------------------------
| Other operating income | 3.7 | 5.9 | -37.3 | 27.1 |
--------------------------------------------------------------------------------
| Operating income | 519.8 | 578.9 | -10.2 | 2 284.5 |
--------------------------------------------------------------------------------
| Operating expenses | | | | |
--------------------------------------------------------------------------------
| Staff costs | 135.2 | 140.5 | -3.8 | 541.0 |
--------------------------------------------------------------------------------
| Fuel | 103.9 | 134.9 | -23.0 | 567.9 |
--------------------------------------------------------------------------------
| Lease payment for aircraft | 19.3 | 20.4 | -5.4 | 82.6 |
--------------------------------------------------------------------------------
| Other rental payments | 26.7 | 18.0 | 48.3 | 69.3 |
--------------------------------------------------------------------------------
| Fleet materials and overhauls | 26.3 | 19.7 | 33.5 | 96.1 |
--------------------------------------------------------------------------------
| Traffic charges | 45.0 | 43.6 | 3.2 | 188.5 |
--------------------------------------------------------------------------------
| Ground handling and catering | 33.4 | 35.2 | -5.1 | 146.6 |
| expenses | | | | |
--------------------------------------------------------------------------------
| Expenses for tour operations | 45.5 | 44.6 | 2.0 | 138.9 |
--------------------------------------------------------------------------------
| Sales and marketing expenses | 20.4 | 26.8 | -23.9 | 102.9 |
--------------------------------------------------------------------------------
| Depreciation | 26.7 | 27.7 | -3.6 | 110.2 |
--------------------------------------------------------------------------------
| Other expenses | 61.7 | 58.7 | 5.1 | 298.4 |
--------------------------------------------------------------------------------
| Total | 544.1 | 570.1 | -4.6 | 2 342.4 |
--------------------------------------------------------------------------------
| Operating profit EBIT | -24.3 | 8.8 | - | -57.9 |
--------------------------------------------------------------------------------
| Financial income | 3.1 | 5.4 | -42.6 | 22.1 |
--------------------------------------------------------------------------------
| Financial expenses | -3.8 | -9.9 | -61.6 | -26.7 |
--------------------------------------------------------------------------------
| Share of result in associates | 0.0 | 0.0 | - | 0.3 |
--------------------------------------------------------------------------------
| Profit before taxes | -25.0 | 4.3 | - | -62.2 |
--------------------------------------------------------------------------------
| Direct taxes | 6.4 | -1.2 | - | 16.1 |
--------------------------------------------------------------------------------
| Profit for the period | -18.6 | 3.1 | - | -46.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share to | -18.6 | 3.1 | | -46.3 |
| shareholders of the parent | | | | |
| company | | | | |
--------------------------------------------------------------------------------
| Minority interest | 0.0 | 0.0 | | 0.2 |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Earnings per share calculated | | | | |
| from profit attributable to | | | | |
| shareholders of the parent | | | | |
| company | | | | |
--------------------------------------------------------------------------------
| Earnings per share EUR (basic) | -0.15 | 0.03 | | -0.36 |
--------------------------------------------------------------------------------
| Earnings per share EUR | -0.15 | 0.03 | | 0.36 |
| (diluted) | | | | |
--------------------------------------------------------------------------------
After the adoption of IFRIC 13, Customer Loyalty Programmes'. (Finnair-Plus
program, the correspondence of turnover, marketing expenses and deferred taxes
of the previous year income statement has been made.
CONSOLIDATED BALANCE SHEET (EUR mill.)
--------------------------------------------------------------------------------
| | 31 March | 31 March | 31 Dec | 1 Jan 2008 |
| | 2009 | 2008 | 2008 | |
--------------------------------------------------------------------------------
| ASSETS | | | | |
--------------------------------------------------------------------------------
| Non-current assets | | | | |
--------------------------------------------------------------------------------
| Intangible assets | 47.7 | 49.0 | 48.1 | 46.6 |
--------------------------------------------------------------------------------
| Tangible assets | 1 373.5 | 1 234.7 | 1 272.1 | 1 168.9 |
--------------------------------------------------------------------------------
| Investments in associates | 5.8 | 5.8 | 6.1 | 5.7 |
--------------------------------------------------------------------------------
| Financial assets | 23.3 | 12.9 | 21.5 | 13.8 |
--------------------------------------------------------------------------------
| Deferred tax receivables | 64.2 | 28.2 | 57.7 | 16.7 |
--------------------------------------------------------------------------------
| Total | 1 514.5 | 1 330.6 | 1 405.5 | 1 251.7 |
--------------------------------------------------------------------------------
| Short-term receivables | | | | |
--------------------------------------------------------------------------------
| Inventories | 36.3 | 40.1 | 35.1 | 36.1 |
--------------------------------------------------------------------------------
| Trade receivables and | 281.4 | 367.6 | 231.8 | 287.3 |
| other receivables | | | | |
--------------------------------------------------------------------------------
| Investments | 359.6 | 443.6 | 373.8 | 518.6 |
--------------------------------------------------------------------------------
| Cash and bank equivalents | 15.2 | 17.5 | 18.3 | 21.5 |
--------------------------------------------------------------------------------
| Total | 692.5 | 868.8 | 659.0 | 863.5 |
--------------------------------------------------------------------------------
| Non-current Assets held | 19.4 | 32.8 | 19.4 | 34.7 |
| for sale | | | | |
--------------------------------------------------------------------------------
| Assets total | 2 226.4 | 2 232.2 | 2 083.9 | 2 149.9 |
--------------------------------------------------------------------------------
| SHAREHOLDERS´ EQUITY AND | | | | |
| LIABILITIES | | | | |
--------------------------------------------------------------------------------
| Capital and reserves | | | | |
| attributable to equity | | | | |
| holders of the parent | | | | |
| company | | | | |
--------------------------------------------------------------------------------
| Shareholders´equity | 75.4 | 75.4 | 75.4 | 75.4 |
--------------------------------------------------------------------------------
| Other equity | 668.2 | 869.8 | 674.0 | 891.8 |
--------------------------------------------------------------------------------
| Total | 743.6 | 945.2 | 749.4 | 967.2 |
--------------------------------------------------------------------------------
| Minority interest | 0.7 | 1.1 | 1.1 | 1.7 |
--------------------------------------------------------------------------------
| Equity, total | 744.3 | 946.3 | 750.5 | 968.9 |
--------------------------------------------------------------------------------
| Long-term liabilities | | | | |
--------------------------------------------------------------------------------
| Deferred tax liability | 122.3 | 150.1 | 120.6 | 144.5 |
--------------------------------------------------------------------------------
| Financial liabilities | 271.8 | 258.9 | 261.1 | 269.6 |
--------------------------------------------------------------------------------
| Pension obligations | 1.9 | 14.0 | 6.1 | 15.8 |
--------------------------------------------------------------------------------
| Total | 396.0 | 423.0 | 387.8 | 429.9 |
--------------------------------------------------------------------------------
| Short-term liabilities | | | | |
--------------------------------------------------------------------------------
| Current income tax | 0.0 | 7.5 | 1.5 | 8.2 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Reserves | 60.7 | 53.8 | 61.5 | 0.0 |
--------------------------------------------------------------------------------
| Financial liabilities | 222.2 | 55.2 | 48.5 | 54.5 |
--------------------------------------------------------------------------------
| Trade payables and other | 803.2 | 746.4 | 834.1 | 688.4 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Total | 1 086.1 | 862.9 | 945.6 | 751.1 |
--------------------------------------------------------------------------------
| Liabilities total | 1 482.1 | 1 285.9 | 1 333.4 | 1 181.0 |
--------------------------------------------------------------------------------
| Shareholders' equity and | 2 226.4 | 2 232.2 | 2 083.9 | 2 149.9 |
| liabilities, total | | | | |
--------------------------------------------------------------------------------
After the adoption of IFRIC 13, Customer Loyalty Programmes'. (Finnair-Plus
program, the correspondence of deferred credits, equity and deferred taxes of
the previous year reported balance sheet has been made.
CONSOLIDATED CASH FLOW STATEMENT
--------------------------------------------------------------------------------
| EUR mill. | 1 Jan - 31 | 1 Jan - 3Mar | 1 Jan - 31 |
| | Mar 2009 | 2008 | Dec 2008 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Cash flow from operating | | | |
| activities | | | |
--------------------------------------------------------------------------------
| Profit for the period | -18.6 | 3.1 | -46.1 |
--------------------------------------------------------------------------------
| Operations for which a payment is | 20.9 | 24.4 | 117.2 |
| not included 1) | | | |
--------------------------------------------------------------------------------
| Interest and other financial | 3.8 | 9.9 | 26.7 |
| expenses | | | |
--------------------------------------------------------------------------------
| Interest income | -2.3 | -5.4 | -18.9 |
--------------------------------------------------------------------------------
| Other financial income | -0.6 | 0.0 | -3.2 |
--------------------------------------------------------------------------------
| Dividend income | -0.2 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Taxes | -6.4 | 1.2 | -16.1 |
--------------------------------------------------------------------------------
| Changes in working capital: | | | |
--------------------------------------------------------------------------------
| Change in trade and other | -49.6 | -60.2 | -2.7 |
| receivables | | | |
--------------------------------------------------------------------------------
| Change in inventories | -1.2 | -4.0 | 1.0 |
--------------------------------------------------------------------------------
| Change in accounts payables and | -18.6 | 61.6 | 45.6 |
| other liabilities | | | |
--------------------------------------------------------------------------------
| Interest paid | -2.1 | -3.2 | -13.1 |
--------------------------------------------------------------------------------
| Paid financial expenses | -0.3 | -0.2 | -1.3 |
--------------------------------------------------------------------------------
| Received interest | 3.1 | 2.3 | 15.4 |
--------------------------------------------------------------------------------
| Received financial income | 0.0 | 0.0 | 3.2 |
--------------------------------------------------------------------------------
| Taxes paid | -1.3 | -0.8 | 12.5 |
--------------------------------------------------------------------------------
| Net cash flow from operating | -73.4 | 28.7 | 120.2 |
| activities | | | |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Cash flow from investing | | | |
| activities | | | |
--------------------------------------------------------------------------------
| Acquisitions of subsidiaries | 0.0 | -2.5 | -3.2 |
--------------------------------------------------------------------------------
| Investments in intangible assets | -3.0 | -3.4 | -12.7 |
--------------------------------------------------------------------------------
| Investments in tangible assets | -123.9 | -91.6 | -215.3 |
--------------------------------------------------------------------------------
| Net Change of shares classified | -14.1 | 50.4 | 183.1 |
| as available for sale | | | |
--------------------------------------------------------------------------------
| Sales of tangible fixed assets | 6.3 | 6.4 | 0.0 |
--------------------------------------------------------------------------------
| Net Change of shares classified | 0.0 | 3.6 | 69.0 |
| as available for sale | | | |
--------------------------------------------------------------------------------
| Received dividends | 0.2 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Change in non-current receivable | -1.7 | 0.9 | -7.8 |
--------------------------------------------------------------------------------
| Net cash flow from investing | -136.2 | -36.2 | 13.1 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing | | | |
| activities | | | |
--------------------------------------------------------------------------------
| Loan withdrawals | 205.1 | 1.4 | 4.9 |
--------------------------------------------------------------------------------
| Loan repayments and changes | -20.6 | -11.4 | -50.0 |
--------------------------------------------------------------------------------
| Purchase of own shares | 0.0 | -4.7 | -4.7 |
--------------------------------------------------------------------------------
| Dividends paid | 0.0 | 0.0 | -31.9 |
--------------------------------------------------------------------------------
| Net cash flow from financing | 184.5 | -14.7 | -81.7 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash flows | -25.1 | -22.2 | 51.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in liquid funds | | | |
--------------------------------------------------------------------------------
| Liquid funds, at beginning | 343.4 | 291.8 | 291.8 |
--------------------------------------------------------------------------------
| Change in cash flows | -25.1 | -22.2 | 51.6 |
--------------------------------------------------------------------------------
| Liquit funds, in the end | 318.3 | 269.6 | 343.4 |
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT
--------------------------------------------------------------------------------
| EUR mill. | 1 Jan - 31 | 1 Jan - 31 | 1 Jan - 31 |
| | Mar 2009 | Mar 2008 | Dec 2008 |
--------------------------------------------------------------------------------
| Notes to consolidated cash flow | | | |
| statement | | | |
--------------------------------------------------------------------------------
| 1) Operations for which a payment is | | | |
| not included | | | |
--------------------------------------------------------------------------------
| Depreciation | 26.7 | 27.7 | 110.2 |
--------------------------------------------------------------------------------
| Employee benefits | -4.5 | -1.8 | -10.3 |
--------------------------------------------------------------------------------
| Other adjustments | -1.3 | -1.5 | 17.3 |
--------------------------------------------------------------------------------
| Total | 20.9 | 24.4 | 117.2 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Financial asset at fair value | 359.6 | 443.6 | 373.8 |
--------------------------------------------------------------------------------
| Liquid funds | 15.2 | 17.5 | 18.3 |
--------------------------------------------------------------------------------
| Short-term cash and cash equivalents | 374.8 | 461.1 | 392.1 |
| in balance sheet | | | |
--------------------------------------------------------------------------------
| Maturing after more than 3 months | -53.7 | -172.3 | -39.6 |
--------------------------------------------------------------------------------
| Shares held to trading purposes | -2.8 | -19.2 | -9.1 |
--------------------------------------------------------------------------------
| Total in cash flow statement | 318.3 | 269.6 | 343.4 |
--------------------------------------------------------------------------------
SHAREHOLDERS´EQUITY EUR mill.
--------------------------------------------------------------------------------
| Equity attributable to shareholders of parent company | | |
--------------------------------------------------------------------------------
| | Sh | Ne | Sha | Bon | Hed | Sha | Tran | Reta | Tota | Mino | Own |
| | a- | w | re | us | -gi | re | s-la | i-ne | l | -rit | equity |
| | re | is | pre | iss | ng | cap | tion | d | | y | total |
| | ca | -s | -mi | ue | re- | i-t | diff | ear- | | inte | |
| | -p | ue | um | | ser | al | e-re | ning | | -res | |
| | i- | | ac- | | ve | | nce | s | | ts | |
| | ta | | cou | | | | | | | | |
| | l | | nt | | | | | | | | |
--------------------------------------------------------------------------------
| Shar | 75 | 0. | 20. | 147 | 26. | 244 | -0.1 | 452. | 967. | 1.7 | 968.9 |
| e-ho | .4 | 0 | 4 | .7 | 8 | .9 | | 1 | 2 | | |
| lder | | | | | | | | | | | |
| s´ | | | | | | | | | | | |
| equi | | | | | | | | | | | |
| ty | | | | | | | | | | | |
| 1.1. | | | | | | | | | | | |
| 2008 | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Divi | | | | | | | | -31. | -31. | -0.6 | -32.5 |
| dend | | | | | | | | 9 | 9 | | |
| paym | | | | | | | | | | | |
| ent | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Purc | 0. | 0. | 0.0 | | | | | -4.7 | -4.7 | | -4.7 |
| hase | 0 | 0 | | | | | | | | | |
| of | | | | | | | | | | | |
| own | | | | | | | | | | | |
| shar | | | | | | | | | | | |
| es | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Shar | 75 | 0. | 20. | 147 | 26. | 244 | -0.1 | 415. | 930. | 1.1 | 931.7 |
| e-ho | .4 | 0 | 4 | .7 | 8 | .9 | | 5 | 6 | | |
| lder | | | | | | | | | | | |
| s | | | | | | | | | | | |
| equi | | | | | | | | | | | |
| ty | | | | | | | | | | | |
| rela | | | | | | | | | | | |
| ted | | | | | | | | | | | |
| to | | | | | | | | | | | |
| owne | | | | | | | | | | | |
| rs | | | | | | | | | | | |
| 31.3 | | | | | | | | | | | |
| .200 | | | | | | | | | | | |
| 8 | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Sta- | | | | | 11. | | 0.2 | 3.1 | 14.6 | 0.0 | 14.6 |
| teme | | | | | 3 | | | | | | |
| nt | | | | | | | | | | | |
| of | | | | | | | | | | | |
| comp | | | | | | | | | | | |
| re-h | | | | | | | | | | | |
| ensi | | | | | | | | | | | |
| ve | | | | | | | | | | | |
| inco | | | | | | | | | | | |
| me | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Shar | 75 | 0. | 20. | 147 | 38. | 244 | 0.1 | 418. | 945. | 1.1 | 946.3 |
| e-ho | .4 | 0 | 4 | .7 | 1 | .9 | | 6 | 2 | | |
| lder | | | | | | | | | | | |
| s´ | | | | | | | | | | | |
| equi | | | | | | | | | | | |
| ty | | | | | | | | | | | |
| 31 | | | | | | | | | | | |
| 3.20 | | | | | | | | | | | |
| 08 | | | | | | | | | | | |
--------------------------------------------------------------------------------
SHAREHOLDERS´EQUITY EUR mill.
--------------------------------------------------------------------------------
| Equity attributable to shareholders of parent company | | |
--------------------------------------------------------------------------------
| | Sh | Ne | Sha | Bon | Hed- | Sha | Tran | Reta | Tota | Mi- | Own |
| | a- | w | re | us | ging | re | -s-l | i-ne | l | no- | equity |
| | re | is | pre | iss | rese | ca- | a-ti | d | | rit | total |
| | ca | -s | -mi | ue | rve | pit | on | ear- | | y | |
| | pi | ue | um | | | al | dif- | ning | | in- | |
| | -t | | ac- | | | | fe-r | s | | te- | |
| | al | | cou | | | | ence | | | res | |
| | | | nt | | | | | | | ts | |
--------------------------------------------------------------------------------
| Shar | 75 | 0. | 20. | 147 | -110 | 247 | 0.0 | 369. | 749. | 1.1 | 750.5 |
| e-ho | .4 | 0 | 4 | .7 | .5 | .2 | | 2 | 4 | | |
| lder | | | | | | | | | | | |
| s´ | | | | | | | | | | | |
| equi | | | | | | | | | | | |
| ty | | | | | | | | | | | |
| 1.1. | | | | | | | | | | | |
| 2009 | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Divi | | | | | | | | 0.0 | 0.0 | -0. | -0.4 |
| dend | | | | | | | | | | 4 | |
| paym | | | | | | | | | | | |
| ent | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Purc | 0. | 0. | 0.0 | | | | | 0.0 | 0.0 | | 0.0 |
| hase | 0 | 0 | | | | | | | | | |
| of | | | | | | | | | | | |
| own | | | | | | | | | | | |
| shar | | | | | | | | | | | |
| es | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Shar | 75 | 0. | 20. | 147 | -110 | 247 | | 369. | 749. | 0.7 | 750.1 |
| e-ho | .4 | 0 | 4 | .7 | .5 | .2 | | 2 | 4 | | |
| lder | | | | | | | | | | | |
| s | | | | | | | | | | | |
| equi | | | | | | | | | | | |
| ty | | | | | | | | | | | |
| rela | | | | | | | | | | | |
| ted | | | | | | | | | | | |
| to | | | | | | | | | | | |
| owne | | | | | | | | | | | |
| rs | | | | | | | | | | | |
| 31.3 | | | | | | | | | | | |
| . | | | | | | | | | | | |
| 2009 | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Sta- | | | | | 12.3 | | 0.5 | -18. | -5.8 | 0.0 | -5.8 |
| teme | | | | | | | | 6 | | | |
| nt | | | | | | | | | | | |
| of | | | | | | | | | | | |
| comp | | | | | | | | | | | |
| re-h | | | | | | | | | | | |
| ensi | | | | | | | | | | | |
| ve | | | | | | | | | | | |
| inco | | | | | | | | | | | |
| me | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Shar | 75 | 0. | 20. | 147 | -98. | 247 | 0.5 | 350. | 743. | 0.7 | 744.3 |
| e-ho | .4 | 0 | 4 | .7 | 2 | .2 | | 6 | 6 | | |
| lder | | | | | | | | | | | |
| s´ | | | | | | | | | | | |
| equi | | | | | | | | | | | |
| ty | | | | | | | | | | | |
| 31.3 | | | | | | | | | | | |
| . | | | | | | | | | | | |
| 2009 | | | | | | | | | | | |
--------------------------------------------------------------------------------
SHAREHOLDERS´EQUITY EUR mill.
--------------------------------------------------------------------------------
| Equity attributable to shareholders of parent company | | |
--------------------------------------------------------------------------------
| | Sh | Ne | Sha | Bon | Hed- | Sha | Tran | Reta | Tota | Mi- | Own |
| | a- | w | re | us | ging | re | s-la | i-ne | l | no- | equity |
| | re | is | pre | iss | rese | ca- | -tio | d | | rit | total |
| | ca | -s | -mi | ue | rve | pit | n | ear- | | y | |
| | -p | ue | um | | | al | dif- | ning | | in- | |
| | i- | | ac- | | | | fe-r | s | | te- | |
| | ta | | cou | | | | ence | | | res | |
| | l | | nt | | | | | | | ts | |
--------------------------------------------------------------------------------
| Shar | 75 | 0, | 20, | 147 | 26,8 | 244 | -0,1 | 470, | 985, | 1,7 | 987,0 |
| e-ho | ,4 | 0 | 4 | ,7 | | ,9 | | 2 | 3 | | |
| lder | | | | | | | | | | | |
| s´ | | | | | | | | | | | |
| equi | | | | | | | | | | | |
| ty | | | | | | | | | | | |
| 1.1. | | | | | | | | | | | |
| 2008 | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Chan | | | | | | | | -18, | -18, | 0,0 | -18,1 |
| ge | | | | | | | | 1 | 1 | | |
| of | | | | | | | | | | | |
| acco | | | | | | | | | | | |
| unt- | | | | | | | | | | | |
| ting | | | | | | | | | | | |
| prin | | | | | | | | | | | |
| cipl | | | | | | | | | | | |
| e | | | | | | | | | | | |
| (IFR | | | | | | | | | | | |
| IC | | | | | | | | | | | |
| 13) | | | | | | | | | | | |
--------------------------------------------------------------------------------
| Adju | 75 | 0, | 20, | 147 | 26,8 | 244 | -0,1 | 452, | 967, | 1,7 | 968,9 |
| sted | ,4 | 0 | 4 | ,7 | | ,9 | | 1 | 2 | | |
| ´ | | | | | | | | | | | |
| equi | | | | | | | | | | | |
| ty | | | | | | | | | | | |
| 1.1. | | | | | | | | | | | |
| 2008 | | | | | | | | | | | |
--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED INTERIM REPORT
1. BASIS OF PREPARATION
This consolidated interim report has been prepared according to the
International (IAS) Standard 34: Interim Financial Reporting, which has been
introduced in the EU.
2. ACCOUNTING PRINCIPLES
The accounting principles adhered to in the interim report are consistent with
the principles adhered to in the 2008 consolidated financial statements,
excluding the changes listed below.
The following new standards, changes to standards and the application of
interpretations which are perceived to be essential for the Group have been
introduced from the beginning of 2009:
- IFRIC 13, Customer Loyalty Programmes'. The interpretation clarifies that
where goods or services are sold together with a customer loyalty incentive, the
arrangement is a multiple-element arrangement and the consideration receivable
from the customer is allocated between the components of the arrangement using
fair values. The group operates loyalty programmes as defined by the
interpretation (Finnair-Plus program) in the scheduled traffic segment. After
the adoption of the interpretation the correspondence of deferred credits,
equity and deferred taxes of the previous year reported balance sheet and
turnover, marketing expenses and deferred credits of the previous year income
and loss statement has been made.
--------------------------------------------------------------------------------
| Changes in | 1 | 1Apr- | 1 Jan | 1 Jul- | 1 Jan- | 1 Oct- | 1 Jan- |
| the income | Jan- | 30 Jun | - | 30 | 30 | 31 Dec | 31 |
| statement | 31 | 2008 | 30 | Sep | Sep | 2008 | Dec |
| | Mar | | Jun | 2008 | 2008 | | 2008 |
| | 2008 | | 2008 | | | | |
--------------------------------------------------------------------------------
| Turnover | -3.6 | -0.9 | -4.5 | -1.0 | -5.5 | -1.3 | -6.8 |
--------------------------------------------------------------------------------
| Marketing | 0.3 | 0.3 | 0.6 | 0.3 | 0.9 | 0.1 | 1.0 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Operating | -3.3 | -0.6 | -3.9 | -0.7 | -4.6 | -1.2 | -5.8 |
| profit, | | | | | | | |
| EBIT* | | | | | | | |
--------------------------------------------------------------------------------
| Deferred | 0.9 | 0.2 | 1.0 | 0.2 | 1.2 | 0,3 | 1.5 |
| taxes | | | | | | | |
--------------------------------------------------------------------------------
| Profit effect | -2,4 | -0.4 | -2.9 | -0.5 | -3.4 | -0.9 | -4.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Changes in the | 1 Jan | 31 Mar | 30 Jun | 30 Sep | 31 Dec |
| balance sheet | 2008 | 2008 | 2008 | 2008 | 2008 |
--------------------------------------------------------------------------------
| Deferred credits, | 24.4 | 27.7 | 28.3 | 29.0 | 30.2 |
| increase | | | | | |
--------------------------------------------------------------------------------
| Equity, decrease | 18.1 | 20.5 | 21.0 | 21.4 | 22.3 |
--------------------------------------------------------------------------------
| Deferred taxes, | 6.3 | 7.2 | 7.3 | 7.6 | 7.9 |
| increase | | | | | |
--------------------------------------------------------------------------------
- IAS 1 (Revised), ‘Presentation of Financial Statements'. The revised standard
is aimed at improving users' ability to analyse and compare the information
given in financial statements by separating changes in equity of an entity
arising from transactions with owners from other changes in equity. Non-owner
changed in equity will be presented in the statement of comprehensive income.
The group has been reported the income statement and statement of comprehensive
income and made the correspondence of the previous year income statement and
statement of the comprehensive income according to the IAS 1 (Revised).
- IFRS 8, ‘Operating Segments'. The new standard replaces IAS 14. The new
standard requires a ‘management approach', under which segment information is
presented on the same basis as that used for internal reporting purposes. The
segments reported by the group will also in the future be the same as the
business segments under IAS 14. The reported operating segments are the same as
under IAS 14 business segments and they correspond the internal reporting.
- Amendment to IAS 23, ‘Borrowing Costs'. The amended standard requires an
entity to capitalise borrowing costs directly attributable to a qualifying asset
as part of the cost of that asset. The option of immediately expensing those
borrowing costs will be removed. The group will commence capitalisation of
borrowing cost related to such undertakings as well as projects to be accounted
for under the stage of completion method embarked in 2009. Such Borrowing Costs
are expected to be most in the Scheduled Traffic segment. So far, there have not
been the Borrowing Costs according to IAS 23 standard.
3. CRITICAL FINANCIAL STATEMENT ESTIMATES AND ASSUMPTIONS
The preparation of interim reports requires the company's management to make
estimates and assumptions that influence the levels of reported assets and
liabilities as well as of revenue and expenses. Realised results might differ
from these estimates.
In connection with the preparation of this interim report, the significant
estimates made by management relating to the consolidated accounting principles
and the key uncertainty factors are the same as those applied in the 2008 annual
financial statements.
4. 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 2009
--------------------------------------------------------------------------------
| | Schedu | Leisu | Aviati | Travel | Group | Unallo | Group |
| | led | re | on | Servic | eliminat | -cated | |
| | Passen | Traff | Servic | es | ions | items | |
| | ger | ic | es | | | | |
| | Traffi | | | | | | |
| | c | | | | | | |
--------------------------------------------------------------------------------
| EUR mill. | | | | | | | |
--------------------------------------------------------------------------------
| External | 326.1 | 147.1 | 28.2 | 14.3 | | | 515.7 |
| turnover | | | | | | | |
--------------------------------------------------------------------------------
| Internal | 27.7 | 1.7 | 84.6 | 0.9 | -114.9 | | 0.0 |
| turnover | | | | | | | |
--------------------------------------------------------------------------------
| Turnover | 353.8 | 148.8 | 112.8 | 15.2 | -114.9 | 0.0 | 515.7 |
--------------------------------------------------------------------------------
| Operating | -50.3 | 5.5 | 2.3 | -1.5 | | 19.7 | -24.3 |
| profit | | | | | | | |
--------------------------------------------------------------------------------
| Share of | | | | | | 0.0 | 0.0 |
| results of | | | | | | | |
| associated | | | | | | | |
| undertaking | | | | | | | |
| s | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | 3.1 | 3.1 |
| income | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | -3.8 | -3.8 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Income tax | | | | | | 6.4 | 6.4 |
--------------------------------------------------------------------------------
| Minority | | | | | | 0.0 | 0.0 |
| interest | | | | | | | |
--------------------------------------------------------------------------------
| Profit for | | | | | | | -18.6 |
| the period | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| Other items | | | | | | | |
--------------------------------------------------------------------------------
| Investments | 118.7 | 0.1 | 8.6 | 0.7 | 0.0 | 0.1 | 128.2 |
--------------------------------------------------------------------------------
| Depreciatio | 20.2 | 0.1 | 5.7 | 0.3 | 0.0 | 0.4 | 26.7 |
| n | | | | | | | |
--------------------------------------------------------------------------------
PRIMARY REPORTING FORMAT - BUSINESS SEGMENT DATA 1 January- 31 March 2008
--------------------------------------------------------------------------------
| | Schedu | Leisu | Aviati | Travel | Group | Unallo-c | Group |
| | led | re | on | Servic | eli-min | ated | |
| | Passen | Traff | Servic | es | ations | items | |
| | ger | ic | es | | | | |
| | Traffi | | | | | | |
| | c | | | | | | |
--------------------------------------------------------------------------------
| EUR mill. | | | | | | | |
--------------------------------------------------------------------------------
| External | 388.4 | 138.1 | 26.5 | 19.9 | | | 572.9 |
| turnover | | | | | | | |
--------------------------------------------------------------------------------
| Internal | 31.2 | 1.2 | 83.4 | 1.2 | -117.0 | | 0.0 |
| turnover | | | | | | | |
--------------------------------------------------------------------------------
| Turnover | 419.6 | 139.3 | 109.9 | 21.1 | -117.0 | 0.0 | 572.9 |
--------------------------------------------------------------------------------
| Operating | -1.6 | 11.1 | 2.6 | 0.4 | | -3.7 | 8.8 |
| profit | | | | | | | |
--------------------------------------------------------------------------------
| Share of | | | | | | 0.0 | 0.0 |
| results of | | | | | | | |
| associated | | | | | | | |
| undertaking | | | | | | | |
| s | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | 5.4 | 5.4 |
| income | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | -9.9 | -9.9 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Income tax | | | | | | -1.2 | -1.2 |
--------------------------------------------------------------------------------
| Minority | | | | | | 0.0 | 0.0 |
| interest | | | | | | | |
--------------------------------------------------------------------------------
| Profit for | | | | | | | 3.1 |
| the period | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| Other items | | | | | | | |
--------------------------------------------------------------------------------
| Investments | 46.4 | 0.1 | 17.7 | 0.2 | 0.0 | 0.0 | 64.4 |
--------------------------------------------------------------------------------
| Depreciatio | 19.6 | 0.1 | 7.3 | 0.4 | 0.0 | 0.3 | 27.7 |
| n | | | | | | | |
--------------------------------------------------------------------------------
TURNOVER
--------------------------------------------------------------------------------
| | 2009 | 2008 | Change | 2008 |
--------------------------------------------------------------------------------
| | 1 Jan- | 1 Jan | % | 1 Jan- |
| | 31 | 31 | | 31 |
| | Mar | Mar | | Dec |
--------------------------------------------------------------------------------
| EUR mill. | | | | |
--------------------------------------------------------------------------------
| Scheduled | 353.8 | 419.6 | -15.7 | 1 728.9 |
| Passenger Traffic | | | | |
--------------------------------------------------------------------------------
| Leisure Traffic | 148.8 | 139.3 | 6.8 | 454.6 |
--------------------------------------------------------------------------------
| Aviation Services | 112.8 | 109.9 | 2.6 | 445.8 |
--------------------------------------------------------------------------------
| Travel Services | 15.2 | 21.1 | -28.0 | 77.9 |
--------------------------------------------------------------------------------
| Group eliminations | -114.9 | -117.0 | -1.8 | -451.4 |
--------------------------------------------------------------------------------
| Total | 515.7 | 572.9 | -10.0 | 2 255.8 |
--------------------------------------------------------------------------------
OPERATING PROFIT EXCLUDING THE DISPOSAL OF THE CAPITAL ASSETS AND FAIR VALUE
CHANGES OF DERIVATIVES AND NON-RECURRING ITEMS
--------------------------------------------------------------------------------
| | 2009 | 2008 | Change | 2008 |
--------------------------------------------------------------------------------
| | 1 Jan- | 1 Jan | % | 1 Jan- |
| | 31 | 31 | | 31 |
| | Mar | Mar | | Dec |
--------------------------------------------------------------------------------
| EUR mill. | | | | |
--------------------------------------------------------------------------------
| Scheduled Passenger | -50.3 | -3.7 | 1 259.5 | -35.9 |
| Traffic | | | | |
--------------------------------------------------------------------------------
| Leisure Traffic | 5.5 | 11.1 | -50.5 | 26.7 |
--------------------------------------------------------------------------------
| Aviation Services | 2.3 | 2.5 | -8.0 | 13.8 |
--------------------------------------------------------------------------------
| Travel Services | -1.5 | 0.4 | -475.0 | 2.1 |
--------------------------------------------------------------------------------
| Unallocated items | -3.5 | -2.5 | 40.0 | -5.9 |
--------------------------------------------------------------------------------
| Total | -47.5 | 7.8 | -709.0 | 0.8 |
--------------------------------------------------------------------------------
EMPLOYEES AVERAGE BY SEGMENT
--------------------------------------------------------------------------------
| | 2009 | 2008 | Change |
--------------------------------------------------------------------------------
| | 1 Jan- | 1 Jan- | % |
| | 31 Mar | 31 Mar | |
--------------------------------------------------------------------------------
| Scheduled Passenger Traffic | 4 159 | 4 168 | -0.2 |
--------------------------------------------------------------------------------
| Leisure Traffic | 499 | 463 | 7.8 |
--------------------------------------------------------------------------------
| Aviation Services | 3 429 | 3 540 | -3.1 |
--------------------------------------------------------------------------------
| Travel Services | 997 | 1 102 | -9.5 |
--------------------------------------------------------------------------------
| Other functions | 146 | 153 | -4.6 |
--------------------------------------------------------------------------------
| Finnair Group Total | 9 230 | 9 426 | -2.1 |
--------------------------------------------------------------------------------
SECONDARY REPORTING FORMAT - GEOGRAPHICAL SEGMENTS
TURNOVER OUTSIDE THE GROUP BY SALES DESTINATION
--------------------------------------------------------------------------------
| | 2009 | 2008 | Change | 2008 |
--------------------------------------------------------------------------------
| | 1 Jan- | 1 Jan- | % | 1 Jan- |
| | 31 Mar | 31 | | 31 |
| | | Mar | | Dec |
--------------------------------------------------------------------------------
| EUR mill. | | | | |
--------------------------------------------------------------------------------
| Finland | 115.8 | 122.1 | -5.2 | 432.8 |
--------------------------------------------------------------------------------
| Europe | 191.2 | 223.5 | -14.5 | 962.5 |
--------------------------------------------------------------------------------
| Asia | 160.2 | 187.0 | -14.3 | 708.8 |
--------------------------------------------------------------------------------
| North America | 10.8 | 11.5 | -6.1 | 67.6 |
--------------------------------------------------------------------------------
| Others | 37.7 | 28.8 | 30.9 | 84.1 |
--------------------------------------------------------------------------------
| Total | 515.7 | 572.9 | -10.0 | 2 255.8 |
--------------------------------------------------------------------------------
5. MANAGEMENT OF FINANCIAL RISKS
No significant changes have been made to the Group's risk management principles
in the reporting period. The objectives and principles of risk management are
consistent with information presented in the Group's 2008 Annual Report.
The tables below present the nominal value or the amount and net fair value of
derivative contracts used in the Group's hedge accounting.
DERIVATIVE CONTRACTS EUR mill.
--------------------------------------------------------------------------------
| Derivative | 31 March 2009 | 31 March 2008 | 31 Dec 2008 |
| 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 | 375.2 | 24.1 | 279.3 | -30.3 | 382.7 | 14.0 |
| contracts, | | | | | | |
| Jet Fuel | | | | | | |
| currency | | | | | | |
| hedging | | | | | | |
--------------------------------------------------------------------------------
| Forward | 501.0 | 29.1 | 461.2 | -34.4 | 484.7 | 26.8 |
| contracts, | | | | | | |
| Hedging of | | | | | | |
| Aircraft | | | | | | |
| purchace | | | | | | |
| price | | | | | | |
--------------------------------------------------------------------------------
| Forward | 38.3 | 3.3 | 52.0 | -5.6 | 48.4 | 2.2 |
| contracts, | | | | | | |
| Currency | | | | | | |
| hedging of | | | | | | |
| lease | | | | | | |
| payments | | | | | | |
--------------------------------------------------------------------------------
| Total | 914.5 | 56.5 | 792.5 | -70.3 | 915.8 | 43.0 |
--------------------------------------------------------------------------------
| Currency | | | | | | |
| derivatives | | | | | | |
| at fair value | | | | | | |
| through | | | | | | |
| profit or | | | | | | |
| loss | | | | | | |
--------------------------------------------------------------------------------
| Operating | 55.6 | 3.0 | 44.4 | -1.5 | 74.4 | 3.2 |
| cash (flow | | | | | | |
| hedging) | | | | | | |
--------------------------------------------------------------------------------
| Operational | 0.0 | 0.0 | 60.2 | 0.3 | 12.8 | 0.2 |
| cash flow | | | | | | |
| hedging | | | | | | |
| (options) | | | | | | |
--------------------------------------------------------------------------------
| Call options | 0.0 | 0.0 | 67.1 | -1.7 | 18.8 | -0.1 |
--------------------------------------------------------------------------------
| Balance sheet | 94.2 | 0.3 | 61.8 | -2.0 | 46.9 | -2.3 |
| hedging | | | | | | |
| (forward | | | | | | |
| contracts) | | | | | | |
--------------------------------------------------------------------------------
| Total | 149.8 | 3.3 | 233.5 | -4.9 | 152.9 | 1.0 |
--------------------------------------------------------------------------------
| Currency | 1 064.2 | 59.8 | 1 026.0 | -75.2 | 1 068.8 | 44.0 |
| derivatives, | | | | | | |
| total | | | | | | |
--------------------------------------------------------------------------------
| | 31 March 2009 | 31 March 2008 | 31 Dec 2008 |
--------------------------------------------------------------------------------
| | 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 | 572 600 | -149.1 | 567 750 | 85.8 | 591 300 | -153.1 |
| swaps | | | | | | |
--------------------------------------------------------------------------------
| Commodity | | | | | | |
| derivatives | | | | | | |
| at fair value | | | | | | |
| through | | | | | | |
| profit or | | | | | | |
| loss | | | | | | |
--------------------------------------------------------------------------------
| Jet Fuel | 53 500 | -18.8 | 14 000 | 1.9 | 71 700 | -27.6 |
| Forward | | | | | | |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Gasoil | 8 000 | -2.6 | 12 500 | 0.9 | 17 000 | -5.5 |
| forward | | | | | | |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Jet | 262 500 | 10.6 | 439 000 | 0.1 | 340 500 | 6.9 |
| differential | | | | | | |
| forward | | | | | | |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Options | | | | | | |
--------------------------------------------------------------------------------
| Jet Fuel call | 16 000 | 0.0 | 72 500 | 5.3 | 28 000 | 0.1 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Jet Fuel put | 16 000 | -5.7 | 76 000 | -0.5 | 28 000 | -8.9 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Gasoil call | 27 000 | 0.0 | 57 500 | 3.0 | 47 000 | 0.0 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Gasoil put | 39 500 | -12.4 | 104 500 | -0.2 | 63 500 | -17.6 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Total | | -177.9 | | 96.3 | | -205.6 |
--------------------------------------------------------------------------------
| | 31 March 2009 | 31 March 2008 | 31 Dec 2008 |
--------------------------------------------------------------------------------
| | 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 | 13.8 | -5.3 | 22.0 | -13.2 | 16.7 | -7.3 |
| accounting | | | | | | |
| items | | | | | | |
--------------------------------------------------------------------------------
| Cross | 10.9 | -5.1 | 13.3 | -10.0 | 11.7 | -6.3 |
| currency | | | | | | |
| interest rate | | | | | | |
| swaps at fair | | | | | | |
| value through | | | | | | |
| profit or | | | | | | |
| loss | | | | | | |
--------------------------------------------------------------------------------
| Total | 24.8 | -10.4 | 35.3 | -23.2 | 28.4 | -13.6 |
--------------------------------------------------------------------------------
| Interest rate | | | | | | |
| swaps | | | | | | |
--------------------------------------------------------------------------------
| Hedge | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| accounting | | | | | | |
| items | | | | | | |
--------------------------------------------------------------------------------
| Interest rate | 20.0 | 0.2 | 20.0 | 0.7 | 20.0 | 0.1 |
| swaps at fair | | | | | | |
| value through | | | | | | |
| profit or | | | | | | |
| loss | | | | | | |
--------------------------------------------------------------------------------
| Total | 20.0 | 0.2 | 20.0 | 0.7 | 20.0 | 0.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share | | | | | | |
| derivatives | | | | | | |
--------------------------------------------------------------------------------
| Shares | | | | | | |
--------------------------------------------------------------------------------
| Call options, | 0.0 | 0.0 | 15.9 | 3.0 | 0.0 | 0.0 |
| share | | | | | | |
--------------------------------------------------------------------------------
6. COMPANY ACQUISITIONS AND SALES
Group subsidiary Oy Aurinkomatkat - Suntours Ltd Ab purchased in March 2009 the
entire share stock of Toivelomat Oy, and the company has been consolidated as a
Group subsidiary in this interim report.
7. INCOME TAXES
Income taxes have been entered in the income statement using the tax rates that
will be applied to the expected total profit for the year.
8. DIVIDEND PER SHARE
The Annual General Meeting on 26 March 2009 decided not to distribute a dividend
for financial year 2008.
9. CHANGE IN INTANGIBLE AND TANGIBLE ASSETS EUR mill.
--------------------------------------------------------------------------------
| | 31 March | 31 March | 31 Dec |
| | 2009 | 2008 | 2008 |
--------------------------------------------------------------------------------
| Carrying amount at beginning of | 1 339.6 | 1 250.2 | 1 250.2 |
| period | | | |
--------------------------------------------------------------------------------
| Fixed asset investments | 129.0 | 66.9 | 273.2 |
--------------------------------------------------------------------------------
| Change in advances | -1.3 | 30.7 | -4.6 |
--------------------------------------------------------------------------------
| Disposals | 0.0 | -3.6 | -69.0 |
--------------------------------------------------------------------------------
| Depreciation | -26.7 | -27.7 | -110.2 |
--------------------------------------------------------------------------------
| Carrying amount at end of period | 1 440.6 | 1 316.5 | 1 339.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Proportion of assets held for sale | 19.4 | 34.7 | 34.7 |
| at beginning of period | | | |
--------------------------------------------------------------------------------
| Proportion of assets held for sale | 19.4 | 32.8 | 19.4 |
| at end of period | | | |
--------------------------------------------------------------------------------
10. INTEREST-BEARING LIABILITIES
In the first quarter of 2009, Group loans were repaid in accordance with a
repayment programme. During the first period the loan withdrawals were 205.1
million euros, the part of short-term loans was 86,8 million euros. The rest of
the loan transactions presented in the accounts relate to old secured loans,
which owing to their exceptional agreement structure have a net repayment
entered gross both as a withdrawal and a repayment.
11. CONTINGENT LIABILITIES EUR mill.
--------------------------------------------------------------------------------
| | 31 March | 31 March | 31 Dec |
| | 2009 | 2008 | 2008 |
--------------------------------------------------------------------------------
| Other contingent liabilities | | | |
--------------------------------------------------------------------------------
| Pledges on own behalf | 377.1 | 250.8 | 273.3 |
--------------------------------------------------------------------------------
| Guarantees on group undertakings | 82.1 | 67.5 | 68.0 |
--------------------------------------------------------------------------------
| Total | 459.2 | 318.3 | 341.3 |
--------------------------------------------------------------------------------
Investment commitments for property, plant and equipment on 31 March 2009
totalled 1, 505.0 million euros (31 December 2008: 1. 508.9 million euros)
12. LIABILITIES (EUR million)
--------------------------------------------------------------------------------
| | 31 March | 31 March | 31 Dec |
| | 2009 | 2008 | 2008 |
--------------------------------------------------------------------------------
| Fleet lease payment liabilities | 272.2 | 299.1 | 285.9 |
--------------------------------------------------------------------------------
| Other liabilities | 205.2 | 239.0 | 202.5 |
--------------------------------------------------------------------------------
| Total | 477.4 | 538.1 | 488.4 |
--------------------------------------------------------------------------------
13. RELATED PARTY TRANSACTIONS
Related party transactions are presented in Finnair's 2008 Annual Report. There
have been no substantial changes after the closing date.
Transactions and open balances with associated undertakings were of very minor
significance in the reporting period.
14. AIR TRAFFIC 1 January - 31 March 2009
--------------------------------------------------------------------------------
| | Total | Europ | Nort | Asia | Domes- | Schedu- | Leisu | Cargo |
| | traff | e | h | | tic | led | re | |
| | ic | | Am | | | Traf-fi | | |
| | | | eric | | | c Total | | |
| | | | a | | | | | |
--------------------------------------------------------------------------------
| Passengers | 1 890 | 790 | 32 | 295 | 412 | 1 529 | 361 | |
| (1000) | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | -6.6 | -10.3 | 12.5 | -3.0 | -11.5 | -8.9 | 5.0 | |
--------------------------------------------------------------------------------
| Cargo and | 20 | 4 520 | 1 | 12 | 764 | 19 491 | 343 | 20 |
| mail | 228 | | 496 | 711 | | | | 228 |
| (tonnes) | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | -19.6 | -15.7 | -4.3 | -22.8 | 2.3 | -19.3 | 219.8 | -19.6 |
--------------------------------------------------------------------------------
| Available | 7 409 | 1 821 | 264 | 2 768 | 414 | 5 267 | 2 141 | |
| seat-kilom | | | | | | | | |
| etres mill | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | -1.4 | -6.3 | 15.4 | -6.9 | -9.5 | -6.0 | 12.0 | |
--------------------------------------------------------------------------------
| Revenue | 5 624 | 1 088 | 209 | 2 126 | 238 | 3 661 | 1 963 | |
| passenger | | | | | | | | |
| kilometres | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | 0.0 | -8.4 | 12.5 | -3.4 | -13.9 | -4.9 | 10.6 | |
--------------------------------------------------------------------------------
| Passenger | 75.9 | 59.7 | 79.2 | 76.8 | 57.6 | 69.5 | 91.7 | |
| load | | | | | | | | |
| factor % | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | 1.1 | -1.3 | -2.1 | 2.8 | -2.9 | 0.8 | -1.2 | |
--------------------------------------------------------------------------------
| Available | 1 105 | | | | | | | 235 |
| tonne-kilo | | | | | | | | |
| metres | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | -1.3 | | | | | | | -2.9 |
--------------------------------------------------------------------------------
| Revenue | 616 | | | | | | | 112 |
| tonne-kilo | | | | | | | | |
| metres | | | | | | | | |
| mill | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | -4.7 | | | | | | | -21.5 |
--------------------------------------------------------------------------------
| Overall | 55.7 | | | | | | | 47.6 |
| load | | | | | | | | * |
| factor % | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | -2.0 | | | | | | | -11.3 |
--------------------------------------------------------------------------------
* Operational calculatory capacity
15. ITEMS OF THE STATEMENT OF COMPREHENSIVE INCOME
Other comprehensive income include the unrealisable change in the fair value of
the hedging instruments of the hedge accounting items which has earlier
recognised straight in the hedging reserve of the shareholders' equity and the
translation difference.
--------------------------------------------------------------------------------
| | 2009 | 2008 | Muutos | 2008 |
--------------------------------------------------------------------------------
| | 1 Jan-31 | 1 Jan-31 | % | 1 Jan -31 |
| | Mar | Mar | | Dec |
--------------------------------------------------------------------------------
| Profit for the period | -18.6 | 3.1 | - | -46.1 |
--------------------------------------------------------------------------------
| Other comprehensive income | | | | |
| items | | | | |
--------------------------------------------------------------------------------
| Translation differences | 0.5 | 0.2 | - | 0.1 |
--------------------------------------------------------------------------------
| Fair value change of hedging | 1.3 | -4.7 | | -13.7 |
| instruments after taxes | | | | |
--------------------------------------------------------------------------------
| - Taxes | -0.4 | 1.7 | | 48.8 |
--------------------------------------------------------------------------------
| Change in fair value of hedging | 11.0 | 16.0 | - | -123.6 |
| instruments after taxes | | | | |
--------------------------------------------------------------------------------
| - Taxes | -3.9 | -5.7 | | 43.4 |
--------------------------------------------------------------------------------
| Other comprehensive income | 12.8 | 11.5 | - | -137.2 |
| items, total | | | | |
--------------------------------------------------------------------------------
| Comprehensive income for the | -5.8 | 14.6 | - | -183.3 |
| financial period | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share to | -5.8 | 14.6 | | -183,5 |
| shareholders of the parent | | | | |
| company of the comprehensive | | | | |
| income statement | | | | |
--------------------------------------------------------------------------------
| Earnings per share to minority | 0.0 | 0.0 | | 0.2 |
| of the parent company of the | | | | |
| comprehensive income statement | | | | |
--------------------------------------------------------------------------------
16. EVENTS AFTER THE REVIEW PERIOD
There have not been other remarkable events after the closing date as told in
the interim report.
