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Finnair: Changes in Finnair's financial reporting principles

Finnair Plc Stock Exchange Release 27 March 2014 at 14.30 EET

Finnair is changing the accounting principle of its aircraft engine
overhauls and will combine the Aviation Services segment with Airline
Business segment from the first quarter of 2014 onward. Finnair's
financial reporting for 2013 has been adjusted to account for the new
reporting practices. The restated 2013 figures are presented in the
attached tables.

Capitalization of the aircraft engine overhauls

Finnair is changing the accounting principle for its aircraft engine
overhauls. From the beginning of 2014, Finnair capitalizes engine
overhauls to its balance sheet and depreciates related costs during
the engines' maintenance periods. Earlier overhauls have been booked
as expense when they occur.

The change will reduce the volatility of engine overhaul costs, which
improves the accuracy of forecasting future profitability and
improves comparability over of periods. It will also improve
comparability with other airlines, because, based on the study
conducted by International Air Traffic Association (IATA), the
amended practice corresponds to the current industry practice. It
will decrease Finnair equity at 31 December 2013 by 13.8 million
euros and improve 2013 EBIT by 16.7 million euros. In addition, the
change will increase 2013 gross investments, improve 2013 cash flow
from operating activities and reduce cash flow from investing
activities respectively. It will also impact Finnair's 2013 key

The change in the accounting principle affects the Airline Business

Aviation Services segment combined with Airline Business segment

Due to restructurings made in past years, the nature and scope of
Aviation Services business have changed. Due to the changes, the
Board of Directors has decided to change the business segment
structure. From the first quarter of 2014 onward, the Aviation
Services segment is not reported separately, but its operations are
reported as a part of the Airline Business segment. After the
structural changes in technical services and catering implemented in
2012, the Aviation Services segment has consisted of aircraft
maintenance and the operations of Finncatering Oy and Finnair Travel
Retail Oy, as well as Finnair's property holdings, office services
and the management and maintenance of properties related to the
company's operational activities. Finncatering Oy was sold to LSG
Lufthansa Service Europa/Afrika GmbH on 28 February 2014.

The segment information for 2013 have been restated accordingly.

Appendix: Restated comparable 2013 figures

Further information:
Finnair communications, 358 9 818 4020, comms(a)

Principal media


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