Summary of the third quarter's key figures
- Turnover rose 5.8% to 545.2 million euros, turnover excluding impact of
FlyNordic, sold in July, rose 10.9%
- Passenger traffic grew 10.8%, passenger load factor fell 1.0 percentage point
to 77.3%
- Unit revenues from flight operations fell by 5.2%, unit costs fell by 7.7%
- Operating profit i.e. EBIT, was 59.9 million euros (14.7 million)
- Operational result, i.e. EBIT excluding capital gains and changes in the fair
value of derivatives, was 39.2 million euros (22.5 million)
- Profit before taxes was 55.9 million euros (13.5 million).
- Gearing at the end of the third quarter was 17.7% (9.7%) and gearing adjusted
for leasing liabilities was 103.3% (108.0%)
- Balance sheet cash and cash equivalents at the end of the period totalled
257.1 million euros (295.6 million)
- Equity ratio 37.5% (38.9%)
- Equity per share 7.68 euros (7.18)
- Earnings per share 0.44 euros (0.11)
- Return on capital employed 9.3% (1.7%)
Comparisons of key figures have been made against the third quarter of 2006,
which still include FlyNordic numbers.
The interim report's traffic performance comparison figures are actual traffic
performance figures from 2006, while in order to facilitate comparison the
traffic performance figures of FlyNordic, sold in July, have been eliminated
from the monthly published traffic figures for the period July-September 2006.
President and CEO Jukka Hienonen on the interim result:
World air transport has kept pace well with the development of the world
economy. Despite the rise in fuel price traffic numbers have grown on all
continents. The growth of demand has been particularly strong in Asia and South
America. Finnair's growth comes from Europe-Asia traffic. We come in fourth in
this segment, right after the big players.
Thanks to Finnair's efficiency programme launched last year, we are in a better
result-making condition which is reflected in the figures for the third quarter
and the whole year. The implementation of the growth strategy and fine-tuning of
our engine have required flexibility from both the core of the Group as well as
all sides of it. The weeding of our cost structure is part of the continuous
rationalisation of our operations and focus on the essential.
Our recently published vision tells of our commitment to growth and
profitability. Finnair has in its hands the keys to its success with the help of
which we can realise our goal of becoming the airline of choice for quality and
environmentally conscious air travellers in intercontinental traffic in the
Northern Hemisphere.
It is a joy to publish such a result on Finnair's 84th birthday; it is much
needed for the coming investments. We have a long, distinguished history, but it
does not guarantee our success tomorrow. This success needs to be built every
day. We are in a position to expect the best operating result of the new
millennium so far this year.
Market and General Review
In the first nine months of the year, Finnair's development has been better than
the average for European network airlines in terms of both traffic growth and
profitability improvement. In Europe-Asia traffic, Finnair is among the ten most
significant operators, and is fourth among European airlines in terms of
capacity.
During this year, global air traffic has grown by around six per cent from the
previous year. The air traffic growth in Asia, where economic growth is boosting
the development of the continent, has been particularly strong. Finnair's
traffic overall grew in January-September by more than 14 per cent and scheduled
passenger traffic by more than 20 per cent - in the third quarter even more
strongly.
Finnair's Asian traffic grew in the early part of the year by 30 per cent, while
European airlines' Asian traffic grew on average by 3.5 per cent. Finnair's
objective is continued growth to Asian destinations. Finnair's vision is to
develop into the most desired intercontinental airline of the northern
hemisphere.
In the third quarter, capacity was increased particularly by two new long-haul
Airbus A340 aircraft entered into traffic in June. The long-haul fleet renewal
is proceeding according to schedule. Next year, another two new Airbus
wide-bodied aircraft will join Finnair's fleet, marking the beginning of the
Boeing MD-11 aircraft replacement investments. The intention is to arrange a
rights issue in order to partially finance the investments.
In the early part of the year, four new 100-seat Embraer 190 jet aircraft have
been acquired for European traffic. At the same time, four of the Estonian
subsidiary Aero's ATR 72 turboprop aircraft have been sold.
In the third quarter, unit revenues for Finnair's air traffic fell due to a
change of traffic structure. Unit revenues were also burdened by new openings
and capacity increases in Europe and Asia, to which flights were sold with a
more aggressive pricing. At the same time, despite record high fuel prices, unit
costs of air traffic fell more strongly than unit revenues, which improved the
profitability of scheduled passenger traffic.
It has been possible to reduce the cost level of air traffic through the more
efficient use of fleet and by improving the productivity of personnel. In terms
of functions supporting air traffic, significant cost savings have been achieved
in Finnair Technical Services, where operational productivity has been improved
through competitiveness projects. Costs of ground handling activity rose from
the third quarter of last year, particularly due to the start-up of operations
in Norway. In September, a memorandum of understanding on the sale of the
Norwegian and Swedish ground handling operations was signed with the Menzies
Aviation Plc.
The 80 million euro efficiency programme on annual savings initiated in May last
year has proceeded according to plan. More than half of the programme's impact
will be seen this year, while the full impact on the result will be evident next
year.
The punctuality of Finnair's flights has been lower this year than last,
although there has been some improvement towards the end of the year. Last
summer, delays were caused by increased traffic in relation to the capacity of
Helsinki-Vantaa Airport. Baggage problems were caused, among other things, by
the perceived terrorist threat in the UK, which overextended baggage streams at
European airports.
Air cargo traffic on Finnair's Asian flights has grown due to an increase in
capacity. Average prices have fallen, particularly due to overcapacity in the
Scandinavian market. Towards the autumn, cargo demand has increased and the fall
in average prices has levelled off.
The agreement made in July for the sale of Finnair's Swedish subsidiary
FlyNordic to Norwegian Air Shuttle was finalised during the autumn. As a result
of the deal, Finnair acquired five per cent of Norwegian's shares and an option
to increase its ownership to ten per cent. In the third quarter, a non-recurring
item improving the operating profit by around 14 million euros was recognised
for the deal. In addition, cooperation between Finnair and Norwegian was agreed
upon.
Financial Result, 1 July - 30 September 2007
Turnover rose in the third quarter by 5.8 per cent to 545.2 million euros
(515.4 million) Turnover excluding FlyNordic from comparison year increased by
10.9%. The Group's operational result, i.e. operating profit excluding capital
gains, changes in the fair value of derivatives and non-recurring arrangement
expenses rose to 39.2 million euros (22.5 million). Adjusted operating profit
margin was 7.2 per cent (4.4). Profit before taxes was 55.9 million euros (13.5
million).
Result includes 17.3 million euros (0.1 million) in capital gains and
non-recurring items. The most significant of these consists of a capital gain on
the sale of FlyNordic, the net impact of which on operating profit is 14.1
million euros. In addition, the figure includes capital gains arising from the
sale of one ATR 72 turboprop aircraft and the engine of one Boeing MD-80
aircraft. In non-recurring items, negative contributions were made by additional
depreciation of Boeing MD-80 aircraft owned by Finnair Aircraft Finance but used
by FlyNordic as well as amortisation of goodwill for FlyNordic.
Changes in the fair value of derivatives improved the third quarter result by
3.4 million euros, but this has no effect on cash flow.
In July-September, the Finnair Group's passenger traffic capacity rose by more
than 12.2 per cent and demand grew 10.8 per cent; demand in Asian traffic alone
rose by 31.5 per cent. Passenger load factor fell by 1.0 percentage points
compared with the previous year to 77.3 per cent. In terms of cargo, 5.9 per
cent more was carried than in July-September last year. The most significant
growth area for cargo traffic is Asia.
In Group passenger traffic, total unit revenues per passenger kilometre fell 5.9
per cent. Yield per passenger rose by 11.8 per cent. Unit revenues per tonne
kilometre for cargo traffic declined by 2.4 per cent. Weighted unit revenue for
passenger and cargo traffic fell 5.2 per cent, mainly due to a change of traffic
structure.
Euro-denominated operating costs rose during the period by 1.2 per cent.
Operating costs, eliminated by Flynordic Q3 2006, increased by 6.6 per cent.
Unit costs for flight operations, on the other hand, fell by 7.7 per cent. The
most significant change from the third quarter of the previous year is the item
‘Fleet materials and overhauls', which fell by 35.6%. One of the main factors
was lower maintenance costs resulting from new aircraft in the fleet. In
addition, there were subcontracting costs in the comparison year, which did not
exist this year. The most significant reason for the reduction of the item
‘Other expenses' is last year's change in the fair value of derivatives.
Fuel costs rose in the third quarter overall by 10.8 per cent, but per available
tonne kilometre fell by 2.0 per cent Unit costs, excluding fuel costs, fell by
9.5 per cent.
Earnings per share for the quarter amounted to 0.44 euros (0.11). The main
factors in the Group's profit improvement were the improved results of the
Scheduled Passenger Traffic business area, Finnair Catering and Finnair
Technical Services.
Financial Result, 1 January - 30 September 2007
Turnover rose in January-September by 8.2 per cent to 1,611.8 million euros
(1,490.3 million euros). The Group's operational result, i.e. EBIT excluding
capital gains, non-recurring arrangement costs and changes in the fair value of
derivatives, rose to 72.2 million euros (35.6 million). Adjusted operating
profit margin was 4.5 per cent (2.4). Profit before taxes was 103.7 million
euros (11.6 million euros).
Changes in the fair value of derivatives improved the result for the first nine
months by 14.3 million euros, but this has no effect on cash flow.
In January-September, the passenger traffic capacity rose by more than 12.2 per
cent and demand grew 11.9 per cent; demand in Asian traffic alone rose by 30.9
per cent. The passenger load factor was at the previous year's level, 75.9 per
cent. The amount of cargo carried grew from the previous year by 2.4 per cent.
In Group passenger traffic, total unit revenues per passenger kilometre fell 1.5
per cent. Yield per passenger rose by 11.1 per cent. In cargo traffic, unit
revenues per tonne kilometre fell 5.4 per cent due to strong price competition
and a change of traffic structure. Weighted unit revenues for passenger and
cargo traffic fell by 1.4 per cent.
Euro-denominated operating costs rose during the period by 3.5 per cent.
Operating costs, eliminated by Flynordic, increased by 5.9 per cent. Unit costs
for flight operations fell by 4.6 per cent. Fuel costs increased in
January-September by 13.6 per cent as a whole, but per available tonne kilometre
only by 0.8 per cent. Unit costs, excluding fuel costs, fell by 6.2 per cent.
Earnings per share for January-September amounted to 0.84 euros (0.07).
Any comparison should also take into consideration the fact that 15 million
euros of non-recurring expenses relating to the restructuring programme were
recognised in the second quarter of last year, which is evident in cumulative
operating expenses. In the comparison of operational result, restructuring
expenses have been eliminated.
Investment, financing and risk management
Investments in January-September totalled 264.3 million euros (195.1 million)
and included, among other things, two Airbus A340 wide-bodied aircraft as well
as three Embraer 190 aircraft for European traffic. Including advance payments,
the cash flow impact of investments was -225.7 million euros. During the final
quarter, a further two Embraer 190 aircraft will arrive.
In 2008 the gross investments will exceed 300 million euros. The forecast for
2009 is more than 400 million euros including potential leasing solutions. The
financing solution for Airbus A330 aircraft between direct leasing and debt
financing remains open, so the level of investment realisable in the balance
sheet is not yet known.
At the end of September, the Group had balance sheet cash and cash equivalents
amounting to 257.1 million euros, in addition to which there was a total of
250 million euros in unused committed credit facilities.
Operational net cash flow in January-September was 168.7 million euros, compared
with 23.4 million euros a year earlier. Gearing increased from 7.1 per cent at
the beginning of the year to 17.7.per cent at the end of September, and gearing
adjusted for leasing liabilities decreased from 112.8 per cent to 103.3. per
cent. The equity ratio has remained at the previous year's level and was 37.5
per cent.
As part of the financing of the investment programme and to strengthen the
capital structure, it is the intention to arrange a share offering (rights
issue) for existing shareholders. This offering has been prepared in cooperation
with Danske Markets and UBS Investment Bank. An Extraordinary Shareholders
Meeting will be convened on 21 November 2007 to decide on the granting of share
offer authorisations to the company's Board of Directors. The aim is to
implement the share offering during the final quarter of this year. In respect
of Finnair's largest shareholder, the Finnish State, the Government has
submitted a proposal to Parliament for an appropriation up to a maximum of
139 million euros, the use of which would maintain the State's ownership at its
current level.
The leasing agreements of the seven Boeing 757 aircraft used by Leisure Flights
have been renewed on more favourable financial terms, which results in as lower
aircraft leasing costs.
This year, sale and leaseback agreements have been made for two Embraer 190
aircraft, one in the second quarter and one, in progress, in the fourth quarter.
The lease agreements are Japanese Operating Leases, which include the right to
repurchase when the leasing term of approximately ten years expires.
According to Finnair's financial risk management policy, the hedging horizon for
jet fuel is three years. Due to derivatives market efficiency differences,
Finnair also uses other oil derivatives as fuel price hedging instruments in
addition to derivatives linked to the price of jet fuel.
Within the framework of the hedging policy, the company has hedged around 66 per
cent of scheduled traffic's jet fuel purchases during the first six months, 42
per cent during the next six months, and thereafter for the following 18 months
with a decreasing level of hedging. Finnair Leisure Flights has price hedged 60
per cent of the fuel consumption of its agreed traffic programme for the coming
winter season.
Under IFRS rules, a change during the financial period in the fair value of
fuel- and foreign currency-related derivatives that mature in future is
recognised in the Finnair income statement item ‘Other expenses'. The change in
the fair value of derivatives is not a realised hedging gain nor does it have an
effect on cash flow; it is a valuation gain in accordance with IFRS reporting
practice. During the third quarter, the change in the fair value of derivatives
was 3.4 million euros, and in January-September
14.3 million euros.
During the early part of the year, a weakening of the US dollar against the euro
has had a positive impact on Finnair's operational result of around five million
euros, taking foreign currency hedging into account. At the end of September,
the degree of hedging for a dollar basket over the next 12 months was 63 per
cent.
Shares and Share Capital
Finnair's market value on 30 September 2007 was 1,038.4 million euros
(1,138.6 million) and the closing share price 11.70 euros. During the period
January-September, the highest price for the Finnair Plc share on the Helsinki
Stock Exchange was 14.35 (15.00) euros, while the lowest price was 10.86 (10.01)
euros and the average price 12.86 (12.53) euros. During the first nine months of
the year, some 13.8 million (26.4 million) of the company's shares, with a value
of 177.5 million euros (330.6 million), were traded on the Helsinki Stock
Exchange. At the end of the period under review, the Finnish State owned 55.8
per cent (56.1) of Finnair's shares, while 32.9 per cent (34.5) were held by
foreign investors or in the name of a nominee.
Finnair's share capital on 30 September 2007 was 75,442,904.30 euros and the
number of issued shares was 88,756,358.
At the beginning of the financial period, Finnair held 151,903 of its own
shares, which it had purchased in previous years. On 22 March 2007 the Annual
General Meeting authorised the Board of Directors for a period of one year to
purchase the company's own shares up to a maximum of 3,500,000 shares and to
dispose of the company's own shares up to a maximum of 3,651,903 shares. The
authorisation applies to shares amounting to less than five per cent of the
company's share capital. The company has not acquired nor disposed of its own
shares in the period 1 January-30 September 2007, and on 30 September 2007 the
company held a total of 151,903 own shares, i.e. 0.17 per cent of all shares.
Changes in Senior Management
Jukka Hämäläinen, who was earlier Managing Director of Servisair Oy, began as
Managing Director of the Finnair's Group's ground handling company Northport Oy
and as member of the Finnair Group's Board of Management on 13 August 2007. He
succeeds Tero Vauraste, who resigned on 31 May 2007.
Veikko Sievänen, who has earlier served as Chief Pilot and Boeing MD-11 Fleet
Captain, was appointed Senior Vice President, Flight Operations Division and
member of the Board of Management on 1 November 2007. Captain Sievänen has also
been approved as Post Holder, Flight Operations, by the Finnish Aviation
Authorities. He succeeds Hannes Bjurström, who resigned his duties on 31 October
2007.
Taru Keronen began as Managing Director of Matkatoimisto Oy Area on 1 October
2007. He joined Area from his previous post as Managing Director of Eckerö Line.
Area's present Managing Director, Juhani Suomela, will act as a senior adviser
until the end of the year, when he will retire.
Personnel
During the first nine months of the year, the Finnair Group had an average
number of 9,534 employees, which was 1.8 per cent fewer than a year earlier.
Scheduled Passenger Traffic had 4,145 employees and Leisure Traffic 372
employees. The total number of personnel in technical, catering and ground
handling services was 3,730 and in travel services 1,129. A total of 158 people
were employed in other functions.
In January-September, personnel expenses rose 3.9 per cent. Salaries rose by 4.1
per cent and pension contributions by 14.1 per cent due to a higher pension
insurance contribution class. In July-September, personnel expenses rose by 5.6
per cent from the third quarter of the previous year. A 3.5 million euro
provision for personnel incentive bonuses resulting from improved profitability
contributed to the rise. Comparable personnel expenses per available tonne
kilometre fell 7.2 per cent in the third quarter.
During October, Finnair agreed with five labour unions on new collective
employment agreements, which will run until spring 2010. The salary rises agreed
in the collective employment agreement negotiations will impose pressure to
improve productivity, particularly on those business units operating in
labour-intensive sectors.
The nominal salary increases contained in the agreements are on average 4-5 per
cent for the coming 12 months and 3-4 per cent for the next 12 month period. The
agreements include accommodations on matters relating to workforce flexibility
as well as incentive pay models.
The collective employment agreement with cabin personnel is still open. The
present agreement with pilots expires at the end of April 2008.
Fleet changes
Finnair Group's fleet is managed by Finnair Aircraft Finance Oy, which belongs
to the Scheduled Passenger Traffic business area. On 30 September 2007, Finnair
Group airlines had a total of 63 aircraft in service. The average age of the
Finnair Scheduled Passenger Traffic's entire fleet was 5.8 years. In European
traffic, the average age of the fleet is around four years. Finnair has at its
disposal the most modern fleet in European air traffic, which brings both cost
savings and eco-efficiency.
Finnair's long-haul fleet consists of three Airbus A340 aircraft and seven
Boeing MD-11 aircraft. The MD-11 aircraft will be replaced with twin-engine
Airbus A330 wide-bodied aircraft by the spring 2010 utilizing model change
rights in September 2007. The Boeing MD-11 aircraft will be withdrawn from
Finnair's ranks in 2008-10 as their lease agreements expire. It has been agreed
that two aircraft owned by Finnair will be sold to Aeroflot Cargo. The aircraft
will be transferred to their new owner in autumn 2008 and summer 2009.
The long-haul fleet renewal programme includes orders for two Airbus A340
aircraft for 2008 and seven Airbus A330 aircraft for 2009-10 as well as options
for three more. Through the programme, the Finnair long-haul fleet can be
increased from the present ten aircraft to 15 aircraft by the end of the decade.
In 2014-16, new technology A350XWB aircraft will also be acquired. Finnair has
placed firm orders for 11 of this type of aircraft and has options for four
more.
The Embraer aircraft acquisition programme, which began in autumn 2005,
continues. The number of Embraer aircraft ordered is 20, of which ten are the
76-seat 170 model and ten the 100-seat 190 model. All ten Embraer 170 aircraft
and five Embraer 190s have already been delivered to Finnair. During the current
year, one more Embraer 190 will arrive, and the remaining four will be delivered
in 2008-2009, two each year.
After the withdrawal of the MD-11 aircraft, the company's scheduled passenger
traffic fleet will consist solely of modern Airbus A320, A330 and A340 aircraft
as well as Embraer 170 and 190 aircraft.
The commonality of the fleet will boost the efficiency of crew utilisation and
maintenance work. The lower fuel consumption of the new aircraft will bring
savings and cut emissions. The fleet renewal will create a good framework for
lowering operating costs and improving profitability. The total value of
confirmed aircraft orders is around two billion euros.
Winglets have been fitted to the Boeing 757 aircraft used by Finnair Leisure
Flights. The modification has improved the aircraft's aerodynamics and
consequently reduced fuel consumption and emissions by five per cent.
One of the ATR 72 turboprop aircraft used by the Estonian subsidiary Aero
Airlines AS was sold in July, for which a capital gain was recognised in the
third quarter. Aero will continue operating with three ATR 72 aircraft until
early 2008, when the remaining ATR aircraft will be sold and Aero's operations
in their present form will be discontinued.
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 Traffic
This business area is responsible for sales of scheduled passenger traffic and
cargo, service concepts, flight operations, and 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, Aero Airlines AS, Finnair Cargo
Oy, Finnair Aircraft Finance Oy, and FlyNordic up to end of the second quarter.
In July-September the business area's turnover grew 7.6 per cent to 432.6
million euros. The operational result, i.e. adjusted EBIT, improved 41.9 per
cent to 28.8 million euros (20.3 million).
Scheduled Passenger Traffic's profitability clearly improved in the third
quarter, despite a fall in unit revenues. The improvement in profitability was
due above all to more efficient flight operations following changes made in the
Asian network and the efficiency measures agreed with flight personnel. In
addition, the improved operational efficiency of internal service providers
facilitates a lower price level. Moreover, the strengthening of the euro against
the US dollar has improved the profitability of Finnair Scheduled Passenger
Traffic.
In the third quarter, Scheduled Passenger Traffic's capacity, measured in
passenger kilometres, grew 15.4 per cent and demand by 0.2 percentage points
more, so passenger load factor remained at the previous year's level, 76.7 per
cent. Alongside additions to Asian traffic, the European fleet's seat renewal
implemented last spring and a capacity swap between the Boeing 757 and the
Airbus A320 fleet agreed with Leisure Flights contributed to the strong growth
in capacity. Scheduled Passenger Traffic carried more than 1.8 million
passengers in July-September. During the entire early part the year, nearly six
million passengers were carried on scheduled flights.
Unit revenue for scheduled passenger traffic declined by 8.1 per cent in
July-September compared with the previous year. Eliminating the impact of
FlyNordic, which was sold in July, from the comparison year, unit revenue fell
6.7 per cent. The fall in unit revenue resulted from weaker unit revenue in
European traffic as well as from growth in the relative share of long-haul
traffic. On long flights, passenger kilometre-based unit revenue and costs are
lower than on the shorter European and domestic flights. The average distance
flown on European routes has also grown.
In international scheduled traffic, Finnair has increased its market share by
several percentage points. Finnair has a nearly 60 per cent market share in
travel departing from Finland. In marketing, particular attention is now being
directed at international corporate customers outside Finland's borders.
During January-September, the arrival punctuality of scheduled passenger flights
fell by 4.8 per cent to 81.0 per cent (85.8). Punctuality has been reduced by
technical faults affecting Boeing MD-11 and Embraer aircraft. Delays have also
been caused by the Helsinki-Vantaa Airport terminal's capability of handling the
increased passenger and baggage streams of Europe-Asia traffic during extension
work, which will be completed in 2009. Special attention will be directed at
production planning and supervision by improving processes and cooperation
between units.
At the end of June, Finnair sold its Swedish subsidiary FlyNordic to Norwegian
Air Shuttle. The deal was confirmed at the end of July and follow-up formalities
were finalised at the end of October. The deal was implemented as a share swap
through which Finnair gained a more than five per cent ownership of Norwegian
Air Shuttle. In addition, Finnair acquired share options which, if exercised,
would increase its ownership to around ten per cent by the end of 2008. In the
third quarter, a non-recurring items improving the operating profit by around 14
million euros was recognised for the deal.
Finnair and Norwegian Air Shuttle have also agreed to deepen cooperation between
the companies. Norwegian Air Shuttle's Scandinavian route network will be linked
to Finnair's increasing Asian connections, which will mean, for example, that
growing demand in Asia for tours of the Nordic countries and Central Europe can
be satisfied better.
The total amount of cargo carried in scheduled traffic grew by 5.9 per cent in
the third quarter. Leased cargo capacity has been reduced in North American
traffic. The amount of cargo carried in Asian traffic increased 18.2 per cent
from the previous year.
Unit revenues for cargo in scheduled traffic declined 5.9 per cent in the third
quarter as a result of a fall in prices due to overcapacity in the Nordic
market. The demand and price level for cargo have turned for the better during
the autumn. Strong cargo demand in the Indian market is also a positive factor.
Leisure Traffic
This business area consists of Finnair Leisure Flights as well as the
Aurinkomatkat-Suntours package tour group, which is the biggest in its field in
Finland with a market share of 37 per cent. Finnair Leisure Flights also enjoys
a strong market leadership in leisure travel flights. The business area's
clientele consists of Finland's leading tour operators and private customers.
In July-September, Finnair Leisure Flights carried nearly 317,500 passengers.
Performance calculated in passenger kilometres was 8.5 per cent less than a year
earlier and capacity was reduced by 2.1 per cent, so the passenger load factor
of Leisure Flights declined 5.6 percentage points from the previous year's level
to 80.1 per cent. The result, however, remained at the previous year's level.
Package tour sales fell in Finland from the previous summer, as tour operators
reduced their capacity in order to avoid significant discounts on last-minute
sales. Unsold trips affect the tour operators', not the charter airline's,
revenues, but are evident in the airline as a fall in passenger load factor.
The contraction of the Leisure Flights' capacity was due to the final fitting of
winglets to the Boeing 757 fleet as well as a capacity optimisation agreed with
Finnair Scheduled Passenger Traffic in the cross-use of Boeing 757 and Airbus
A320 fleets. Southern European scheduled traffic destinations favoured by
tourists have been flown with 227-seat Boeing 757 leisure flight aircraft and,
correspondingly, Airbus A320 aircraft, with less seats, have been used by
Leisure Flights for smaller Mediterranean destinations. Demand was also affected
by foreign-owned travel operators' increased use of their own airlines in the
Finnish market. Finnair Leisure Flights' capacity was cut to meet demand which
led to a slight fall in Finnair Leisure Flights' market share in the summer
season.
The third quarter capacity of Aurinkomatkat-Suntours was nearly ten per cent
lower than the previous year. Passenger load factor rose 1.2 percentage points
to 97.3 per cent and profitability improved correspondingly. For the summer,
Aurinkomatkat-Suntours launched a new youth travel brand, takeOFF. The company
sold more than 6,000 package tours. Aurinkomatkat's new Estonian subsidiary is
growing strongly. During January-September, Horizon sold over a third more tours
than in the corresponding period the previous year. The Aurinkomatkat-Suntours
Group's winter season 2007/2008 sales are ahead of the previous year.
The business area's turnover in the third quarter was 90.1 million euros
(90.7 million). The operating profit was 7.8 million euros (8.2 million).
Finnair has agreed fixed flight prices with tour operators and provided for the
fuel risk with price hedging in accordance with the Group's financial policy.
In October, Aurinkomatkat-Suntours made an agreement to acquire the Russian
travel agency and tour operator Calypso. Calypso is the St. Petersburg area's
leading travel agency for VIP travel and tailored itineraries, and it has its
own tour operator business. The aim is to finalise the deal by the end of the
year. Calypso will organise the foreign travel of around 15,000 customers this
year. The Calypso Group has 60 employees.
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.
In July-September, turnover for Aviation Services rose by 8.2 per cent to 109.9
million euros (101.6 million). The operational result improved by 7.3 million
euros and was a profit of 2.7 million euros (4.6 million loss).
At the beginning of 2006, Finnair Technical Services initiated a competitiveness
project in which the entire organisation's revenue and cost structure was
examined. The goal is to achieve profitable business operations through
specialisation and by developing processes and operating models. Operations for
which there is no commercial justification will be discontinued. As a result of
operational efficiencies, Finnair Technical Services' operational result in
January-September was in profit, even though the third quarter was slightly
loss-making.
Finnair Technical Services has received new clients outside the Group, which is
expected to increase external turnover towards the end of the year. Utilisation
of the Aircraft Heavy Maintenance unit has increased and profitability improved,
but the unit is still loss-making.
Around 300 jobs will be cut in Finnair Technical Services by the end of the
year. The reduction will be implemented mainly through various early retirement
solutions and outsourcing of functions, in a manner agreed upon earlier. A
significant proportion of these employment relationships has already ended.
All of the units of ground handling company Northport Oy operated at a loss in
July-September. Northport Oy expanded its operations also to Oslo's Gardemoen
Airport in October 2006. Operational profitability has not developed in line
with objectives.
As part of the Finnair Group's structural change and profitability improvement,
it has been decided to sell Northport Oy's Swedish and Norwegian subsidiary to
Menzies Aviation. Improvements in efficiency will continue in the Helsinki unit
under Northport's new management.
The profitability of Catering operations has improved from the previous year.
The efficiency of production processes has been improved and traffic growth has
also increased demand for catering products. In addition to basic operations,
additional revenue has been generated from expanded advance sales in connection
with long-haul flights and increased sales on European flights. Moreover, the
product range has been expanded to special meals ordered by passengers in
advance. Adjustments to the Tax Free Plus shops' product range as well as sales
campaigns have also increase turnover and improved customer satisfaction.
Finnair Catering will receive new premises at Helsinki-Vantaa Airport at the
beginning of 2008. The subsidiary Finncatering moved to new premises a year ago.
Travel Services
This business area consists of the Group's domestic and foreign travel agencies,
including Finland Travel Bureau (FTB), its subsidiary Estravel which operates in
the Baltic countries, and Matkatoimisto Area, as well as the operations of the
travel reservations systems supplier Amadeus Finland Oy.
In the third quarter, the business area's turnover fell 6.9 per cent to 19.0
million euros (20.4 million). The decline was due to a down-sizing of FTB's own
package tour production. Sales via the internet doubled from the previous year.
Customers have given a good reception to the opportunity to tailor their leisure
trips themselves on the internet. The internal restructuring of Area and FTB
implemented last year and the merger of operating locations situated in various
localities into an FTB distribution network are beginning to be evident in
improved financial performance. As a result of efficiency measures, Travel
Services' operating profit improved in the third quarter by 44.4 per cent to 1.3
million euros (0.9 million).
Air Traffic Services and Products
Finnair is focusing on traffic between Europe and Asia, offering efficient and
diverse connections from Finland to the world. Nearly half of scheduled traffic
revenue is linked to Asian traffic. Finnair has a total of 59 non-stop flight
connections per week to ten Asian destinations.
A new destination, Mumbai in India, was opened in June 2007 with five flights
per week. In June 2008 Finnair will begin direct flights to Seoul, the capital
of South Korea. The route will be operated with five flights a week.
Finnair's long-haul strategy exploits Helsinki's ideal location on flight routes
between Asia and Europe. A terminal extension at Helsinki-Vantaa Airport
intended to service Asian traffic in particular will open in 2009. Flights
covering 50 European and 14 domestic destinations connect into Finnair's Asia
network. At the same time, a wide selection of direct connections are offered
from Finland to the rest of Europe. New, all-year-round destinations are
Bucharest, Lisbon and Ljubljana.
In July American Airlines, Finnair and three other oneworld airlines - Iberia,
Malév and Royal Jordanian - applied for antitrust immunity (ATI) from the United
States' Department of Transport (DOT) in respect of Trans-Atlantic traffic. The
oneworld partners wish to expand their cooperation in, among other things,
traffic and route planning, marketing, pricing, frequent-flyer schemes, cargo
transportation, and information and distribution systems.
In their bilateral cooperation, Finnair and American Airlines have had a valid
antitrust immunity agreement in the United States since 2002. This is reflected,
for example, in common pricing, increased onward connections between Finland and
the USA, and improved airport services.
Finnair Leisure Flights carries the customers of ten tour operators to 66
holiday destinations in 33 countries. In addition, there are flights that can
only be purchased on the internet to dozens of Leisure Flights' destinations.
Growth in Asian travel is also reflected in Leisure Flights. Next winter season,
Leisure Flights will operate 12 weekly flights to Asia, including daily flights
to Thailand. A new winter destination is Krabi in Thailand.
The Leisure Flights' fleet consists of seven Boeing 757 aircraft and Airbus
capacity leased from Scheduled Passenger Traffic. At the beginning of 2007,
Finnair Leisure Flights launched additional services that customers can pay for
via the internet before their trip. Customers can, for example, order various
meal options or make arrangements for special baggage. The range of additional
services will be expanded during the latter part of the year.
Vision 2017
In October, Finnair published its long-term vision, which envisaged the
company's future for the decade ahead. The company's objective is to become the
airline of choice for quality and environmentally conscious air travellers in
intercontinental travel in the northern hemisphere. Finnair also aims to be an
attractive investment for shareholders.
The vision specifies scheduled traffic between Europe and Asia, and between
North American and Asia, as the key growth areas, because number of the shortest
routes between these continents passes over Scandinavia and offer
Helsinki-Vantaa Airport a natural role as a transit point. Traffic on these axes
is expected to develop strongly in the coming years. The anticipated opening of
Russian air traffic in future will present opportunities to supplement the
network.
The intention of Finnair and Finavia is to develop Helsinki-Vantaa so that
changing aircraft at the airport offers a travel experience in itself as well as
basic services. The reliable image of Finnair and Finland in the world is a
strength in a changing environment.
With its present fleet programme, Finnair's long-haul fleet can be increased to
over 20 wide-bodied aircraft by 2017. Finnair‘s total passenger numbers can
rise from the present nine million to over 20 million, with clearly over three
million passengers a year in long-haul traffic. The aim of the fleet
modernisation is to create a fleet that is as modern, economic and
environmentally positive as possible.
Finnair wants to be a responsible world citizen that takes the environment into
consideration in everything it does. Finnair supports the International Air
Transport Association IATA's target towards zero-emissions air transport.
Decreasing the environmental load of air transport will facilitate growth in air
travel also in the future.
Finnair considers that the significance of Asian airlines in intercontinental
traffic will grow and that consolidation in the sector will continue. For
Finnair, the most interesting future cooperation candidates are to be found
among the Asian oneworld airline partners. The main goals for Finnair are
improved connections and customer service while increasing value for
shareholders.
Finnair's other core business area is Leisure Traffic. The aim is to expand
package tour and charter operations from the Finnish market into the Baltic Sea
area, particularly the Baltic States and Russian market.
The Finnair brand's success factors will also be based in future on strong
expertise and good networking. The value generated for a Finnish airline's
customers is based on safety, freshness, creativity and Finnishness, which are
positive, differentiating qualities.
Short-term risks and uncertainty factors
Fuel costs constitute approximately one fifth of the Group's total costs and are
one of the most significant uncertainty factors where costs are concerned. The
price of oil has been at a record high during the autumn. For the rest of the
year, the degree of hedging of more than 70 per cent will dampen any short-term
fluctuation in the result, but if the present development continues, fuel costs
for 2008 will grow more than operational performance.
Finnair has opened new routes to Asia and has increased capacity on existing
routes. The new route openings and increases may weaken average load factors and
prices in the short term.
Negotiations for Cabin personnel's collective employment agreement, due at the
end of September, are still continuing. The agreement with pilots expires on 30
April 2008.
Outlook
In its strategy, Finnair is strongly committed to Europe-Asia traffic. The
objective is to increase traffic utilising Helsinki's favourable location on
flight routes between the continents. Finnair offers a significant number of the
shortest connections between Europe and Asia. At least half of travellers
require at least one connecting flight, because they have no direct connection
between the European and Asia destinations in question.
According to Finnair's new ten-year vision published in October, traffic streams
between North America and Asia will also offer Finnair a growth opportunity in
future. Number of the shortest connections also between these continents also
passes over Scandinavia.
The world market price of oil has been at a record high this autumn. This is not
expected to have significant impact for the rest of the year, but the rise will
be reflected in fuel cost from 2008 onwards. Expensive fuel underlines how
significant it is that Finnair has committed itself to acquiring a more
energy-efficient fleet.
The fleet modernisation is expected to proceed according to plan, so that an
additional one Embraer 190 will enter European and domestic service at the end
of the year, and two more next year. In addition, two Airbus A340 long-haul
aircraft will join the fleet in 2008.
In collaboration with the organising banks, Finnair is contemplating a share
offering (rights issue) to existing shareholders in order to partially finance
the fleet investments and to strengthen the capital structure. On 21 November
2007, an Extraordinary Shareholders Meeting will be convened to decide on the
arrangement of the share offering as well as the authorisation of the Board of
Directors to implement the share offering.
Finnair's Asian traffic is expected to continue growing at a rapid pace. New
openings will continue to burden load factors to some extent, but less than
before. The trend in unit revenues is expected to continue to decline, although
more gently than in the third quarter.
Improvements in operational efficiency will continue throughout the Finnair
Group in accordance with the 80 million euro programme initiated last year. Most
of the workforce reductions will be implemented by the end of the year. More
than half of the savings will be delivered this year and the full impact will be
evident next year. The operational result for 2007 is expected to exceed 70
million euros. The result for the last quarter is expected to be profitable.
FINNAIR PLC
Board of Directors
PRESS CONFERENCE
Finnair will hold briefings for media representatives (11 a.m.) and analysts
(12.30 p.m.) on 1 November 2007 at the address Toimistotorni, Lentäjäntie 3 at
Helsinki-Vantaa Airport. Further information and registrations: Teija
Kirjavainen, tel. +358 9 818 4941 or teija.kirjavainen@finnair.com.
Finnair Plc
Communications
Christer Haglund
SVP Corporate Communications
For further information, please contact:
SVP and CFO Lasse Heinonen
tel. +358 9 818 4950
lasse.heinonen@finnair.fi
SVP Communications, Christer Haglund
tel. +358 9 818 4007
christer.haglund@finnair.fi
Director, Investor Relations, Taneli Hassinen
tel. +358 9 818 4976
taneli.hassinen@finnair.fi
http://www.finnair.com/investor
The interim report has been prepared in accordance with accounting and valuation
principles of IFRS standards, but all requirements of IAS 34 has not been
followed to full extend.
KEY FIGURES EUR mill.
--------------------------------------------------------------------------------
| | 2007 | 2006 | Change | 2007 |
--------------------------------------------------------------------------------
| | 1July- | 1July- | % | 1 Jan- |
| | 30 Sep | 30 Sep | | 30 |
| | | | | Sep |
--------------------------------------------------------------------------------
| Turnover | 545.2 | 515.4 | 5.8 | 1 611.8 |
--------------------------------------------------------------------------------
| Profit before depreciation | 88.0 | 69.8 | 26.1 | 216.8 |
| and lease payments, EBITDAR * | | | | |
--------------------------------------------------------------------------------
| Lease payments for aircraft | 19.8 | 22.2 | -10.8 | 60.6 |
--------------------------------------------------------------------------------
| Operating profit, EBIT* | 39.2 | 22.5 | 74.2 | 72.2 |
--------------------------------------------------------------------------------
| Fair value changes of | 3.4 | -7.9 | - | 14.3 |
| derivatives | | | | |
--------------------------------------------------------------------------------
| Profit from disposal of | 17.3 | 0.1 | - | 24.2 |
| capital assets | | | | |
--------------------------------------------------------------------------------
| Operating profit, EBIT | 59.9 | 14.7 | - | 110.7 |
--------------------------------------------------------------------------------
| Profit for the financial year | 39.6 | 10.3 | - | 74.7 |
| (share attributable to | | | | |
| shareholders of parent | | | | |
| company) | | | | |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Operating profit, EBIT, % of | 7.2 | 4.4 | - | 4.5 |
| turnover * | | | | |
--------------------------------------------------------------------------------
| EBITDAR, % of turnover * | 16.1 | 13.5 | - | 13.5 |
--------------------------------------------------------------------------------
| Unit revenues of flight | 68.9 | 72.7 | -5,2 | 72.8 |
| operations c/RTK | | | | |
--------------------------------------------------------------------------------
| Unit costs of flight | 40.9 | 44.3 | -7.7 | 43.7 |
| operations c/ATK | | | | |
--------------------------------------------------------------------------------
| Earnings per share EUR | 0.44 | 0.11 | - | 0.84 |
| (basic) | | | | |
--------------------------------------------------------------------------------
| Earnings per share EUR | 0.44 | 0.11 | - | 0.84 |
| (diluted) | | | | |
--------------------------------------------------------------------------------
| Equity per share EUR | 7.68 | 7.18 | 7.0 | 7.68 |
--------------------------------------------------------------------------------
| Gross investment EUR mill. | 19.7 | 76.1 | - | 264.3 |
--------------------------------------------------------------------------------
| Gross investment, % of | 3.6 | 14.8 | - | 16.4 |
| turnover | | | | |
--------------------------------------------------------------------------------
| Equity ratio % | | | | 37.5 |
--------------------------------------------------------------------------------
| Gearing % | | | | 17.7 |
--------------------------------------------------------------------------------
| Adjusted gearing % | | | | 103.3 |
--------------------------------------------------------------------------------
| Rolling 12-month ROCE % | | | | 9.3 |
--------------------------------------------------------------------------------
| Rolling 12-month ROE % | | | | 8.3 |
--------------------------------------------------------------------------------
KEY FIGURES EUR mill.
--------------------------------------------------------------------------------
| | 2006 | Change | 2006 |
--------------------------------------------------------------------------------
| | 1 Jan- | % | 1 Jan- |
| | 30 | | 31 Dec |
| | Sep | | |
--------------------------------------------------------------------------------
| Turnover | 1 490.3 | 8.2 | 1 989.6 |
--------------------------------------------------------------------------------
| Profit before depreciation and | 178.9 | 21.2 | 206.8 |
| lease payments, EBITDAR * | | | |
--------------------------------------------------------------------------------
| Lease payments for aircraft | 68.0 | -10.9 | 90.8 |
--------------------------------------------------------------------------------
| Operating profit, EBIT* | 35.6 | 102.8 | 11.2 |
--------------------------------------------------------------------------------
| Fair value changes of derivatives | -7.4 | - | -8.8 |
--------------------------------------------------------------------------------
| Profit from disposal of capital | -13.2 | - | -13.2 |
| assets | | | |
--------------------------------------------------------------------------------
| Operating profit, EBIT | 15.0 | - | -10.8 |
--------------------------------------------------------------------------------
| Profit for the financial year | 6.7 | - | -13.6 |
| (share attributable to | | | |
| shareholders of parent company) | | | |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Operating profit, EBIT, % of | 2.4 | 87.5 | 0.6 |
| turnover * | | | |
--------------------------------------------------------------------------------
| EBITDAR, % of turnover * | 12.0 | 12.0 | 10.4 |
--------------------------------------------------------------------------------
| Unit revenues of flight | 73.8 | -1.4 | 74.0 |
| operations c/RTK | | | |
--------------------------------------------------------------------------------
| Unit costs of flight operations | 45.8 | -4.6 | 46.0 |
| c/ATK | | | |
--------------------------------------------------------------------------------
| Earnings per share EUR (basic) | 0.07 | - | -0.16 |
--------------------------------------------------------------------------------
| Earnings per share EUR (diluted) | 0.07 | - | -0.16 |
--------------------------------------------------------------------------------
| Equity per share EUR | 7.18 | 7.0 | 6.77 |
--------------------------------------------------------------------------------
| Gross investment EUR mill. | 195.1 | 35.5 | 252.2 |
--------------------------------------------------------------------------------
| Gross investment, % of turnover | 13.1 | - | 12.7 |
--------------------------------------------------------------------------------
| Equity ratio % | 38.9 | - | 37.2 |
--------------------------------------------------------------------------------
| Gearing % | 9.7 | - | 7.1 |
--------------------------------------------------------------------------------
| Adjusted gearing % | 108.0 | - | 112.8 |
--------------------------------------------------------------------------------
| Rolling 12-month ROCE % | 1.7 | - | -0.1 |
--------------------------------------------------------------------------------
| Rolling 12-month ROE % | 0.6 | - | -2.0 |
--------------------------------------------------------------------------------
* Excluding capital assets, fair value changes of derivatives and reorganization
expenses.
Unit costs of flight operations c / ATK = Operating expenses (excluding fair
value changes of derivatives) of Scheduled Traffic business area and Leisure
Flights business unit / ATK of Group.
CALCULATION OF KEY RATIOS
Earnings / share:
Profit for the financial year/
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 before extraordinary items - taxes*100/
Equity + minority interests (average)
Operating profit, EBIT = Operating profit excluding the disposal of the capital
assets, fair value changes of derivatives and reorganization expenses
Shareholders equity = To equity holders of the parent
The figures of interim report have not been audited.
CONSOLIDATED INCOME STATEMENT (EUR mill.)
--------------------------------------------------------------------------------
| | 2007 | 2006 | Change | 2007 |
--------------------------------------------------------------------------------
| | 1 July- | 1 July- | % | 1 Jan- |
| | 30 Sep | 30 Sep | | 30 |
| | | | | Sep |
--------------------------------------------------------------------------------
| Turnover | 545.2 | 515.4 | 5.8 | 1 611.8 |
--------------------------------------------------------------------------------
| Work used for own purposes | 1.1 | 1.6 | -31.3 | 2.4 |
| and capitalized | | | | |
--------------------------------------------------------------------------------
| Other operating income | 26.1 | 4.1 | 536.6 | 42.7 |
--------------------------------------------------------------------------------
| Operating income | 572.4 | 521.1 | 9.8 | 1 656.9 |
--------------------------------------------------------------------------------
| Operating expenses | | | | |
--------------------------------------------------------------------------------
| Staff costs | 129.1 | 122.2 | 5.6 | 391.4 |
--------------------------------------------------------------------------------
| Fuel | 116.5 | 105.1 | 10.8 | 324.0 |
--------------------------------------------------------------------------------
| Lease payment for aircraft | 19.8 | 22.2 | -10.8 | 60.6 |
--------------------------------------------------------------------------------
| Other rental payments | 16.0 | 18.3 | -12.6 | 48.5 |
--------------------------------------------------------------------------------
| Fleet materials and | 17.0 | 26.4 | -35.6 | 58.4 |
| overhauls | | | | |
--------------------------------------------------------------------------------
| Traffic charges | 46.0 | 43.9 | 4.8 | 134.1 |
--------------------------------------------------------------------------------
| Ground handling and | 39.1 | 34.5 | 13.3 | 118.3 |
| catering expenses | | | | |
--------------------------------------------------------------------------------
| Expenses for tour | 25.0 | 23.9 | 4.6 | 83.8 |
| operations | | | | |
--------------------------------------------------------------------------------
| Sales and marketing | 19.1 | 23.2 | -17.7 | 65.6 |
| expenses | | | | |
--------------------------------------------------------------------------------
| Depreciation | 33.5 | 25.1 | 33.5 | 88.5 |
--------------------------------------------------------------------------------
| Other expenses | 51.4 | 61.6 | -16.6 | 173.0 |
--------------------------------------------------------------------------------
| Total | 512.5 | 506.4 | 1.2 | 1 546.2 |
--------------------------------------------------------------------------------
| Operating profit EBIT | 59.9 | 14.7 | - | 110.7 |
--------------------------------------------------------------------------------
| Financial income | 2.0 | 2.9 | -31.0 | 8.2 |
--------------------------------------------------------------------------------
| Financial expenses | -6.0 | -4.1 | 46.3 | -15.3 |
--------------------------------------------------------------------------------
| Share of result in | 0.0 | 0.0 | - | 0.1 |
| associates | | | | |
--------------------------------------------------------------------------------
| Profit before taxes | 55.9 | 13.5 | - | 103.7 |
--------------------------------------------------------------------------------
| Direct taxes | -16.1 | -3.3 | - | -28.6 |
--------------------------------------------------------------------------------
| Profit for financial year | 39.8 | 10.2 | - | 75.1 |
--------------------------------------------------------------------------------
CONSOLIDATED INCOME STATEMENT (EUR mill.)
--------------------------------------------------------------------------------
| | 2006 | Change | 2006 |
--------------------------------------------------------------------------------
| | 1 Jan- | % | 1 Jan- |
| | 30 Sep | | 31 |
| | | | Dec |
--------------------------------------------------------------------------------
| Turnover | 1 490.3 | 8.2 | 1 989.6 |
--------------------------------------------------------------------------------
| Work used for own purposes and | 2.0 | 20.0 | 3.7 |
| capitalized | | | |
--------------------------------------------------------------------------------
| Other operating income | 17.1 | 149.7 | 17.9 |
--------------------------------------------------------------------------------
| Operating income | 1 509.4 | 9.8 | 2 011.2 |
--------------------------------------------------------------------------------
| Operating expenses | | | |
--------------------------------------------------------------------------------
| Staff costs | 376.6 | 3.9 | 508.2 |
--------------------------------------------------------------------------------
| Fuel | 285.2 | 13.6 | 385.0 |
--------------------------------------------------------------------------------
| Lease payment for aircraft | 68.0 | -10.9 | 90.8 |
--------------------------------------------------------------------------------
| Other rental payments | 58.3 | -16.8 | 80.7 |
--------------------------------------------------------------------------------
| Fleet materials and overhauls | 75.3 | -22.4 | 100.6 |
--------------------------------------------------------------------------------
| Traffic charges | 123.0 | 9.0 | 161.9 |
--------------------------------------------------------------------------------
| Ground handling and catering | 102.7 | 15.2 | 139.4 |
| expenses | | | |
--------------------------------------------------------------------------------
| Expenses for tour operations | 81.0 | 3.5 | 111.5 |
--------------------------------------------------------------------------------
| Sales and marketing expenses | 64.9 | 1.1 | 91.3 |
--------------------------------------------------------------------------------
| Depreciation | 75.3 | 17.5 | 104.8 |
--------------------------------------------------------------------------------
| Other expenses | 184.1 | -6.0 | 247.8 |
--------------------------------------------------------------------------------
| Total | 1 494.4 | 3.5 | 2 022.0 |
--------------------------------------------------------------------------------
| Operating profit EBIT | 15.0 | - | -10.8 |
--------------------------------------------------------------------------------
| Financial income | 7.6 | 7.9 | 11.0 |
--------------------------------------------------------------------------------
| Financial expenses | -11.1 | 37.8 | -15.0 |
--------------------------------------------------------------------------------
| Share of result in associates | 0.1 | - | 0.1 |
--------------------------------------------------------------------------------
| Profit before taxes | 11.6 | - | -14.7 |
--------------------------------------------------------------------------------
| Direct taxes | -4.3 | - | 1.7 |
--------------------------------------------------------------------------------
| Profit for financial year | 7.3 | - | -13.0 |
--------------------------------------------------------------------------------
CONSOLIDATED INCOME STATEMENT (EUR mill.)
--------------------------------------------------------------------------------
| | 2007 | 2006 | Change | 2007 |
--------------------------------------------------------------------------------
| | 1 | 1 July | % | 1 Jan- |
| | July- | 30 | | 30 |
| | 30 Sep | Sep | | Sep |
--------------------------------------------------------------------------------
| Earnings per share to | 39.6 | 10.3 | | 74.7 |
| shareholders of the parent | | | | |
| company | | | | |
--------------------------------------------------------------------------------
| Minority interest | 0.2 | -0.1 | | 0.4 |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Earnings per share | | | | |
| calculated from profit | | | | |
| attributable to | | | | |
| shareholders of the parent | | | | |
| company | | | | |
--------------------------------------------------------------------------------
| Earnings per share EUR | 0.44 | 0.11 | | 0.84 |
--------------------------------------------------------------------------------
| Earnings per share EUR | 0.44 | 0.11 | | 0.84 |
| (diluted) | | | | |
--------------------------------------------------------------------------------
CONSOLIDATED INCOME STATEMENT (EUR mill.)
--------------------------------------------------------------------------------
| | 2006 | Change | 2006 | |
--------------------------------------------------------------------------------
| | 1 Jan- | % | 1 Jan- | |
| | 30 Sep | | 31 | |
| | | | Dec | |
--------------------------------------------------------------------------------
| Earnings per share to | 6.7 | | -13.6 |
| shareholders of the parent | | | |
| company | | | |
--------------------------------------------------------------------------------
| Minority interest | 0.6 | | 0.6 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Earnings per share calculated | | | |
| from profit attributable to | | | |
| shareholders of the parent | | | |
| company | | | |
--------------------------------------------------------------------------------
| Earnings per share EUR | 0.07 | | -0.16 |
--------------------------------------------------------------------------------
| Earnings per share EUR (diluted) | 0.07 | | -0.16 |
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET (EUR mill.)
--------------------------------------------------------------------------------
| | 30 Sep 2007 | 30 Sep 2006 | 31 Dec 2006 |
--------------------------------------------------------------------------------
| ASSETS | | | |
--------------------------------------------------------------------------------
| Non-current assets | | | |
--------------------------------------------------------------------------------
| Intangible assets | 47.0 | 46.2 | 47.5 |
--------------------------------------------------------------------------------
| Tangible assets | 1 163.2 | 984.1 | 1 012.3 |
--------------------------------------------------------------------------------
| Investments in associates | 5.7 | 3.0 | 5.6 |
--------------------------------------------------------------------------------
| Financial assets | 14.3 | 16.1 | 15.4 |
--------------------------------------------------------------------------------
| Deferred tax receivables | 18.1 | 28.2 | 27.1 |
--------------------------------------------------------------------------------
| Total | 1 248.3 | 1 077.6 | 1 107.9 |
--------------------------------------------------------------------------------
| Short-term receivables | | | |
--------------------------------------------------------------------------------
| Inventories | 39.8 | 41.4 | 38.5 |
--------------------------------------------------------------------------------
| Trade receivables and other | 307.6 | 269.5 | 211.8 |
| receivables | | | |
--------------------------------------------------------------------------------
| Investments | 231.8 | 258.4 | 268.6 |
--------------------------------------------------------------------------------
| Cash and bank equivalents | 26.6 | 37.2 | 25.7 |
--------------------------------------------------------------------------------
| Total | 605.8 | 606.5 | 544.6 |
--------------------------------------------------------------------------------
| Non-current Assets held for | 11.2 | 0.0 | 7.6 |
| sale | | | |
--------------------------------------------------------------------------------
| Assets total | 1 865.3 | 1 684.1 | 1 660.1 |
--------------------------------------------------------------------------------
| SHAREHOLDERS´ EQUITY AND | | | |
| LIABILITIES | | | |
--------------------------------------------------------------------------------
| Capital and reserves | | | |
| attributable to equity holders | | | |
| of the parent company | | | |
--------------------------------------------------------------------------------
| Shareholders´equity | 75.4 | 75.4 | 75.4 |
--------------------------------------------------------------------------------
| Other equity | 605.1 | 560.5 | 524.5 |
--------------------------------------------------------------------------------
| Total | 680.5 | 635.9 | 599.9 |
--------------------------------------------------------------------------------
| Minority interest | 1.6 | 1.6 | 1.6 |
--------------------------------------------------------------------------------
| Equity, total | 682.1 | 637.5 | 601.5 |
--------------------------------------------------------------------------------
| Long-term liabilities | | | |
--------------------------------------------------------------------------------
| Deferred tax liability | 118.7 | 118.9 | 115.7 |
--------------------------------------------------------------------------------
| Financial liabilities | 313.6 | 293.4 | 286.9 |
--------------------------------------------------------------------------------
| Pension obligations | 11.8 | 7.5 | 7.0 |
--------------------------------------------------------------------------------
| Total | 444.1 | 419.8 | 409.6 |
--------------------------------------------------------------------------------
| Short-term liabilities | | | |
--------------------------------------------------------------------------------
| Current income tax liabilities | 23.1 | 12.5 | 3.0 |
--------------------------------------------------------------------------------
| Reserves | 4.9 | 0.0 | 10.0 |
--------------------------------------------------------------------------------
| Financial liabilities | 70.3 | 63.4 | 56.6 |
--------------------------------------------------------------------------------
| Trade payables and other | 630.8 | 550.9 | 579.4 |
| liabilities | | | |
--------------------------------------------------------------------------------
| Total | 729.1 | 626.8 | 649.0 |
--------------------------------------------------------------------------------
| Liabilities related to | 10.0 | 0.0 | 0.0 |
| long-term asset items held for | | | |
| sale | | | |
--------------------------------------------------------------------------------
| Liabilities total | 1 183.2 | 1 046.6 | 1 058.6 |
--------------------------------------------------------------------------------
| Shareholders' equity and | 1 865.3 | 1 684.1 | 1 660.1 |
| liabilities, total | | | |
--------------------------------------------------------------------------------
SHAREHOLDERS´EQUITY EUR mill.
--------------------------------------------------------------------------------
| Equity attributable to shareholders of parent company | |
--------------------------------------------------------------------------------
| | Shar | New | Shar | Bonu | Hed- | Retai- | Total | Minor | Own |
| | e | is- | e | s | ging | ned | | -ity | equity |
| | capi | sue | pre- | is- | rese | ear-ni | | inte- | total |
| | -tal | | mium | sue | r-ve | ngs | | rests | |
| | | | ac-c | | | | | | |
| | | | ount | | | | | | |
--------------------------------------------------------------------------------
| Share-h | 73.8 | 0.6 | 18.3 | 147. | 20.9 | 411.1 | 672.4 | 1.6 | 674.0 |
| olders´ | | | | 7 | | | | | |
| equity | | | | | | | | | |
| 1.1.200 | | | | | | | | | |
| 6 | | | | | | | | | |
--------------------------------------------------------------------------------
| Optio | 1.3 | -0.3 | 4.4 | | | | 5.4 | | 5.4 |
| right | | | | | | | | | |
| to own | | | | | | | | | |
| shares | | | | | | | | | |
--------------------------------------------------------------------------------
| Share | | | -2.3 | | | 2.1 | -0.2 | | -0.2 |
| premium | | | | | | | | | |
| account | | | | | | | | | |
| changes | | | | | | | | | |
--------------------------------------------------------------------------------
| Trans-l | | | | | | -0.4 | -0.4 | | -0.4 |
| ation | | | | | | | | | |
| diffe- | | | | | | | | | |
| rence | | | | | | | | | |
--------------------------------------------------------------------------------
| Minorit | | | | | | -0.1 | -0.1 | -0.2 | -0.3 |
| y | | | | | | | | | |
| purchas | | | | | | | | | |
| es | | | | | | | | | |
--------------------------------------------------------------------------------
| Dividen | | | | | | -21.8 | -21.8 | -0.4 | -22.2 |
| d | | | | | | | | | |
| payment | | | | | | | | | |
--------------------------------------------------------------------------------
| Change | | | | | -26. | | -26.1 | | -26.1 |
| in fair | | | | | 1 | | | | |
| value | | | | | | | | | |
| of | | | | | | | | | |
| hedging | | | | | | | | | |
| inst-ru | | | | | | | | | |
| ments | | | | | | | | | |
--------------------------------------------------------------------------------
| Profit | | | | | | 6.7 | 6.7 | 0.6 | 7.3 |
| for the | | | | | | | | | |
| period | | | | | | | | | |
--------------------------------------------------------------------------------
| Share-h | 75.1 | 0.3 | 20.4 | 147. | -5.2 | 397.6 | 635.9 | 1.6 | 637.5 |
| olders´ | | | | 7 | | | | | |
| equity | | | | | | | | | |
| 30.9.20 | | | | | | | | | |
| 06 | | | | | | | | | |
--------------------------------------------------------------------------------
SHAREHOLDERS´EQUITY EUR mill.
--------------------------------------------------------------------------------
| Equity attributable to shareholders of parent company | |
--------------------------------------------------------------------------------
| | Shar | New | Shar | Bonus | Hed-g | Retai | Total | Mino- | Own |
| | e | is- | e | issue | ing | -ned | | rity | equity |
| | capi | sue | pre- | | reser | ear-n | | inte- | total |
| | - | | mium | | -ve | ings | | rests | |
| | tal | | ac- | | | | | | |
| | | | coun | | | | | | |
| | | | t | | | | | | |
--------------------------------------------------------------------------------
| Share-h | 75.4 | 0.0 | 20.4 | 147.7 | -21.1 | 377.5 | 599.9 | 1.6 | 601.5 |
| olders´ | | | | | | | | | |
| equity | | | | | | | | | |
| 1.1.200 | | | | | | | | | |
| 7 | | | | | | | | | |
--------------------------------------------------------------------------------
| Trans-l | | | | | | -0.3 | -0.3 | | -0.3 |
| ation | | | | | | | | | |
| diffe- | | | | | | | | | |
| rence | | | | | | | | | |
--------------------------------------------------------------------------------
| Divi- | | | | | | -8.9 | -8.9 | -0.4 | -9.3 |
| dend | | | | | | | | | |
| payment | | | | | | | | | |
--------------------------------------------------------------------------------
| Optio | 0.0 | 0.0 | 0.0 | | | | 0.0 | | 0.0 |
| right | | | | | | | | | |
| to | | | | | | | | | |
| shares | | | | | | | | | |
--------------------------------------------------------------------------------
| Change | | | | | 15.1 | | 15.1 | | 15.1 |
| in fair | | | | | | | | | |
| value | | | | | | | | | |
| of | | | | | | | | | |
| hedging | | | | | | | | | |
| inst-ru | | | | | | | | | |
| ments | | | | | | | | | |
--------------------------------------------------------------------------------
| Profit | | | | | | 74.7 | 74.7 | 0.4 | 75.1 |
| for the | | | | | | | | | |
| period | | | | | | | | | |
--------------------------------------------------------------------------------
| Share-h | 75.4 | 0.0 | 20.4 | 147.7 | -6.0 | 443.0 | 680.5 | 1.6 | 682.1 |
| olders´ | | | | | | | | | |
| equity | | | | | | | | | |
| 30.9.20 | | | | | | | | | |
| 07 | | | | | | | | | |
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT
--------------------------------------------------------------------------------
| EUR mill. | 1 Jan - 30 | 1 Jan - 30 | 1 Jan - 31 |
| | Sep 2007 | Sep 2006 | Dec 2006 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Cash flow from operating | | | |
| activities | | | |
--------------------------------------------------------------------------------
| Profit for the financial year | 75.1 | 7.3 | -13.0 |
--------------------------------------------------------------------------------
| Operations for which a payment is | 79.8 | 65.7 | 100.2 |
| not included 1) | | | |
--------------------------------------------------------------------------------
| Interest and other financial | 15.3 | 11.1 | 15.0 |
| expenses | | | |
--------------------------------------------------------------------------------
| Interest income | -8.1 | -6.9 | -9.1 |
--------------------------------------------------------------------------------
| Other financial income | -0.1 | -0.7 | -1.8 |
--------------------------------------------------------------------------------
| Dividend income | 0.0 | 0.0 | -0.1 |
--------------------------------------------------------------------------------
| Taxes | 28.6 | 4.3 | -1.7 |
--------------------------------------------------------------------------------
| Changes in working capital: | | | |
--------------------------------------------------------------------------------
| Change in trade and other | -86.3 | -40.3 | 10.2 |
| receivables | | | |
--------------------------------------------------------------------------------
| Change in inventories | -1.3 | 3.8 | 6.7 |
--------------------------------------------------------------------------------
| Change in accounts payables and | 87.9 | 1.6 | 13.4 |
| other liabilities | | | |
--------------------------------------------------------------------------------
| Interest paid | -10.5 | -7.7 | -11.0 |
--------------------------------------------------------------------------------
| Paid financial expenses | -2.5 | -2.4 | -3.4 |
--------------------------------------------------------------------------------
| Received interest | 6.3 | 6.1 | 9.9 |
--------------------------------------------------------------------------------
| Received financial income | 0.1 | 0.0 | 1.6 |
--------------------------------------------------------------------------------
| Taxes paid | -15.6 | -18.5 | -21.1 |
--------------------------------------------------------------------------------
| Net cash flow from operating | 168.7 | 23.4 | 95.8 |
| activities | | | |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Cash flow from investing | | | |
| activities | | | |
--------------------------------------------------------------------------------
| Acquisitions of subsidiaries | -0.6 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Investments in intangible assets | -15.2 | -9.0 | -12.6 |
--------------------------------------------------------------------------------
| Investments in tangible assets | -264.3 | -209.6 | -273.0 |
--------------------------------------------------------------------------------
| Net change of financial interest | 12.6 | 65.8 | 53.2 |
| bearing assets at fair value | | | |
| through profit and loss | | | |
--------------------------------------------------------------------------------
| Sales of tangible fixed assets | 40.7 | 1.9 | 2.3 |
--------------------------------------------------------------------------------
| Received dividends | 0.0 | 0.0 | 0.1 |
--------------------------------------------------------------------------------
| Change in non-current receivable | 1.1 | 1.6 | 2.3 |
--------------------------------------------------------------------------------
| Net cash flow from investing | -225.7 | -149.3 | -227.7 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing | | | |
| activities | | | |
--------------------------------------------------------------------------------
| Loan withdrawals and changes | 85.1 | 108.4 | 108.3 |
--------------------------------------------------------------------------------
| Loan repayments | -43.8 | -19.9 | -25.9 |
--------------------------------------------------------------------------------
| Optio right to shares | 0.0 | 6.0 | 5.4 |
--------------------------------------------------------------------------------
| Dividends paid | -8.9 | -21.8 | -21.8 |
--------------------------------------------------------------------------------
| Net cash flow from financing | 32.4 | 72.7 | 66.0 |
| activities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash flows | -24.6 | -53.2 | -65.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in liquid funds | | | |
--------------------------------------------------------------------------------
| Liquid funds, at beginning | 273.5 | 339.4 | 339.4 |
--------------------------------------------------------------------------------
| Change in cash flows | -24.6 | -53.2 | -65.9 |
--------------------------------------------------------------------------------
| Liquit funds, in the end | 248.9 | 286.2 | 273.5 |
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT
--------------------------------------------------------------------------------
| EUR mill. | 1 Jan - 30 | 1 Jan - 30 | 1 Jan - 31 |
| | Sep 2007 | Sep 2006 | Dec 2006 |
--------------------------------------------------------------------------------
| Notes to consolidated cash flow | | | |
| statement | | | |
--------------------------------------------------------------------------------
| 1) Operations for which a payment is | | | |
| not included | | | |
--------------------------------------------------------------------------------
| Depreciation | 88.5 | 75.3 | 104.8 |
--------------------------------------------------------------------------------
| Employee benefits | -4.8 | -5.3 | -2.8 |
--------------------------------------------------------------------------------
| Finance lease | -3.7 | -3.7 | -5.0 |
--------------------------------------------------------------------------------
| Other adjustments | -0.2 | -0.6 | 3.2 |
--------------------------------------------------------------------------------
| Total | 79.8 | 65.7 | 100.2 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Financial asset at fair value | 231.8 | 258.4 | 268.6 |
--------------------------------------------------------------------------------
| Cash and bank equivalents (including | 25.3 | 37.2 | 25.7 |
| cash and cash equivalents of | | | |
| long-term assets held for sale, | | | |
| EUR 3.0 million) | | | |
--------------------------------------------------------------------------------
| Short-term cash and cash equivalents | 257.1 | 295.6 | 294.3 |
| in balance sheet | | | |
--------------------------------------------------------------------------------
| Shares held to trading purposes | -2.9 | -4.1 | -2.9 |
--------------------------------------------------------------------------------
| Maturing after more than 3 months | -5.3 | -5.3 | -17.9 |
--------------------------------------------------------------------------------
| Total in cash flow statement | 248.9 | 286.2 | 273.5 |
--------------------------------------------------------------------------------
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 - 30 Sep 2007
--------------------------------------------------------------------------------
| | Schedu | Lei-s | Avia- | Travel | Group | Un- | Group |
| | -led | ure | tion | Servi-c | elimin | allo-ca | |
| | Pas-se | Traf- | Servi | es | a-tions | ted | |
| | nger | fic | -ces | | | items | |
| | Traf-f | | | | | | |
| | ic | | | | | | |
--------------------------------------------------------------------------------
| EUR mill. | | | | | | | |
--------------------------------------------------------------------------------
| External | 1 | 285,1 | 89.0 | 58.7 | | | 1 611.8 |
| turnover | 179,0 | | | | | | |
--------------------------------------------------------------------------------
| Internal | 78.8 | 4.7 | 231.5 | 3.4 | -318.4 | | 0.0 |
| turnover | | | | | | | |
--------------------------------------------------------------------------------
| Turnover | 1 | 289.8 | 320.5 | 62.1 | -318.4 | 0.0 | 1 611.8 |
| | 257.8 | | | | | | |
--------------------------------------------------------------------------------
| Operating | 63.4 | 14.5 | 8.5 | 3.8 | | 20.5 | 110.7 |
| profit | | | | | | | |
--------------------------------------------------------------------------------
| Share of | | | | | | 0.1 | 0.1 |
| results of | | | | | | | |
| associated | | | | | | | |
| undertaking | | | | | | | |
| s | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | 8.2 | 8.2 |
| income | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | -15.3 | -15.3 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Income tax | | | | | | -28.6 | -28.6 |
--------------------------------------------------------------------------------
| Minority | | | | | | -0.4 | -0.4 |
| interest | | | | | | | |
--------------------------------------------------------------------------------
| Result for | | | | | | | 74.7 |
| the period | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| Other items | | | | | | | |
--------------------------------------------------------------------------------
| Investments | 237.2 | 0.8 | 23.3 | 0.8 | 0.0 | 2.2 | 264.3 |
--------------------------------------------------------------------------------
| Depreciatio | 64.7 | 0.3 | 19.8 | 1.1 | 0.0 | 2.6 | 88.5 |
| n | | | | | | | |
--------------------------------------------------------------------------------
PRIMARY REPORTING FORMAT - BUSINESS SEGMENT DATA 1 January- 30 Sep 2006
--------------------------------------------------------------------------------
| | Sche-d | Lei-s | Avia-t | Travel | Group | Un- | Group |
| | uled | ure | ion | Servi-c | elimi-n | allo-ca | |
| | Pas-se | Traf- | Servi- | es | ations | ted | |
| | nger | fic | ces | | | items | |
| | Traffi | | | | | | |
| | c | | | | | | |
--------------------------------------------------------------------------------
| EUR mill. | | | | | | | |
--------------------------------------------------------------------------------
| External | 1 | 279.7 | 80.3 | 62.9 | | | 1 490.3 |
| turnover | 067.4 | | | | | | |
--------------------------------------------------------------------------------
| Internal | 79.6 | 2.8 | 221.0 | 3.2 | -306.6 | | 0.0 |
| turnover | | | | | | | |
--------------------------------------------------------------------------------
| Turnover | 1 | 282.5 | 301.3 | 66.1 | -306.6 | 0.0 | 1 490.3 |
| | 147.0 | | | | | | |
--------------------------------------------------------------------------------
| Operating | 38.4 | 14.9 | -19.9 | 2.1 | | -20.5 | 15.0 |
| profit | | | | | | | |
--------------------------------------------------------------------------------
| Share of | | | | | | 0.1 | 0.1 |
| results of | | | | | | | |
| associated | | | | | | | |
| undertakin | | | | | | | |
| gs | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | 7.6 | 7.6 |
| income | | | | | | | |
--------------------------------------------------------------------------------
| Financial | | | | | | -11.1 | -11.1 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Income tax | | | | | | -4.3 | -4.3 |
--------------------------------------------------------------------------------
| Minority | | | | | | -0.6 | -0.6 |
| interest | | | | | | | |
--------------------------------------------------------------------------------
| Result for | | | | | | | 6.7 |
| the period | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| Other | | | | | | | |
| items | | | | | | | |
--------------------------------------------------------------------------------
| Investment | 167.1 | 0.7 | 24.6 | 0.9 | 0.0 | 1.8 | 195.1 |
| s | | | | | | | |
--------------------------------------------------------------------------------
| Depreciati | 52.8 | 0.2 | 19.0 | 1.1 | 0.0 | 2.2 | 75.3 |
| on | | | | | | | |
--------------------------------------------------------------------------------
TURNOVER
--------------------------------------------------------------------------------
| | 2007 | 2006 | Change | 2007 |
--------------------------------------------------------------------------------
| | 1 July- | 1 July | % | 1 Jan- |
| | 30 Sep | 30 | | 30 Sep |
| | | Sep | | |
--------------------------------------------------------------------------------
| EUR mill. | | | | |
--------------------------------------------------------------------------------
| Scheduled | 432.6 | 401.9 | 7.6 | 1257.8 |
| Passenger Traffic | | | | |
--------------------------------------------------------------------------------
| Leisure Traffic | 90.1 | 90.7 | -0.7 | 289.8 |
--------------------------------------------------------------------------------
| Aviation Services | 109.9 | 101.6 | 8.2 | 320.5 |
--------------------------------------------------------------------------------
| Travel Services | 19.0 | 20.4 | -6.9 | 62.1 |
--------------------------------------------------------------------------------
| Group | -106.4 | -99.2 | 7.3 | -318.4 |
| eliminations | | | | |
--------------------------------------------------------------------------------
| Total | 545.2 | 515.4 | 5.8 | 1611.8 |
--------------------------------------------------------------------------------
TURNOVER
--------------------------------------------------------------------------------
| | 2006 | Change | 2006 |
--------------------------------------------------------------------------------
| | 1 Jan- | % | 1 Jan- |
| | 30 | | 31 Dec |
| | Sep | | |
--------------------------------------------------------------------------------
| EUR mill. | | | |
--------------------------------------------------------------------------------
| Scheduled Passenger | 1 147.0 | 9.7 | 1522.1 |
| Traffic | | | |
--------------------------------------------------------------------------------
| Leisure Traffic | 282.5 | 2.6 | 386.8 |
--------------------------------------------------------------------------------
| Aviation Services | 301.3 | 6.4 | 407.5 |
--------------------------------------------------------------------------------
| Travel Services | 66.1 | -6.1 | 87.4 |
--------------------------------------------------------------------------------
| Group eliminations | -306.6 | 3.8 | -414.2 |
--------------------------------------------------------------------------------
| Total | 1 490.3 | 8.2 | 1 989.6 |
--------------------------------------------------------------------------------
OPERATING PROFIT EXCLUDING THE DISPOSAL OF THE CAPITAL ASSETS AND FAIR VALUE
CHANGES OF DERIVATIVES AND REORGANIZATION EXPENSES
--------------------------------------------------------------------------------
| | 2007 | 2006 | Change | 2007 |
--------------------------------------------------------------------------------
| | 1 July- | 1July | % | 1 Jan- |
| | 30 Sep | 30 | | 30 |
| | | Sep | | Sep |
--------------------------------------------------------------------------------
| EUR mill. | | | | |
--------------------------------------------------------------------------------
| Scheduled Passenger | 28.8 | 20.3 | 41.9 | 56.2 |
| Traffic | | | | |
--------------------------------------------------------------------------------
| Leisure Traffic | 7.8 | 8.2 | -4.9 | 14.5 |
--------------------------------------------------------------------------------
| Aviation Services | 2.7 | -4.6 | -158.7 | 7.3 |
--------------------------------------------------------------------------------
| Travel Services | 1.3 | 0.9 | 44.4 | 3.8 |
--------------------------------------------------------------------------------
| Unallocated items | -1.4 | -2.3 | -39.1 | -9.6 |
--------------------------------------------------------------------------------
| Total | 39.2 | 22.5 | 74.2 | 72.2 |
--------------------------------------------------------------------------------
OPERATING PROFIT EXCLUDING THE DISPOSAL OF THE CAPITAL ASSETS AND FAIR VALUE
CHANGES OF DERIVATIVES AND REORGANIZATION EXPENSES
--------------------------------------------------------------------------------
| | 2006 | Change | 2006 |
--------------------------------------------------------------------------------
| | 1 Jan- | % | 1 Jan- |
| | 30 Sep | | 31 Dec |
--------------------------------------------------------------------------------
| EUR mill. | | | |
--------------------------------------------------------------------------------
| Scheduled Passenger | 37.5 | 49.9 | 28.6 |
| Traffic | | | |
--------------------------------------------------------------------------------
| Leisure Traffic | 15.6 | -7.1 | 18.6 |
--------------------------------------------------------------------------------
| Aviation Services | -9.4 | -177.7 | -24.5 |
--------------------------------------------------------------------------------
| Travel Services | 2.1 | 81.0 | 2.3 |
--------------------------------------------------------------------------------
| Unallocated items | -10.2 | -5.9 | -13.8 |
--------------------------------------------------------------------------------
| Total | 35.6 | 102.8 | 11.2 |
--------------------------------------------------------------------------------
EMPLOYEES AVERAGE BY SEGMENT
--------------------------------------------------------------------------------
| | 2007 | 2006 | Change |
--------------------------------------------------------------------------------
| | 1 Jan- | 1 Jan- | % |
| | 30 Sep | 30 Sep | |
--------------------------------------------------------------------------------
| Scheduled Passenger Traffic | 4 145 | 4 194 | -1.2 |
--------------------------------------------------------------------------------
| Leisure Traffic | 372 | 333 | 11.7 |
--------------------------------------------------------------------------------
| Aviation Services | 3 730 | 3 814 | -2.2 |
--------------------------------------------------------------------------------
| Travel Services | 1 129 | 1 141 | -1.1 |
--------------------------------------------------------------------------------
| Other functions | 158 | 226 | -30.1 |
--------------------------------------------------------------------------------
| Finnair Group Total | 9 534 | 9 708 | -1.8 |
--------------------------------------------------------------------------------
SECONDARY REPORTING FORMAT - GEOGRAPHICAL SEGMENTS
TURNOVER OUTSIDE THE GROUP BY SALES DESTINATION
--------------------------------------------------------------------------------
| | 2007 | 2006 | Change | 2007 |
--------------------------------------------------------------------------------
| | 1 July- | 1 July- | % | 1 Jan- |
| | 30 Sep | 30 Sep | | 30 Sep |
--------------------------------------------------------------------------------
| EUR mill. | | | | |
--------------------------------------------------------------------------------
| Finland | 99.0 | 101.7 | -2.7 | 308.5 |
--------------------------------------------------------------------------------
| Europe | 246.8 | 245.0 | 0.7 | 762.2 |
--------------------------------------------------------------------------------
| Asia | 164.9 | 137.2 | 20.2 | 440.4 |
--------------------------------------------------------------------------------
| North America | 21.3 | 23.3 | -8.6 | 49.5 |
--------------------------------------------------------------------------------
| Others | 13.2 | 8.2 | 61.0 | 51.2 |
--------------------------------------------------------------------------------
| Total | 545.2 | 515.4 | 5.8 | 1 611.8 |
--------------------------------------------------------------------------------
TURNOVER OUTSIDE THE GROUP BY SALES DESTINATION
--------------------------------------------------------------------------------
| | 2006 | Change | 2006 |
--------------------------------------------------------------------------------
| | 1 Jan- | % | 1 Jan- |
| | 30 | | 31 Dec |
| | Sep | | |
--------------------------------------------------------------------------------
| EUR mill. | | | |
--------------------------------------------------------------------------------
| Finland | 324.4 | -4.9 | 436.7 |
--------------------------------------------------------------------------------
| Europe | 716.7 | 6.3 | 936.5 |
--------------------------------------------------------------------------------
| Asia | 347.1 | 26.9 | 482.0 |
--------------------------------------------------------------------------------
| North America | 52.8 | -6.3 | 66.4 |
--------------------------------------------------------------------------------
| Others | 49.3 | 3.9 | 68.0 |
--------------------------------------------------------------------------------
| Total | 1 490.3 | 8.2 | 1 989.6 |
--------------------------------------------------------------------------------
AIR TRAFFIC 1 January - 30 Sep 2007
--------------------------------------------------------------------------------
| | Tota | Euro | North | Asia | Domest | Schedul | Leisu | Cargo |
| | l | pe | Amer | | ic | ed | re | |
| | traf | | ica | | | Traffic | | |
| | fic | | | | | Total | | |
--------------------------------------------------------------------------------
| Passengers | 6 | 3 | 108 | 838 | 1 288 | 5 815 | 889 | |
| (1000) | 704 | 581 | | | | | | |
--------------------------------------------------------------------------------
| %-change | 4.0 | 12.9 | -4.6 | 25.8 | -16.1 | 6.0 | -7.3 | |
--------------------------------------------------------------------------------
| Cargo and | 71 | 16 | 5 586 | 41 | 2 498 | 65 865 | 352 | 71 125 |
| mail | 125 | 085 | | 696 | | | | |
| (tonnes) | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | 2.4 | -7.3 | -10.1 | 18.9 | -13.5 | 7.1 | 40.0 | 2,4 |
--------------------------------------------------------------------------------
| Available | 19 | 6 | 856 | 7 532 | 1 107 | 16 211 | 3 767 | |
| seat-kilom | 978 | 716 | | | | | | |
| etres mill | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | 14.7 | 19.8 | -2.7 | 31.8 | 14.7 | 19.8 | -2.7 | 31.8 |
--------------------------------------------------------------------------------
| Revenue | 15 | 4 | 713 | 5 912 | 680 | 11 952 | 3 219 | |
| passenger | 171 | 646 | | | | | | |
| kilometres | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | 14.3 | 21.4 | -4.6 | 30.9 | 11.2 | 21.3 | -5.7 | |
--------------------------------------------------------------------------------
| Passenger | 75.9 | 69.2 | 83.3 | 78.5 | 61.4 | 73.7 | 85.5 | |
| load | | | | | | | | |
| factor % | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | -0.2 | 0.9 | -1.7 | -0.5 | 4.2 | 0.9 | -2.4 | |
--------------------------------------------------------------------------------
| Available | 3 | | | | | | | 936 |
| tonne-kilo | 024 | | | | | | | |
| metres | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | 14.2 | | | | | | | 43,8 |
--------------------------------------------------------------------------------
| Revenue | 1 | | | | | | | 393 |
| tonne-kilo | 752 | | | | | | | |
| metres | | | | | | | | |
| mill | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | 12.7 | | | | | | | 6,9 |
--------------------------------------------------------------------------------
| Overall | 57.9 | | | | | | | 42,0 * |
| load | | | | | | | | |
| factor % | | | | | | | | |
--------------------------------------------------------------------------------
| %-change | -0.8 | | | | | | | -14,5 |
--------------------------------------------------------------------------------
* Operational calculatory capacity
CONTINGENT LIABILITIES EUR mill.
--------------------------------------------------------------------------------
| | 30 Sep | 30 Sep | 31 Dec |
| | 2007 | 2006 | 2006 |
--------------------------------------------------------------------------------
| Other contingent liabilities | | | |
--------------------------------------------------------------------------------
| Pledges on own behalf | 282.8 | 244.9 | 236.9 |
--------------------------------------------------------------------------------
| Guarantees on group undertakings | 662.3 | 409.4 | 536.3 |
--------------------------------------------------------------------------------
| Total | 905.1 | 654.3 | 773.2 |
--------------------------------------------------------------------------------
| Fleet lease payment liabilities | 333.2 | 426.7 | 389.8 |
--------------------------------------------------------------------------------
| Other liabilities | 181.9 | 167.2 | 180.8 |
--------------------------------------------------------------------------------
| Total | 1 420.2 | 1 248.2 | 1 343.8 |
--------------------------------------------------------------------------------
CONTINGENT LIABILITIES AND DERIVATIVE CONTRACTS EUR mill.
--------------------------------------------------------------------------------
| Derivative | 30 Sep 2007 | 30 Sep 2006 | 31 Dec 2006 |
| 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 | 254.3 | -17.1 | 235.9 | -0.7 | 260.2 | -8.2 |
| contracts, | | | | | | |
| Jet Fuel | | | | | | |
| currency | | | | | | |
| hedging | | | | | | |
--------------------------------------------------------------------------------
| Forward | 424.8 | -15.0 | 216.9 | -0.7 | 324.7 | -9.1 |
| contracts, | | | | | | |
| Hedging of | | | | | | |
| Aircraft | | | | | | |
| purchace | | | | | | |
| price | | | | | | |
--------------------------------------------------------------------------------
| Forward | 62.6 | -3.2 | 48.5 | -1.1 | 63.8 | -1.9 |
| contracts. | | | | | | |
| Currency | | | | | | |
| hedging of | | | | | | |
| lease | | | | | | |
| payments | | | | | | |
--------------------------------------------------------------------------------
| Total | 741.7 | -35.3 | 501.3 | -2.5 | 648.6 | -19.2 |
--------------------------------------------------------------------------------
| Currency | | | | | | |
| derivatives | | | | | | |
| at fair value | | | | | | |
| through | | | | | | |
| profit or | | | | | | |
| loss | | | | | | |
--------------------------------------------------------------------------------
| Operating | 0.0 | 0.0 | 37.9 | -0.8 | 26.7 | -1.3 |
| cash flow | | | | | | |
| hedging | | | | | | |
--------------------------------------------------------------------------------
| Balance sheet | 77.6 | -1.3 | 88.8 | -0.3 | 94.1 | -0.6 |
| hedging | | | | | | |
--------------------------------------------------------------------------------
| Currency call | 28.2 | 0.0 | 15.8 | 0.1 | 0.0 | 0.0 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Currency put | 28.2 | -0.5 | 15.8 | 0.0 | 0.0 | 0.0 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Total | 134.0 | -1.8 | 158.3 | -1.0 | 120.9 | -2.0 |
--------------------------------------------------------------------------------
| Currency | 875.7 | -37.1 | 659.6 | -3.5 | 769.5 | -21.2 |
| derivatives, | | | | | | |
| total | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 30 Sep 2007 | 30 Sep 2006 | 31 Dec 2006 |
--------------------------------------------------------------------------------
| | 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 | 538 000 | 17.5 | 450 700 | -3.1 | 510 400 | -12.8 |
| swaps | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Commodity | | | | | | |
| derivatives | | | | | | |
| at fair value | | | | | | |
| through | | | | | | |
| profit or | | | | | | |
| loss | | | | | | |
--------------------------------------------------------------------------------
| Jet Fuel | 9 400 | 0.3 | 98 500 | -4.9 | 79 300 | -5.1 |
| Forward | | | | | | |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Gasoil | 38 400 | 1.7 | 0 | 0.0 | 0 | 0.0 |
| forward | | | | | | |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Jet | 333 000 | 1.8 | 0 | 0.0 | 112 500 | 0.0 |
| differential | | | | | | |
| forward | | | | | | |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Options | | | | | | |
--------------------------------------------------------------------------------
| Jet Fuel call | 28 500 | 2.0 | 31 500 | 0.9 | 35 000 | 0.3 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Jet Fuel put | 57 000 | -0.7 | 63 000 | -0.6 | 70 000 | -0.5 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Gasoil call | 51 000 | 3.3 | 0 | 0.0 | 9 000 | 0.0 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Gasoil put | 99 000 | -0.8 | 0 | 0.0 | 18 000 | 0.0 |
| options | | | | | | |
--------------------------------------------------------------------------------
| Total | | 25.1 | | -7.7 | | -18.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 30 Sep 2007 | 30 Sep 2006 | 31 Dec 2006 |
--------------------------------------------------------------------------------
| | 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 | 30.3 | -13.6 | 46.9 | -14.4 | 42.5 | -15.2 |
| accounting | | | | | | |
| items | | | | | | |
--------------------------------------------------------------------------------
| Cross | 17.1 | -10.2 | 24.2 | -10.3 | 22.1 | -10.7 |
| currency | | | | | | |
| interest rate | | | | | | |
| swaps at fair | | | | | | |
| value through | | | | | | |
| profit or | | | | | | |
| loss | | | | | | |
--------------------------------------------------------------------------------
| Total | 47.4 | -23.8 | 71.1 | -24.7 | 64.7 | -25.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest rate | | | | | | |
| swaps | | | | | | |
--------------------------------------------------------------------------------
| Hedge | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| accounting | | | | | | |
| items | | | | | | |
--------------------------------------------------------------------------------
| Interest rate | 20.0 | 1.0 | 20.0 | 0.8 | 20.0 | 1.0 |
| swaps at fair | | | | | | |
| value through | | | | | | |
| profit or | | | | | | |
| loss | | | | | | |
--------------------------------------------------------------------------------
| Total | 20.0 | 1.0 | 20.0 | 0.8 | 20.0 | 1.0 |
--------------------------------------------------------------------------------
| Share | | | | | | |
| derivatives | | | | | | |
--------------------------------------------------------------------------------
| Shares | | | | | | |
--------------------------------------------------------------------------------
| Call options, | 16.6 | 3.2 | 0.0 | 0.0 | 0.0 | 0.0 |
| share | | | | | | |
--------------------------------------------------------------------------------
FINNAIR GROUP INTERIM REPORT FOR JANUARY 1 - SEPTEMBER 30, 2007, EFFICIENCY MEASURES IMPROVED PROFITABILITY
| Source: Finnair Oyj
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