Breakout session II: Crisis Management

1. Breakout session II:Crisis Management

2. Crisis ManagementNordic IR Conference26.5.2004Taneli Hassinen

3. An exceptional situation A situation where the company’s ability to take care of its business is compromised Caused by... • Accident, illness, injuries, loss of life • Sabotage, catastrophe, strike or war • Company under official and/or media observation • Serious damage to property • Activities of partners Resulting in... • Interruption or down-sizing of business • Staff not able to take care of their duties • Dramatic drop in demand

5. “911” + 2h 35 min 15:45 00:00 First plane hits the WTC 15:50 00:05 Finnair gets first piece of information 16:04 00:18 Second plane hits the WTC 16:07 00:22 Information to the staff through the intranet 16:10 00:25 Increase in level of crisis management 16:15 00:30 Contact with Finnair flight AY005 on the way to NYC 16:30 00:45 First contacts from media 16:40 00:55 Decision to take AY005 back to Helsinki 16:45 01:00 Plane hits Pentagon in Washington 17:00 01:15 1. Finnair press release 17:00 01:15 Activation of de-briefing group 17:12 01:27 Security level upgraded 18:00 02:15 Re-routing of Bangkok flight 18:20 02:35 2. Finnair press release

6. New York => New York 11.09. Terrorist attacks in New York 12.09. First contact from analysts First Meeting of the crisis management group September Focus: 1. Safety and security 2. Adaptation of capacity and costs 3. Communication 19.09. First negotiations with labour unions 24.09. First profit warning 02.10. Liquidation of Swissair 08.10. SAS SK686 crash in Milan 17.10. Cost cutting programme of 115 mill. euro 19.10. Second profit warning 06.11. Bankruptcy of Sabena 12.11. American Airlines AA587 crash in New York 19.11. Agreement on savings with five of seven unions

7. SARS epidemic • Media “infected” first: loosing sense of proportion • Only few victims in relation to other disease, but low predictability created fear among public • Secrecy of the Chinese authorities delayed effective actions and created unreliability • Travel ban lowered demand in China • Resulting in capacity cuts • Importance of Asia in Finnair strategy became a challenge to IR • Losses were tens of millions of euros

8. Development in Demand AEA and Finnair AEA: Association of European Airlines

9. Demand in Finnair Asian Traffic vs. AEA AEA: Association of European Airlines

10. Big questions • How to handle a crisis as such • How to communicate in and about the crisis • How to make most of an unwanted situation

11. Key objectives • Immediate reaction according to the recovery plan • Presence in media also steers market sentiment take care of media needs: • Communicate actively and immediately • Openness towards media • Ensure that media has the right facts • Provide staff with correct information • Well-considered statements on economics • As the acute phase is over, communicate with capital markets

12. Prepare yourself in advance • Be prepared - plans prepared in advance help to act correctly and quickly • Plans for operations • Plans for communication • Spokespersons and guidelines for them • Templates for releases • Long-term relations with media and capital markets - background information

13. A CRISIS well-handled, can turn into a VICTORY