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Competitive position in intercontinental travel from Scandinavia

Competitive position in intercontinental travel from Scandinavia. Christer Haglund, SVP, Public Affairs and Corporate Communications 10.6.2008. On blue and white wings since 1923. Nine million passengers per year Turnover two billion euros 9,500 employees 64 aircraft Listed in 1989

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Competitive position in intercontinental travel from Scandinavia

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  1. Competitive position in intercontinental travel from Scandinavia Christer Haglund, SVP, Public Affairs and Corporate Communications 10.6.2008

  2. On blue and white wings since 1923 • Nine million passengers per year • Turnover two billion euros • 9,500 employees • 64 aircraft • Listed in 1989 • 7,000 shareholders • Government ownership 55.8 per cent • Foreign ownership20 per cent • Dividend paid every year

  3. The modern silk road Seoul Finland is on the shortest route to Asia Europe-Asia: close to 30 mill. passengers per year Annual market growth 6-10% (market doubles by 2015)

  4. Europe a natural catchment area for Finnair Asia A natural choice if you have to change aircraft, for example from: HEL CPH Stockholm Gothenburg Oslo Hamburg Düsseldorf Berlin Stuttgart Manchester Tallinn Krakow Riga Vilnius Budapest Warsaw Prague BarcelonaMadrid Milan Zurich Venice LON PAR FRA

  5. Finnair long-haul traffic in 2001 Tokyo 2 7 New York Beijing 3 Bangkok 4 Singapore 4

  6. Long-haul network in 2008 Tokyo 4 Nagoya 4 Osaka 7 Seoul 5 7 New York Beijing 7 Shanghai 7 Hong Kong 7 Guangzhou 4 Bangkok 7 Delhi 7 Mumbai 6

  7. Asian capacity has grown rapidly Thailand China Japan India Korea

  8. Finnair has most of the fastest connections between Europe and Asia Airline # of fastest connections Finnair 278 Lufthansa 126 KLM 40 Aeroflot 35 Air France 35 Austrian 30 Swiss 23 SAS 19 Thai Airways 18 Air China 16 Aerosvit Airlines 11 Alitalia 11 Turkish Airlines 10 British Airways 9 JAL 8 Cathay Pacific 5 China Southern 5 Hainan Airlines 5 Jet Airways 5 LTU Airways 5 Korean Air 4 Others 22 Total oneway flights 720 Routings ranked in reservation systems by total travel times Source: Amadeus Reservation System, December 2007 flights

  9. More revenues from Asia than EuropeDistribution of passenger and cargo revenues in scheduled traffic Domestic Europe Asia US Aasia-EurooppaVia Helsinki >50 % Asia-Europegateway >50%

  10. Vision 2017 • The airline of choice in intercontinental traffic in the Northern Hemisphere • Choice of quality and environmentally conscious air travelers • Europe-Asia traffic main growth area • Next axis between North America and South East Asia further strengthens Finnair’s strategy • Via Helsinki concept means the shortest and most environmentally friendly route and a smooth and uncongested connection

  11. Finnair 2017 – ”On top of the World”

  12. Modern, eco-efficient European fleet • The best thing an airline can do for the environment is to fly a modern fleet • Increased flexibility, improved load factors, lower costs and less emissions • Average age of Finnair’s European fleet is four years. • European fleet consists of Airbus A320 and Embraer 170/190 family aircraft

  13. New wide-bodied aircraft enable future growth in intercontinental traffic • In 2007-14 a fleet of maximum 15 Airbus A330/A340 aircraft • Boeing MD-11 fleet will be phased out by March 2010 • In 2014-16 a fleet of maximum 15 new technology Airbus A350XWB aircraft

  14. Airlines going bust • Growth of demand declining • Passenger load factors down • Soaring fuel prices • More airlines facing uphill struggle to survive • Big airlines in a rush to go small – ”less is more” • Old inefficient aircraft grounded • Bankruptcies and mergers, more to come • Subsidies once again distort competition

  15. Ugly outlook for the industry With fuel prices almost double what they were a year ago, airlines have switched strategies from expansion to downsizing. The New York Times 6.6.2008 Already suffering, U.S. airlines have raised fares, added fees and surcharges, cut jobs and reduced services to cope with oil prices and the slowdown.Reuters 2.6.2008 Ryanair warned on Tuesday that its operating profits would be wiped out this year, if the crude oil price remained at around $130 a barrel.Financial Times 3.6.2008 United Airlines plans to ground more than a fifth of its fleet, slash its domestic capacity by as much as 18 per cent by the end of next year and cut as many as 1,600 jobs in the latest sign of the crisis gripping the US airline industry amid record oil prices and a slowing economy.Financial Times 4.6.2008

  16. Size does not matter –Only the fittest will survive Survivers are airlines with - New fuel efficient fleet - Fuel hedging - Healthy financial position - Good strategy - Patient ownership - Happy customers

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