Financial
Information
2021
Contents
Review of the year 
The Report of the Board of Directors
 Financial Statements
 Board of Directors’
Proposal on the Dividend
 Auditor’s Report
Finnair – Financial Information 2021 2
The Report of the
Board of Directors
Board of Directors’
Proposal on the Dividend
Auditor’s ReportReview of the year 2021 Financial Statements
Review of the year 2021
During 2021, we took the first steps in Finnair’s
recovery from the pandemic. We carried 2.9 million
passengers during the year. Our revenue improved
slightly year-on-year and totaled 838.4 million
euros, still less than 30 per cent of the 2019 level. The
comparable operating result for the year remained
heavily negative at -469.9 million euros.
The gradual recovery of passenger traffic started
in the latter half of 2021 as vaccination coverage
improved and travel restrictions were partially
removed. Pent-up demand was reflected in
increased passenger numbers and improved
bookings starting from late summer. Our long-haul
passenger numbers also started to recover as
the United States, Thailand, Singapore, and India
opened for travel. We launched our direct services
from Stockholm to the United States and Thailand,
which was a major new initiative for us. At the end
of Q4, the impacts of the Omicron variant began to
be visible, as many countries tightened their travel
restrictions in December.
Due to global supply chain disruptions, cargo
demand was exceptionally strong throughout
the year, and cargo accounted for 40 per cent of
Finnair’s revenue.
We continued our comprehensive financing
measures throughout the year. In early 2021,
we signed an agreement on a 400-million-
euro hybrid loan with the State of Finland. This
facility is still undrawn, but it will have a stabilising
effect on Finnair’s balance sheet. We also
implemented an over 400-million-US dollar sale
and leaseback arrangement covering four Airbus
A350 aircraft and issued a 400-million-euro bond.
The management and the board want to thank
sincerely both the state owner and all our other
investors for the trust they have placed in us. We
had c. 116,000 shareholders at the end 2021, and
the number grew by more than 35 per cent year-
on-year.
Our cost savings programme proceeded well
and we reached our target of 200 million euros of
permanent annual cost savings, based on 2019
volumes. The achieved cost savings decreased our
loss already in 2021, and their full run-rate impact
will be visible starting from 2022. Despite achieving
the target, we will continue our cost savings work
through continuous operational improvement
andefficiency.
After the period, we introduced our new long-
haul customer experience, for which we are
renewing the cabins of all our long-haul aircraft,
both in business and economy class, and are
introducing a new premium economy travel class.
This 200-million-euro investment has been in
development for years and it is essential to secure
our competitiveness. Together with the terminal
expansion at Helsinki-Vantaa airport, our cabin
renewal enables us to offer a modern premium
product to our customers.
Our net promoter score remained at a high level,
38, for the whole year. Finnair was chosen as the
best airline in Northern Europe in the Skytrax
customer survey for the eleventh consecutive
time, for which we are grateful to our customers.
Ramping up flights after a long period of low traffic
brought operational challenges, which were
further amplified by the unanticipated impacts
of the Omicron variant at the end of the year. This
was reflected in weaker on-time performance and
in congestion in our customer service channels
when many customers changed their travel dates.
This year, ensuring high-quality customer service
and on-time performance are in special focus for
Finnair – Financial Information 2021 3
The Report of the
Board of Directors
Board of Directors’
Proposal on the Dividend
Auditor’s ReportReview of the year 2021 Financial Statements
us, as they are integral for Finnair’s recovery from
thepandemic.
During the year, we advanced our sustainability
targets. Together with other members of the
oneworld Alliance, we agreed to jointly purchase
sustainable aviation fuel. We dismantled and
recycled one of the oldest A319-aircraft in our
fleet. This provided work for our employees at
Finnair Technical Services during a period of
low traffic and gave us valuable information on
recycling opportunities of airplanes: c. 99% of the
aircraft materials were reutilised. We successfully
continued our weight and fuel programme,
improving our flight efficiency. Our actions related
to social responsibility consisted of e.g., supporting
the re-employment of employees who were made
redundant in 2020 and supporting the wellbeing of
employees on long-term furloughs.
As the Omicron wave is waning, the pandemic is
changing to an endemic. We are preparing for
the traffic in summer 2022 and the opening of our
new long-haul routes to Busan, Dallas, Seattle, and
Tokyo Haneda. We estimate that, aside from China
and Hong Kong, by next summer we will be closer
to a normal operating environment.
The prolonged pandemic and the rapid changes
in our operating environment were wearing for
our personnel. Even though I’m grateful that we
were able to provide a safe and healthy working
environment for them, we have been forced to
continue the very unfortunate furloughs as there
still has not been enough work for everyone. I want
to deliver my special thanks to the entire Finnair
team for their commitment and for delivering a
high-quality customer experience under these
strenuous circumstances. I believe the operating
environment this year will be more positive for our
employees as we continue to take significant steps
forward in our recovery from the pandemic.
Topi Manner,
President and CEO
Finnair – Financial Information 2021 4
The Report of the
Board of Directors
Board of Directors’
Proposal on the Dividend
Auditor’s ReportReview of the year 2021 Financial Statements
The Report of the
Board of Directors
Business model and operational environment
 Financial performance in 
 Financial position and capital expenditure
 Fleet
 Strategy implementation
 Financial performance –
 Non-Financial Performance 
 Changes in company management
 Shares and shareholders
 Risk management
 Significant risks and uncertainties
 Seasonal variation and sensitivities in business
operations
 Outlook
 Key performance indicators classified as
alternative performance measures
 Reconciliation of key performance indicators
classified as alternative performance measures
 Other performance indicators
Finnair – Financial Information 2021 5
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
THE REPORT OF THE BOARD OF DIRECTORS
Business model and
operational environment
Finnair is a network airline that specialises in
passenger and cargo traffic between Asia and
Europe. It also offers package tours under its
Aurinkomatkat-Suntours (later Aurinkomatkat)
brand. The cornerstone of Finnair’s strategy is its
geographical position, which confers a competitive
advantage because it enables the fastest
connections in the growing market of air traffic
between Asia and Europe.
The Finnair Plus loyalty programme strengthens
engagement with customers and generates
valuable customer data. It is one of Finland’s
leading loyalty programmes with over 3.5 million
members. The number of members has grown
by over 50% since 2017 and Finnair was able to
increase the number despite the challenging
operational and market environment during 2021.
The programme currently has c. 150 partners.
Finnair’s business is impacted by the four
megatrends described in the adjacent picture.
They offer numerous opportunities, but also add
new requirements for conducting business.
Finnair’s business is cyclical in nature, and in
addition to long-term megatrends, it is heavily
influenced by external factors described in the
picture on the next page.
Read more on Finnair’s website.
Increasing significance of sustainability
Technological progress, an increase in the significance of
network connections and digitalisation
Shift in economic and political focus from the United
States and Europe to the growth economies in Asia
Urbanisation
Megatrends impacting Finnair’s business
Finnair – Financial Information 2021 6
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
In the current three forecast scenarios, demand
and revenue are expected to recover somewhat
more slowly during 2022 than estimated in the
2020 financial statements. This is caused by the
prolonged impact of the COVID-19 pandemic
on travel restrictions. The company, however, still
estimates in its base scenario that the capacity,
measured in ASKs, will reach 2019 levels in 2023.
Business environment
in2021
The COVID-19 pandemic dramatically impacted
the global aviation sector also in 2021. Even though
the improved vaccination coverage enabled a
gradual ramp-up and less restricted travel starting
in the summer to Europe, and later in the year to
e.g., the United States, Thailand, Singapore and
India, also Finnair was forced to significantly cut its
capacity and operate a limited network due to the
continued travel restrictions and lack of demand.
The annual capacity (measured in ASKs) was
slightly lower than in 2020.
Measured in ASKs, the scheduled market capacity
between origin Helsinki and Finnair’s European
destinations decreased by 14.5 per cent (-68.7)
compared to 2020, as the pandemic impact was
not visible before the end of Q1 2020. Demand on
European and domestic routes was soft due to the
COVID-19-related strict travel restrictions especially
in early 2021 even though the situation improved
starting from late summer because of improved
vaccination coverage. Direct market capacity
between Finnair’s Asian and European destinations
decreased by 34.8 per cent (-70.5) year-on-year
despite the partially opened travel to Asia during
Q4. Due to continued travel restrictions, demand
between Europe and Finnair’s Asian destinations
remained soft.
Finnair engages in closer cooperation with certain
oneworld partners through participation in joint
businesses, namely the Siberian Joint Business
(SJB) on flights between Europe and Japan,
and the Atlantic Joint Businesses (AJB) on flights
between Europe and North America. During the
unprecedented circumstances, Finnair and its JB
partners were working closely together in 2021
to ensure the continued delivery of efficiencies
and customer benefits, despite the severely
reduced capacity and revenue. Further, Finnair
launched its Joint Business with Juneyao Airlines in
the beginning of July. The carriers will cooperate
commercially on flights between Helsinki and
Shanghai as well as on Chinese and European
routes. The Joint Business demonstrates Finnair’s
commitment to China as a strategic market.
Aurinkomatkat’s foreign package holiday offering
was suspended during H1 2021 due to the COVID-19
pandemic and related travel restrictions and
guidelines. Package holidays were produced only
for domestic destinations, which were launched
External factors influencing airlines
SEASONALITY IN
LEISURE AND BUSINESS
TRAVEL
WEATHER,
NATURAL DISASTERS,
PANDEMICS AND OTHER
EXTERNAL SHOCKS
POLITICAL ENVIRONMENT
AND REGULATION
EXCHANGE
RATES
PRICE OF
JET FUEL
GLOBAL
ECONOMIC CYCLES
CHANGES IN CONSUMER PREFERENCE, EXPECTATIONS,
PURCHASING PATTERNS AND DEMOGRAPHICS
Of these external factors, the COVID-19 pandemic
continued to have a significantly negative
impact on Finnair’s business in 2021. Even though
vaccinations against the virus were available from
early 2021, many countries continued to heavily
restrict travelling. As Finnair continued to adjust
its operations, both temporary and permanent
layoffs impacted most Finnair personnel in 2021. In
addition, the implementation of other significant
cost adjustment measures – which were volume-
driven, but also permanent - continued in order to
minimise losses caused by limited operations as
well as to secure the company’s competitiveness
and ability to operate from a more efficient cost
base as passenger traffic gradually started to
recover in the second half of 2021.
In 2021, Finnair continued its extensive financing
programme, consisting of e.g. an unsecured and
currently undrawn hybrid loan agreement of up to
400 million euros signed with the State of Finland,
a new 400-million-euro unsecured senior bond,
which refinanced the previous senior bond of 200
million euros and a sale and leaseback transaction
of four A350 aircraft resulting in cash proceeds of
more than 400 million US dollars. The company
also reached the targeted permanent, annual cost
savings of c. 200 million euros by 2022, calculated
based on 2019 operational volumes. After this, it
will continue to seek savings through continuous
operational improvement and efficiency.
Finnair – Financial Information 2021 7
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
as a new product in autumn 2020. Aurinkomatkat’s
foreign package holiday production restarted
in Q3 after a suspension of almost one year with
mainly Mediterranean destinations on offer. In Q4,
the selection was extended with destinations such
as the Canary Islands, the United Arab Emirates
and Thailand due to eased travel restrictions.
The domestic package holidays were also in
production in H2. Even though demand for foreign
package holidays strengthened in H2, and was
primarily focused on the winter season 2021–
2022 as well as summer 2022, it was negatively
impacted by the Omicron variant and related
travel restrictions. The relatively strong demand for
the winter season 2022–2023 suggests, however,
that there is pent-up desire to travel.
The global air freight market was also impacted
by COVID-19 in 2021, as the scheduled passenger
traffic capacity (which provides the volume
available to carry belly cargo) was down
compared to the pre-pandemic era. Pandemic-
related supply chain disruptions and the lack of
capacity resulted in delivery delays that continued,
however, to benefit air cargo as they resulted in
exceptionally strong demand and surging market
prices. Due to the exceptional demand, a market
for cargo-only operations to both Asia and North
America remained viable. Finnair was gradually
able to also increase the number of scheduled
long-haul flights carrying belly cargo despite the
low passenger load factor. Finnair’s cargo revenue
increased significantly year-on-year, and even
compared to 2019. Similarly, the total cargo load
factor increased significantly compared to 2020.
Finnair estimates that this cargo demand trend will
continue at least through H1 2022.
The US dollar, which is the most significant expense
currency for Finnair after the euro, depreciated
by 3.4 per cent against the euro year-on-year. The
market price of jet fuel was 69.2 per cent higher in
2021 than in the comparison period.
“Finnair’s cargo revenue
increased significantly year-
on-year, and even compared to
2019.”
Finnair – Financial Information 2021 8
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
Increasing value for society
• Enabling safe and free movement of people,
goods and services
• Improving cultural, societal and commercial
interaction
• Participating and inspiring cross-industry
collaboration
• Economic multiplier effects for the Finnish society
Sustainable growth
• Producing direct and indirect employment
( e.g. tourism, international trade and foreign
investments )
• Venturing out of our traditional business
to find solutions for our core
• Producing value for shareholders‘ investments
• Increased brand value
Satisfied & competent personnel
• Equal opportunities for personnel
• Good governance
• Safe and healthy work
• Support and respect of labour and human rights
Environmental impact
• Air emissions ( CO
2
and non-CO
2
)
• Noise emissions
• Liquid waste ( de-icing fluids )
• Material waste
Human
• Competent personnel
Intellectual and social
• Suppliers and partners
• Joint businesses ( AJB / SJB / Juneyao )
and alliance cooperation
• Distribution channels
• Public affairs
Immaterial
• Traffic & overflight rights
• Customer base and data
• Quality certifications
• Route network
• Brand
Financial and material
• Adjusted interest-bearing debt € 2 ,796.6 million
• Equity capital € 475.7 million
• Modern and efficient fleet of 84 aircraft
• COOL Nordic Cargo Terminal, Helsinki Hub
• Maintenance facilities
• Catering facilitie
s
Natural resources
• Fuel use ( jet and ground )
• Energy consumption of facilities
• Water use
• Purchased goods
• Material use
Capitals ImpactBusiness activities
Customer service and products
Finnair and oneworld global network
Passenger and cargo traffic
Ancillary services
Package tours
Dynamic travel products
Support services
Catering
Aircraft maintenance
Ground handling
Airline training
COURAGE
SIMPLICITY
COMMITMENT
TO CARE
Purpose: Enriching life by bridging the world
Strategy and values
WORKING
TOGETHER
Cost efficiency
Capture
market growth
Sustainability as
a differentiator
Modern
premium
offering, retailing
and distribution
PEOPLE
Finnair – Financial Information 2021 9
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
Financial performance
in 2021
pandemic impact was more visible starting from
the end of Q1 2020, passenger revenue decreased
by 20.3 per cent and traffic capacity, measured in
Available Seat Kilometres (ASK), declined by 6.5
per cent overall against the comparison period.
The number of passengers decreased by 18.2 per
cent to 2,852,300 passengers. Traffic measured in
Revenue Passenger Kilometres (RPK) decreased by
36.5 per cent and the passenger load factor (PLF)
by 20.2 percentage points to 42.8 per cent.
Revenue in 2021
Finnair’s total revenue increased slightly from
the comparison period due to the record cargo
performance in 2021.
Unit revenue (RASK) increased by 8.2 per cent and
amounted to 6.93 cents (6.41). The RASK increase
was caused by the decline in ASKs due to the
COVID-19 pandemic; therefore, the strong cargo
operations – of which cargo-only flights did not
generate any ASKs – had an outsize contribution to
the increase.
Passenger traffic
The COVID-19 pandemic and related travel
restrictions had a significant negative impact on
almost all 2021 passenger traffic figures. As the
In Asian traffic, the number of scheduled
passenger flights was limited in 2021 despite e.g.,
Thailand, Singapore and India opening for travel
in Q4, and the number of Finnair flights to those
destinations increasing. ASKs were down by 27.5
per cent, and RPKs by 75.1 per cent. PLF declined
by 40.9 percentage points to 21.4 per cent, causing
low passenger yields, but it was supported by
the strong cargo operations and a high cargo
loadfactor.
Revenue by product
EUR million 2021 2020 Change %
Passenger revenue 420.8 528.1 -20.3
Ancillary revenue 44.1 62.3 -29.2
Cargo 334.7 177.7 88.3
Travel services 38.7 61.1 -36.7
Total 838.4 829.2 1.1
2021
2020
Revenue bridge by product
€ million
Passenger revenue
Ancillary and
retail revenue
Cargo
Travel services
157.0
-22.4
-107.2
-18.2
838.4
829.2
Finnair – Financial Information 2021 10
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
Even though the first North Atlantic passenger
flights since June 2020 were restarted in March
(only to New York), capacity in North Atlantic traffic
increased by 168.9 per cent year-on-year. The
Chicago and Los Angeles routes were reopened
in June 2021 and the Miami route was reopened for
the winter season. Travel restrictions from Finland
and Sweden to the United States were eased in Q4,
when Finnair also commenced direct flights from
Stockholm to Miami, Los Angeles and New York.
RPKs increased by 8.7 per cent. On the other hand,
the PLF decreased by 45.4 percentage points to
30.8 per cent, with low passenger yields, but the
strong cargo operations also supported the North
Atlantic traffic.
ASKs fell by 8.2 per cent and RPKs by 2.8 per cent
but the PLF increased by 3.7 percentage points to
65.7 per cent in European traffic.
Domestic traffic capacity decreased by 19.2
per cent, and RPKs by 11.4 per cent, but the PLF
increased by 5.8 percentage points to 66.0 per cent.
Ancillary
Ancillary revenue, consisting of e.g., various service
fees and inflight sales, decreased by 29.2 per cent
due to the COVID-19 impact. Excess baggage and
frequent flyer programme related revenue were
the largest ancillary categories.
Cargo
The impact of the COVID-19 pandemic was also
visible in Finnair’s 2021 cargo volumes, due to the
limited number of scheduled passenger flights,
even though available scheduled cargo tonne
kilometres increased by 16.9 per cent and revenue
scheduled cargo tonne kilometres increased
by 47.0 per cent. Cargo-related available tonne
kilometres grew by 36.5 per cent and revenue
tonne kilometres by 58.9 per cent as they both
include the cargo-only flights, which were
operated mainly between Europe and Asia as well
as between Europe and North America. Finnair
was also able to continue operating scheduled
Asian and North Atlantic passenger flights carrying
belly cargo, despite their low PLF, as these flights
had high cargo load factors due to continued
strong cargo demand. As a result, cargo revenue
Passenger revenue and traffic data by area, 2021
Passenger revenue ASK RPK PLF
Traffic area MEUR Share % Change% Mill. km Change % Mill. km Change % % Change %-p
Asia 75.3 17.9 -59.5 4,463.0 -27.5 956.3 -75.1 21.4 -40.9
North Atlantic 38.6 9.2 46.0 2,282.5 168.9 703.5 8.7 30.8 -45.4
Europe 243.6 57.9 -0.4 4,644.7 -8.2 3,053.8 -2.8 65.7 3.7
Domestic 60.3 14.3 -12.8 704.0 -19.2 464.6 -11.4 66.0 5.8
Unallocated 3.0 0.7 59.7
Total 420.8 100.0 -20.3 12,094.2 -6.5 5,178.2 -36.5 42.8 -20.2
increased by as much as 88.3 per cent year-on-
year, with December being a record month as
measured by revenue.
Travel services
Travel Services’ financial development has been
significantly affected by the COVID-19 pandemic
and the related travel restrictions and guidelines.
During Q1–Q2, only domestic destinations were
in production but in Q3 and Q4, international
package holidays were included in production as
demand improved significantly due to reduced
travel restrictions. The total number of Travel
Services passengers declined by 0.7 per cent and
the load factor in Aurinkomatkat’s allotment-based
capacity was 89.1 per cent. Travel Services revenue
decreased, however, by 36.7 per cent.
2021
2020
€ million
Revenue bridge by traffic area
Asia
North Atlantic
Europe
Domestic
Unallocated
16.1
4.2
-46.4
43.3
838.4
829.2
-8.0
Finnair – Financial Information 2021 11
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
Operating expenses included in
comparable ebit in 2021
Finnair’s operating expenses included in the
comparable operating result decreased by 8.6
per cent despite the increase in revenue. Finnair
continued its significant cost adjustment initiatives
during 2021, including temporary and permanent
layoffs, which were visible in the decline in
operating expenses.
Unit cost (CASK) decreased by 1.8 per cent and
totalled 10.81 cents (11.01). CASK excluding fuel also
decreased by 1.6 per cent.
Operating expenses included in the comparable
operating result excluding fuel decreased by 8.5
per cent.
Fuel costs, including hedging results and emissions
trading costs, decreased almost in line with
capacity (measured in ASK) although the cargo-
only flights, which commenced in Q2 2020,
increased fuel consumption while they did not
generate ASKs. Fuel efficiency (as measured in
fuel consumption per ASK) weakened by 6.7 per
cent for the same reason. Fuel consumption per
RTK, which also accounts for developments in both
passenger and cargo load factors, decreased,
however, by 1.8 per cent.
Staff and other crew related costs decreased
as capacity was down and, therefore, Finnair
continued the COVID-19-related temporary and
permanent layoffs during 2021. Further, other staff-
related savings had a decreasing impact.
Passenger and handling costs (including tour
operation expenses related to e.g., hotels) were
driven down by the volume decline particularly in
passenger traffic. Sales, marketing and distribution
costs remained low, even though they increased
year-on-year due to increases in marketing
activities and sales intake as a result of the
ramp-up in traffic together with stronger demand.
Aircraft materials and overhaul costs decreased
due to the decline in capacity and updated
USD-based discount rates of maintenance
reserves. Depreciation and impairment costs
remained closer to the comparison period level.
Traffic charges increased as the traffic mix was
structurally different due to the relatively increased
wide-body operations caused by cargo-only
flights, which led to additional costs.
Capacity rents, covering purchased traffic from
Norra and any wet leases or potential cargo rents,
declined more than capacity from the comparison
period due to renegotiated agreements with
Norra. Property, IT and other expenses were closer
to the comparison period level as they mainly
consist of fixed costs, even though notable cost
savings were achieved.
2020 2021
Operating expenses included in comparable operating result
Operating expenses included in comparable operating result
€ million
2,000
1,500
1,000
500
0
Staff and other crew
related costs,
change -12%
Fuel costs, change -9%
Capacity rents,
change -20%
Aircraft materials and
overhaul, change -12%
Traffic charges,
change 7%
Sales, marketing and
distribution costs,
change 35%
Passenger and handling
services, change -12%
Depreciation and
impairment, change -7%
Property, IT and other
expenses, change -12%
1,472.9
1,346.4
Key Figures - Revenue and profitability
EUR million 2021 2020 2019 2018 2017
Revenue EUR mill. 838.4 829.2
3,097.7
2,836.1
2,568.4
change from previous year % 1.1 -73.2 9.2 10.4 10.9
Comparable operating result EUR mill.
-468.9
-595.3 162.8 218.4 170.4
Comparable operating result at constant
currency and fuel price*
2018 EUR mill.
-466.0
-558.9 205.7 218.4
2019
EUR mill. -476.5 -575.5 162.8
Comparable operating result of revenue % -55.9 -71.8 5.3 7.7 6.6
Operating result EUR mill. -454.4
-464.5
160.0 256.3 224.8
Comparable EBITDA/EBITDAR of revenue % -17.8 -30.3 15.8 18.1 17.0
Basic and diluted earnings per share (EPS)** EUR -0.34 -0.51 0.09 0.13 0.23
Unit revenue per available seat kilometre
(RASK)
cents/ASK 6.93 6.41 6.56 6.69 6.96
RASK at contant currency* 2018 cents/ASK 6.91 6.40 6.53 6.69
2019
cents/ASK 6.99 6.43 6.56
Unit revenue per revenue passenger
kilometre (yield)
cents/RPK 8.13 6.48 6.44 6.48 6.57
Unit cost per available seat kilometre (CASK)
cents/ASK 10.81 11.01 6.22 6.18 6.49
CASK excluding fuel cents/ASK 9.06 9.21 4.76 4.81 5.22
CASK at constant currency and fuel price* 2018 cents/ASK 10.76 10.72 6.10 6.18
2019
cents/ASK 10.93 10.88 6.22
* Key figures at constant currency and fuel price are reported on 2018 and 2019 level.
** A rights offering was executed between June and July 2020 and, therefore, 2017-2019 EPS figures have been restated accordingly.
Finnair – Financial Information 2021 12
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
Result in 2021
Finnair’s 2021 result was heavily impacted by the
COVID-19 pandemic due to extensive route and
frequency cuts caused by travel restrictions in
many countries worldwide.
Because of cost adjustment initiatives, Finnair’s
comparable EBITDA and comparable operating
result both improved year-on-year. Comparable
EBIT margin was -55.9 per cent (-71.8), when the
targeted over the cycle level was above 7.5 per
cent during the strategy period of 2020–2025. The
targeted level will, however, be reassessed due to
the COVID-19 impact once visibility on the business
environment, and particularly in Asia, improves.
Unrealised changes in foreign currencies of fleet
overhaul provisions were -11.7 million euros (12.2)
due to the strengthening US dollar. Exceptional
changes in defined benefit pension plans booked
as items affecting comparability totalled 20.6
million euros and they related to amendments in
the collective labour agreement relating to the
curtailment of the occupational disability pensions,
as well as to pilots’ withdrawn early retirement
announcements. In the comparison period (132.8),
the exceptional changes in defined benefit
pension plans related to changes in defined
benefit plans caused by the net impact of Finnair’s
pension fund index increment removals, and
pilots’ early retirement costs. Other items affecting
comparability consist of fair value changes in
derivatives where hedge accounting is not applied,
sales gains or losses and restructuring costs totalled
5.6 million euros (-14.3) during 2021. Due to the items
affecting comparability being clearly lower in 2021,
the operating result was close to the 2020 level.
The net of financial income and expenses as
well as exchange gains (mainly related to USD
denominated aircraft lease payments and
liabilities) declined significantly especially
due to lower financial expenses, which in the
comparison period related mainly to reclassified
jet fuel and foreign exchange hedges from other
comprehensive income to profit and loss. Thus,
Finnair’s result before taxes and result after taxes
improved year-on-year.
EUR million 2021 2020 Change %
Comparable EBITDA -149.0 -251.5 40.7
Depreciation and impairment -319.8 -343.8 7.0
Comparable operating result -468.9 -595.3 21.2
Items affecting comparability 14.4 130.8 -89.0
Operating result -454.4 -464.5 2.2
Financial income 12.8 38.7 -67.0
Financial expenses -117.8 -255.2 53.8
Exchange gains and losses -22.5 26.6 -184.5
Result before taxes -581.9 -654.4 11.1
Income taxes 117.6 131.1 -10.3
Result for the period -464.3 -523.2 11.3
2021 operating expenses (€1,346.4 million in total) included in comparable operating result
EUR million 2021 2020 Change %
Staff and other crew related costs 248.9 283.5 -12.2
Fuel costs 211.4 232.7 -9.1
Capacity rents 71.3 89.3 -20.1
Aircraft materials and overhaul 91.7 104.7 -12.4
Traffic charges 120.4 112.4 7.1
Sales, marketing and distribution costs 38.1 28.2 35.0
Passenger and handling costs 148.0 168.6 -12.2
Property, IT and other expenses 96.8 109.7 -11.8
Depreciation and impairment 319.8 343.8 -7.0
Total 1,346.4 1,472.9 -8.6
Finnair – Financial Information 2021 13
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
Financial position
and capital expenditure
Balance Sheet
The Group’s balance sheet totalled 4,047.1 million
euros at the end of 2021 (3,646.5). Fleet book value
decreased by 494.0 million euros due to depreciation
and the sale and leaseback transaction of four
Airbus A350 aircraft finalised in September. Despite
depreciation, the right-of-use fleet increased by
252.8 million euros similarly due to the same sale and
leaseback transaction as well as due to a leased
A350 aircraft that was delivered to Finnair in Q4. Both
transactions increased lease liabilities. Assets held for
sale totalled 18.7 million euros (none in the comparison
period) relating to four A321 aircraft.
Receivables related to revenue increased to 110.9
million euros mainly due to improved ticket sales and
strong cargo operations (57.5). Net deferred tax assets
increased to 191.9 million euros (84.8) resulting from
estimated tax losses caused by the COVID-19 impact
on Finnair’s result. The pension assets rose to 80.9
million euros (31.8) mainly due to actuarial gains
and the curtailment of the occupational disability
pensions whereas pension obligations remained at
the same level and were 0.7 million euros (1.5).
Deferred income and advances received
increased to 291.1 million euros (133.6). This was
mainly caused by an increase in the unflown ticket
liability amounting to 202.7 million euros (55.7) due
to improved sales intake.
The loss for the period, as well as the hybrid bond
coupon payment in Q3, decreased shareholders’ equity.
Shareholders’ equity also includes a fair value reserve
that is affected by changes in the fair values of jet fuel
and currency derivatives used for hedging as well as
actuarial gains and losses related to pilots’ defined
benefit plans according to IAS 19. The value of the item
at the end of December was 16.6 million euros after
deferred taxes (-41.8) as the increase in the fair value of
hedge instruments had an increasing effect on equity
especially due to the increase in the jet fuel price and
actuarial gains from defined benefit pension plans.
Key Figures - Capital structure
EUR million 2021 2020 2019 2018 2017
Equity ratio % 11.8 24.6 24.9 23.3 35.2
Gearing % 321.8 153.2 64.3 76.9 24.2
Interest-bearing net debt EUR mill. 1,530.9 1,373.8 621.0 706.7 246.0
Interest-bearing net debt /
Comparable EBITDA
-10.3 -5.5 1.3 1.4 1.6
Gross capital expenditure EUR mill. 434.5 515.9 443.8 474.0 519.0
Return on capital employed (ROCE) % -13.9 -15.2 6.3 9.3 13.6
350
300
250
200
150
100
50
0
%
2020 2021
Cash funds
Adjusted Interest-bearing liabilities
Equity
Gearing
Equity ratio
Gearing
€ million
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1,265.7
475.7
11.8%
2,796.6
32 1.8%
Shareholders’ equity totalled 475.7 million euros
(896.6), or 0.34 euros per share (0.64).
Finnair – Financial Information 2021 14
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
Cash flow
and financial
position
In 2021, the COVID-19 impact was clearly visible
in net cash flow from operating activities, which
remained negative due the negative result for
the period, lease and loan interest costs as well
as payments related to unwound fuel and foreign
exchange hedges, even though H2 was already
positive by 151.7 million euros. Net cash flow from
investments remained positive mainly due to fleet
divestments related to the sale and leaseback
transaction in September. Net cash flow from
financing was positive due to c. 400-million-euro
proceeds from the new unsecured senior bond
that was issued in May and will mature in May
2025. On the other hand, approximately half of the
refinanced, old 200-million-euro unsecured senior
bond was redeemed in May, which had a negative
impact on the net cash flow from financing, and
the other half will be repaid in March 2022 when
itmatures.
The equity ratio on 31 December 2021 decreased
from the year-end 2020 mainly due to the
negative result for the period, even though the
positive change in the hedging reserve and other
comprehensive income alleviated the impact, and
the impact of the sale and leaseback transaction
finalised in September as well as the new
unsecured senior bond on total liabilities. Gearing,
on the contrary, rose as interest-bearing net debt
increased and equity weakened.
The company’s liquidity was very strong at the end
of the period under review. Despite the negative
net cash flow from operating activities in 2021,
Finnair Group’s cash funds increased due to the
divestments of more than 400 million euros mainly
related to the sale and leaseback transaction
finalised in September and the new unsecured
senior bond of c. 400 million euros although it
was netted by the partial redemption of the old
unsecured senior bond.
Finnair and the State of Finland signed an
agreement on an unsecured hybrid loan of
up to 400 million euros in Q1. Of this credit limit,
approximately 350 million euros could be used
by Finnair based on the state aid decision made
by the EU Commission in March. The remaining
approximately 50-million-euro share was
approved by the EU Commission after the period.
Finnair can access the funds, if its cash or equity
position would drop below the limits defined in
the facility agreement’s terms and conditions. In
addition, Finnair has a 200-million-euro short-term,
unsecured commercial paper programme, which
was unused at the end of December. In October,
Finnair announced that it has retired the undrawn
Cash flow
EUR million 2021 2020
Net cash flow from operating activities -25.3 -1,043.1
Net cash flow from investing activities 309.6 351.6
Net cash flow from financing activities 73.4 1,001.9
Capital structure
% 31 Dec 2021 31 Dec 2020
Equity ratio 11.8 24.6
Gearing 321.8 153.2
Liquidity and net debt
EUR million 31 Dec 2021 31 Dec 2020
Cash funds 1,265.7 823.7
Adjusted interest-bearing liabilities 2,796.6 2,197.5
Interest-bearing net debt 1,530.9 1,373.8
Cash Flow change 2021
€ million
Net cash flow from
operating activities, -25.3
Net cash flow from
investing activities, +309.6
Net cash flow from
financing activities, +73.4
Cash at the beginning
Proceeds from loans
Comparable EBITDA
Loan and lease liability repayments
Change in working capital
Hybrid bond interests
Acquisitions and disposals of assets
Financial expenses paid, net
Acquisitions of own shares
Change in other current financial
assets (maturity over 3 months)
Other operating activities
Cash at the end
Other investing activities
1,600
1,200
800
400
0
-149.0
209.2
-99.3
365.4
-67.5
11.7
396.7
-20.5
792.2
-301.6
13.9
-1.1
1,150.0
Finnair – Financial Information 2021 15
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
Capital expenditure
Gross capital expenditure, excluding advance
payments, totalled 434.5 million euros during
2021 (515.9) and was primarily related to fleet
investments. This figure includes also changes in
the right-of-use fleet consisting of e.g., the sale and
leaseback transaction finalised in September as
well as the A350 aircraft delivered in Q4.
Cash flow from investments (including fixed asset
investments and divestments, sublease payments
received and advance payments) totalled 377.2
million euros (-88.3).
Change in other current financial assets (maturity
over three months) totalled -67.5 million euros
(439.9) also forming a part of the net cash flow
from investments, which amounted to 309.6 million
euros(351.6).
Cash flow from investments (including only fixed
asset investments and advance payments) for the
financial year 2022 relates mainly to the fleet and is
expected to total approximately -180 million euros.
Investment cash flow includes both committed
investments as well as estimates for planned, but
not yet committed, investments.
The company has 35 unencumbered aircraft,
which account for approximately 30.5 per cent of
the balance sheet value of the entire fleet of 1,971.6
million euros.*
175-million-euro revolving credit facility which was
maturing in January 2023.
Adjusted interest-bearing liabilities increased from
year-end 2020 mainly due to the sale and leaseback
transaction finalised in September, the new senior
unsecured bond and the leased A350 aircraft that
was delivered to Finnair in Q4. The share of lease
liabilities amounted to 1,381.0 million euros (1,016.2).
Interest-bearing net debt increased from the end of
2020 mainly due to the A350 aircraft delivered in Q4,
negative net cash flow from operating activities but
also due to the strengthened US dollar.
* Fleet value includes right of use assets as well as
prepayments of future aircraft deliveries.
2020 2021
2021
2020
Balance sheet
4,000
3,000
2,000
1,000
0
€ million
Fleet
Other fixed assets
Other assets
Cash and cash
equivalents and other
financial assets
Assets Equity and liabilities
Equity
Interest-bearing
liabilities
Deferred income
and advances
received
Other liabilities
2,808.9
2,178.7
291.1
133.6
475.7
896.6
4,047.1
3,646.5
4,047.1
3,646.5
471.5
437.5
1,971.6
2,212.7
318.7
330.2
491.1
279.9
1,265.7
823.7
Dividend policy and the
Board’s proposal for the
distribution of profit
The aim of Finnair’s dividend policy is to pay, on
average, at least one-third of the earnings per
share as a dividend over an economic cycle. The
aim is to take into account the company’s earnings
trend and outlook, financial situation and capital
needs in the distribution of dividends.
In 2021, earnings per share were -0.34 euros (-0.51).
Finnair Plc’s distributable equity amounted to
73,709,760.76 euros on 31 December 2021. The
Board of Directors proposes to the Annual General
Meeting that no dividend be distributed for 2021.
Finnair – Financial Information 2021 16
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
Finnair’s operating fleet
Finnair’s fleet is managed by Finnair Aircraft
Finance Oy, a wholly-owned subsidiary of Finnair.
At the end of the year, Finnair itself had 60 aircraft,
of which 25 were wide-body and 35 narrow-
body aircraft. During the fourth quarter, Finnair
took delivery of its 17th Airbus A350 aircraft which
was financed with an operating lease during the
first quarter and at that time planned for delivery
in the second quarter of 2022. The delivery was
advanced in response to widebody aircraft
capacity requirements. During the fourth quarter,
Finnair also purchased one Airbus A330, which was
already accounted for as owned, as the finance
lease period ended.
At the end of 2021, the average age of the fleet
operated by Finnair was 11.4 years.
Fleet renewal
At the end of the year, Finnair had seventeen A350
aircraft, which have been delivered between 2015–
2021 and two A350 aircraft on order from Airbus.
These aircraft are scheduled to be delivered to
Finnair in Q4 2024 and Q1 2025.
Finnair’s investment commitments for property, plant
and equipment, totalling 355.0 million euros, include
the upcoming investments in the wide-body fleet.
Finnair has the possibility to adjust the size of its fleet
in line with demand forecasts through the staggered
maturities of its lease agreements and changes in
the number of owned aircraft.
Fleet operated by Norra
(purchased traffic)
Nordic Regional Airlines (Norra) operates a fleet of
24 aircraft for Finnair on a contract flying basis. All the
aircraft operated by Norra are leased from Finnair
Aircraft Finance Oy.
Fleet
Fleet operated by
Finnair*
31.12.2021 Seats #
Change
from
31.12.2020 Own** Leased
Average age
31.12.2021 Ordered
Narrow-body fleet
Airbus A319 144 6 5 1 20.1
Airbus A320 174 10 8 2 19.4
Airbus A321 209 19 4 15 10.6
Wide-body fleet
Airbus A330 289/263 8 4 4 12.2
Airbus A350 297/336 17 1 5 12 4.1 2
Total 60 1 26 34 11.4 2
* Finnair’s Air Operator Certificate (AOC).
** Includes JOLCO-financed (Japanese Operating Lease with Call Option) and ECA (Export Credit
Agency) financed aircraft.
Fleet operated by
Norra*
31.12.2021 Seats #
Change
from
31.12.2020 Own Leased
Average
age
31.12.2021 Ordered
ATR 68–70 12 6 6 12.4
Embraer E190 100 12 9 3 13.5
Total 24 0 15 9 13.0
* Nordic Regional Airlines Oy’s Air Operator Certificate (AOC).
Finnair – Financial Information 2021 17
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
In 2021, Finnair has re-evaluated its strategy, which
is valid until 2025, due to the pandemic impact. The
company implements it in four focus areas, namely:
Capture market growth; Modern premium offering,
retailing and distribution; Cost efficiency; as well as
Sustainability as a differentiator.
Finnair’s long-term financial targets will be
re-evaluated once visibility on the business
environment, particularly in Asia, improves.
Capture market growth
Finnair continues to focus on transfer traffic
between the essential Asian mega cities and
Europe. Finnair also continues to leverage its home
hub’s unique geographical location, enabling
fast connections via the short northern route and
maximising its efficiencies. The company now
expects annual capacity growth of c. 3% which
is in line with the anticipated growth of Finnair’s
mainmarkets.
Currently committed wide-body aircraft
investments will be made. As a result of the
negative financial impact of the pandemic,
Finnair will, however, postpone the narrow-
body fleet renewal investment by some years
as it concentrates on optimising the life of its
currentfleet.
Modern premium
offering, retailing and
distribution
Finnair aims to be defined as a modern,
premium airline. The company’s customer
promise emphasises freedom of choice, a
smooth travel experience and sustainability.
Finnair supports the customer experience
with the help of digital services. Finnair is also
targeting more dynamic retailing, increased
share of direct sales in digital channels and
renewal of its distribution channels.
Strategy implementation
During 2021, the average monthly number of
unique Finnair website visitors started to recover
especially in H2 even though it remained the same
as in 2020 and totalled 1.1 million (1.1). The number of
active users of the Finnair mobile application grew
by 74.1 per cent to 326,000 from 2020. Direct sales in
Finnair’s digital channels increased to 51.0 per cent
(40.7) of all tickets sold.
To win in the competitive airline market, Finnair
must also excel in everyday customer experience.
Finnair’s Net Promoter Score (NPS), measuring
customer satisfaction, was at a good level with a
score of 38 (47) in 2021. The customers especially
appreciated Finnair’s service and extensive health
and safety measures during the pandemic and
this appreciation was reflected in customers voting
Finnair the best airline in the Northern Europe
for the 11th consecutive time in the Skytrax World
Airline Awards. The drop in NPS compared to 2020
related mainly to surveys conducted in December
and was caused by the decline in on-time
performance, issues at airports caused by e.g., sick
leaves, and a backlog in customer care channels.
In 2021, Finnair renewed its pricing and introduced
one-way ticket fares for all its flights within Europe
and a completely new Business Light ticket. The
renewals increase pricing transparency and bring
customers more choice and flexibility. Finnair
also reinstated certain pre-pandemic services
as two Finnair lounges at Helsinki Airport were
reopened and in-flight and pre-order sales were
restarted. During the period, Finnair renewed its
service concept onboard. Streamlined, more
uniform inflight selection supports the company’s
sustainability targets and helps to cut the amount
of food waste.
After the period, Finnair revealed the long-
prepared, new long-haul experience in which the
company invested c. 200 million euros. It covers
all Finnair’s wide-body aircraft and, as a result,
business and economy classes are refurbished
Finnair – Financial Information 2021 18
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
and a completely new premium economy class
isintroduced.
Finnair also continued its COVID-19-related actions
which were started in 2020. The company offered
a complimentary Corona Cover to its customers. It
compensates to a great extent potential COVID-19
related costs accrued during an international trip.
Further, Finnair introduced affordable PCR and
rapid antigen testing services, which are available
at Finnair’s headquarters near Helsinki Airport.
Finnair also prolonged Book with Confidence
sales until 28 February 2022 and, after the period,
further until 31 May 2022 . Moreover, the company
introduced a digital service, with which customers
can confirm their COVID-19-certificates before
their journey from Finland to selected European
countries, and a digital travel requirements
map presenting the latest travel requirements
andguidelines.
Cost efficiency
In 2021, it was confirmed that Finnair will achieve
the targeted permanent, annual cost savings of
c. 200 million euros by 2022, calculated based
on 2019 operational volumes. It will also continue
to seek savings through continuous operational
improvement and efficiency.
Particular focus will be on fuel efficiency and
on-time performance, which have a significant
impact on both cost and productivity as well
as customer experience. In terms of on-time
performance and fuel efficiency, Finnair aims to
being among the industry leaders. The company’s
on-time performance in 2021 was 82.3% (90.2). The
decline was mainly related to events in December;
in addition to severe weather conditions, on-time
performance was impacted by COVID-19-related
challenges such as new travel restrictions, which
required additional travel document checks, and
higher-than-normal sick leaves, which caused
resourcing challenges both internally and for
external service providers in the home hub as well
as in outstations.
Finnair is recognised as one of the world’s
safest airlines. The strong safety culture, as well
as the reliability and productivity of Finnair’s
operations are at the core of the company’s
strategy. More effort will be put into technology,
automation, utilising data and working together
cross-functionally as they support safety and
costefficiency.
Sustainability as a
differentiator
Sustainability is an essential part of Finnair, and
the company’s ambitious sustainability targets
remain unchanged. Finnair’s long-term goal is
carbon neutrality by 2045, with a 50% reduction in
net emissions in 2025 compared to the 2019 level.
As a priority, Finnair strives to reduce the direct
emissions of its operations, i.e., reducing actual
emissions whenever reasonably possible. Meeting
the global climate challenge requires long-term
planning, and in the short-term, the company
will have to rely more on economic measures
before it can, in the longer term, take advantage
of the improvements in the emissions efficiency of
newtechnologies.
In 2021, Finnair signed a letter of interest to potentially
introducing Heart Aerospace ES-19 electric aircraft
as part of its fleet. This aircraft type is developed
for use on short routes. Finnair also commenced
cooperation with air navigation services provider
Fintraffic ANS to reduce emissions of flights
operated in the Finnish airspace. Further, Finnair
Technical Services finished a recycling project
of one of its retired Airbus A319 aircraft. The final
recovery rate was very high: 99.2% of the aircraft
was either recycled or reused.
Finnair’s renewed onboard service is more
sustainable. Plastic cutlery was replaced with
a wooden version and the share of vegetarian
options was increased. Further, the previous target
of halving the amount of food waste produced
has already been met and was extended by
another30%.
Finnair aims to increase the use of sustainable
aviation fuel (SAF) together with the oneworld
Alliance and other stakeholders. The oneworld
Alliance set a common goal of achieving a 10 per
cent level in SAF uptake by 2030, well above the
designed 5 per cent EU mandate target. Finnair has
already signed a Memorandum of Understanding
with Aemetis, a renewable fuels company, in 2021.
Finnair has earlier partnered with Neste in Finland
to increase to use of SAF and, hence, reduce
carbon emissions of flying.
People
Genuine collaboration, target-oriented leadership
and utilising new working methods such as lean
and agile are important tools when implementing
the strategy. These measures are emphasised in
Finnair’s people plan. The number of employees
has decreased because of the COVID-19 impact
and, therefore, new, more effective ways of working
as well as extensive and cross-organisational
collaboration are necessary.
Once Finnair returns to the path of growth, it wants
to be an even more sustainable company. As a
result, two sustainability performance indicators,
fuel efficiency and work safety, were included in
the short-term incentive programme, thus, making
sustainability a common target.
Finnair – Financial Information 2021 19
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
Financial performance 2017–2021
17 18 19 20 21
Revenue
€ million
838.4
3,500
3,000
2,500
2,000
1,500
1,000
500
0
17 18 19 20 21
15 000
12 000
9 000
6 000
3 000
0
Number of passengers
thousand
2,852
17 18 19 20 21
40
20
0
-20
-40
-60
-80
%
Available seat kilometres (ASK) and
revenue passenger kilometres (RPK)
Available seat kilometres (ASK)
Revenue passenger kilometres (RPK)
Available seat kilometres (ASK), %
Revenue passenger kilometres (RPK), %
million
50,000
40,000
30,000
20,000
10,000
0
5,178
12,094
-36.5%
-6.5%
15
10
5
0
-5
-10
-15
-20
17 18 19 20 21
Return on capital employed (ROCE)
-13.9
17 18 19 20 21
Interest-bearing liabilities
Cash funds
3,000
2,500
2,000
1,500
1,000
500
0
1,265.7
2,808.9
17 18 19 20 21
Investment cash flow*
Net cash flow from operations
* Including investments and divestments of fixed
assets and group shares.
-25,3
365,4
600
300
0
-300
-600
-900
-1,200
300
200
100
0
-100
-200
-300
-400
-500
-600
45
30
15
0
-15
-30
-45
-60
-75
-90
%
%
17 18 19 20 21
-
-
-
-
-
-
Comparable operating result*
Operating result
Comparable operating result*, % of revenue
Financial target: The target level of comparable
operating result percentage of revenue for the
strategy period until year 2025 will be reassessed
due to the COVID-19 impact.
* Comparable operating result excluding unrealised
changes in foreign currencies of fleet overhaul
provision, fair value changes of derivatives where
hedge accounting is not applied, sales gains and
losses on aircraft and other transactions, exceptional
changes in defined benefit pension plans and
restructuring costs.
Comparable operating result
and operating result
€ million
-468.9
-55.9%
-454.4
Finnair – Financial Information 2021 20
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
In 2021, Finnair continued cost adaptations and
financing measures addressing the impacts of
the COVID-19 pandemic. The negative impact
of the pandemic continued throughout the year,
which resulted in lower passenger numbers and
revenue compared to the pre-pandemic period.
Towards the end of the year, however, the easing
of travel restrictions was reflected in increased
bookings and the number of flights. Overall, the
available seat kilometres decreased by 6.5 per
cent compared to 2020. The exceptionally low
number of flights caused by travel restrictions and
the challenges of targeting supply with demand
make performance comparisons with previous
years challenging. Thus, it can be stated that the
year 2021 still shows unusual earnings figures in
both financial and non-financial data.
As traffic increased towards the end of the year,
Finnair was able to call its staff back to work from
long furloughs. The recalls have been relevant
to the personnel experience of Finnair’s staff,
although long furloughs have not affected all
professional groups. Community spirit and
collegiality have been the driving force behind
Finnair’s personnel for decades. As a major
opening, Finnair launched new direct flights from
Stockholm to the United States and Thailand.
With increased demand towards the end of the
year, Finnair was able to reopen lounge services
for its customers at Helsinki-Vantaa Airport and
restart in-flight sales, which were very limited for
a long time due to health and safety reasons. The
company’s in-flight sales have been redesigned so
that the amount of food waste can be minimized
in the future. In addition to renewing the product
range, Finnair has strongly guided the customers
to pre-order meals, which, in addition to minimising
food waste, significantly expands the customer’s
choice. Further, the reduction in the amount of food
and sales products loaded on the aircraft has a
direct impact on the emissions from the flight.
Health safety measures throughout the
organization continued throughout the year. In
health safety, the focus was on emphasizing the
responsibility of customers and employees, as
well as the entire tourism industry, with all possible
measures. Finnair’s customer satisfaction was still
at a good level, as evidenced by the company’s
selection as the best airline in Northern Europe in
the Skytrax World Airline Awards customer survey
for the eleventh consecutive time.
Demand for air cargo was exceptionally strong,
especially towards the end of the year, due to
global supply chain difficulties and a lack of
cargo capacity. Cargo achieved record sales
and enabled the addition of passenger flights to
Finnair’s long-haul destinations in Asia and the
United States.
Direct and indirect taxes paid during 2021
remained relatively low due to reduced operations
and the negative result. Other performance-based
payments, such as environmental charges, also
remained low.
17 18 19 20 21
150
125
100
75
50
25
0
Paid taxes and other environmental costs
€ million
Direct taxes payable
Indirect taxes collected
EU ETS costs
Other environmentally related costs
Other environmentally based costs include Noise and
NOx costs, and environmental-based taxes
52.4
45.1
124.9
91.9
121.1
Non-Financial Performance 2021
Finnair – Financial Information 2021 21
Review of the year 2021
Board of Directors’
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The Report of the
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Financial Statements
EU Taxonomy
Background
The purpose of the EU Taxonomy, a classification
system, is to direct investments towards sustainable
projects and activities and to provide companies,
investors and policymakers with appropriate
definitions for which economic activities can be
considered environmentally sustainable
The EU Taxonomy Regulation establishes six
environmental objectives:
1. Climate change mitigation
2. Climate change adaptation
3. The sustainable use and protection of water and
marine resources
4. The transition to a circular economy
5. Pollution prevention and control
6. The protection and restoration of biodiversity
and ecosystems
The first delegated act on sustainable activities
for climate change adaptation and mitigation,
was approved in principle on 21 April 2021, and
formally adopted on 4 June 2021 for scrutiny by the
co-legislators. The second delegated act for the
remaining four environmental objectives will be
published in 2022.
Article 8 of the EU Taxonomy regulation brings
an obligation for a Public Interest Entity under the
Non-Financial Reporting Directive, such as Finnair,
to report on its Taxonomy eligibility starting from
1 January 2022 for the first two environmental
objectives. All in-scope Entities must report the
proportion of their 2021 economic activities that
are considered Taxonomy-eligible in their revenue,
capital expenditure (CAPEX) and operating
expenditure (OPEX). For the reporting year of
2021, Entities are not yet required to assess the
Taxonomy-alignment of their economic activities
Finnair’s approach on EU Taxonomy
The Taxonomy regulation includes the sectors
assessed to have the largest climate change
mitigation and adaptation potential. It should
be noted that Finnair’s core businesses, i.e.,
commercial aviation (including ancillary sales),
air freight or travel services (supplied by Finnair
Cargo and Aurinkomatkat, respectively) are not
yet covered by the economic activities included
in the Taxonomy. Thus, detailed technical criteria
for e.g., passenger air transportation (NACE
H51.1 and N77.35) have not yet been specified.
However, Finnair estimates that transition to new,
low-emission aircraft and sustainable aviation
fuels (SAF) are likely to be included in the future in
the Taxonomy regulation.
Finnair has also assessed the Taxonomy-eligibility
of its other economic activities by comparing its
business relevant NACE codes to the ones included
in the EU Taxonomy. The most significant identified
economic activity included in the Taxonomy is
freight transport services by road (NACE H49.4.1)
supplied by Finnair Cargo. However, as the
operation of these services have been outsourced
to a third party, they are not deemed as Taxonomy-
eligible for Finnair. Other identified but immaterial
examples are Finnair Group’s acquisition and
ownership of buildings (NACE L68), solar electricity
generated by Finnair Cargo for its own operations
(NACE D35.11), and Finnair Technical Services’
industrial wastewater treatment (NACE E37.00).
COVID-19 has had an unprecedented financial
impact on Finnair both in 2020 and 2021. Due to
travel restrictions and lack of customer demand,
Finnair’s revenue reached a record low and,
therefore, the company has been forced to
drastically cut all its expenses and investments,
including those supporting sustainable
development, to minimise the losses caused by the
limited operations as well as to secure a healthy
cash position. Thus, 2021 was not comparable
with the pre-pandemic years. As more than 99%
of Finnair’s operations in 2021 were not deemed
as Taxonomy-eligible economic activities, it can
be stated that the shares of Taxonomy-eligible
revenue, CAPEX and OPEX were not material
compared to Finnair’s total revenue, CAPEX
and OPEX. Therefore, the Taxonomy-eligible
proportion of Finnair’s revenue, CAPEX and OPEX
during the financial year 2021 rounds down to
0%. Consequently, Finnair’s non-eligible revenue,
CAPEX and OPEX round up to 100%.
Finnair has heavily modernised its wide-body fleet
in recent years. In 2015–2017, seven A340 aircraft
were retired from revenue service at Finnair and
since 2015, Finnair has introduced 17 modern, lower
emission A350 wide-body aircraft to its fleet. Of the
disposed A340 aircraft, one was sold for recycling,
two were returned to lessors at the end of their
leases, and four were sold to Airbus in conjunction
with the confirmation of the exercise of Finnair’s
option to purchase eight additional A350 aircraft.
This renewal of the wide-body fleet is the largest
single investment in the company’s history. It is not
yet defined how, or whether, this investment made
before the Taxonomy implementation can be
reported within the Taxonomy.
Finnair aims to increase the use of sustainable
aviation fuels (SAF) together with the oneworld
alliance and other stakeholders. The oneworld
Alliance has set a common goal of achieving
a 10 per cent level in SAF uptake by 2030, well
above the designed 5 per cent EU mandate
target. Achieving this goal will require a joint
effort with both legislators and various industrial
sectors. The introduction of SAF is also strongly
linked to the protection of biodiversity, i.e., the
sixth environmental objective, so that the rapidly
growing global demand does not lead to e.g.,
Finnair – Financial Information 2021 22
Review of the year 2021
Board of Directors’
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Auditor’s Report
The Report of the
Board of Directors
Financial Statements
increased land use and, thus, harm biodiversity.
SAF volumes used by Finnair in 2021 did not meet
the minimum level of 5 per cent potentially to be set
by the Taxonomy.
1
Regarding Travel Services, the Taxonomy focuses
on the conservation and protection of nature’s
biodiversity. The technical criteria have been
created for accommodation services, and the
need to develop criteria for the leisure activities
management is still pending. Nature and its
diversity are a significant attraction in the business
of Aurinkomatkat. When planning destination
programmes, Aurinkomatkat carefully assesses
their potential impacts on environment and
biodiversity. The aim is to avoid, for example,
organising visits in places where this might pose a
threat or harm to biodiversity.
2
Sustainability
Finnair is a network airline specializing in passenger
and cargo traffic between Asia and Europe,
and whose purpose is to create value for all its
stakeholders by bridging the world in a sustainable
and safe manner. Sustainability is reflected in
company’s purpose, strategy, vision, and values. The
company’s risk management framework covers the
risk assessment of non-financial activities also. The
most significant near-term risks and uncertainties
are described in the Risk Management section of
this Report of the Board of Directors..
Sustainability is an integral part of all Finnair’s
operations. The objective of the company’s
sustainability strategy is to reduce the
environmental impact and increase the economic
and social value of society. The key areas and
strategic goals of corporate sustainability work
are divided into the following themes: ethical
business, environment, sociality, and economics.
Sustainability applies to everyone at Finnair, and
the company’s objective is to include the themes
of sustainability equally in all operational activities,
and product and service design.
Human Rights, Bribery
and Anti-Corruption
Finnair’s operations are based on its ethical
business principles, which are described in more
detail in the Sustainability Appendix of this Annual
Report; Section 103: Management Model. The
company respects the UN Declaration of Human
Rights and the conventions of the International
Labor Organization (ILO). Finnair has signed
the UN Global Compact initiative and reports
annually on the implementation of the Global
Compact’s ten principles of responsible business
conduct. A summary of that report can also
be found in the Sustainability Appendix of the
AnnualReport.
Finnair has a Whistleblowing line called Finnair Ethics
Helpline in use, through which both our employees
and partners can report on concerns related to
ethical business principles. During 2021 no material
incidents of material misconduct were notified
through the Finnair Ethics Helpline nor were there any
such investigations ongoing in the company.
Customers, employees
and other stakeholders
Finnair is committed to providing its customers with
reliable, accurate and pleasant travel experiences
with a friendly smile. Equality and non-discrimination
are part of Finnair’s basic principles, and the
company is committed to ensuring accessibility
for people with reduced mobility. The company
is constantly improving the customer experience
of its services and applying relevant accessibility
standards in practice.
The well-being of Finnair’s employees and customers
is equally important to the company. Finnair
takes good care of its employees by investing in
their health and safety, as well as by providing
training opportunities and promoting equality,
non-discrimination, and diversity. At Finnair, diversity
is seen as a driver of performance.
17 18 19 20 21
Number of persons employed by Finnair at
year-end
8,000
6,000
4,000
2,000
0
5,325
The diversity of the Personnel: Gender
Men:
Employees 43%
Leaders/Managers 53%
Excecutive Board 78%
Women:
Employees 57%
Leaders/Managers 47%
Executive Board 22%
1
Platform on Sustainable Finance: Technical
Working Group, Part B – Annex: Full list of Technical
Screening Criteria, August 2021.
2
https://www.aurinkomatkat.fi/vastuullinen-
matkailu
The diversity of the Personnel: Gender
Men:
Employees 43%
Leaders/Managers 53%
Excecutive Board 78%
Women:
Employees 57%
Leaders/Managers 47%
Executive Board 22%
Finnair – Financial Information 2021 23
Review of the year 2021
Board of Directors’
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The Report of the
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Financial Statements
As mentioned above, during the year 2021 special
attention was paid to the health safety of the
entire travel chain from the airport until the end of
the flight. Finnair’s overall customer satisfaction,
measured by the Net Promoter Score (NPS),
decreased from the previous year and was 38
(47). The score still remained at a relatively high
level showing that together with Finnair, customers
are committed to safe travel and are aware
of the importance of responsibility although
in-flight services were minimised for health and
safetyreasons.
Finnair employed an average of 5,614 (6,573) people
in 2021, which is 14.6 per cent less than in the previous
year. The number of employees decreased during
2021 by 780 or 12.8 per cent, totalling 5,325 at the end
of December (6,105). During 2021, the staff turnover
rate was 6.8 per cent (7.4). The reduction in staff and
the increase in the staff turnover were still due to
continued layoffs and the prolonged low operational
level caused by the pandemic. During 2021, the
average number of people at work was 2,996.
Due to the pandemic’s social impacts, Finnair
has especially invested in social responsibility by
supporting its redundant and laid-off employees.
The company has an ongoing NEXT programme
designed to individually support those made
redundant in finding a new job. The programme
consists of, among other things, a personal plan
for moving forward in their working career, a
wide range of training, career coaching, services
supporting change management and well-being,
support for those interested in entrepreneurship, and
tailored support of the Employment and Economic
Development Office of Finland.
Full-time staff accounted for 91 per cent (92) of
Finnair employees in 2021, and 99 per cent (99) of
staff were employed on a permanent basis. The
average age of employees was 42 years (43). Of
the personnel, 33 per cent (33) were over 50 years
of age, while 13 per cent (13) were under 30 years of
age. At the end of 2021, 57 per cent (57) of Finnair’s
employees were women and 43 per cent (43)
were men. Three (four) out of the eight members
of Finnair’s Board of Directors are women. Finnair
does not maintain statistics based on ethnicity.
LTIF (Lost Time Incident Frequency), which
measures the frequency of accidents at the
company level, increased when compared to
previous year being 5.6 (4.4). In contrast, the number
of absences due to illness was less than in the
comparison period and was 2.3 per cent (3.8).
Finnair values good cooperation with labour
unions representing its various employee groups.
In 2021, the following collective agreements
werenegotiated:
• An agreement between Service Sector
Employers Palta and Finnish Air Line Pilots’
Association concerning Finnair Plc’s Finnish
pilots. The agreement is valid until the end of
September 2024.
• An agreement between Finnair Plc and Finnairin
Insinöörit ja ylemmät FINTO ry concerning
Finnair Plc’a upper white-collar employees. The
agreement is valid until the end of February 2023.
• An agreement between Palta and Workers’
Union AKT concerning travel agencies (Suntours).
The agreement is valid until the end of April 2023.
An agreement between Palta and Transport
Workers’ Union AKT representing Finnair’s cabin
crew in Finland negotiated in 2019 will expire on
31 January 2022. The same applies to agreements
between Palta and Trade Union Pro concerning
technical aviation employees and aviation
employees, which were negotiated in 2020 and
are also valid until the end of January 2022. An
agreement between Palta and Finnish Aviation
Union IAU concerning blue collar employees in
Finnair’s Helsinki Airport customer and ground
service, cargo and technical services was
negotiated also in 2020. The agreement is valid
until 15 March 2023.
17 18 19 20 21
Lost Time Incident Frequency
LTIF
No/M h
5.6
20.0
15.0
10.0
5.0
0
Finnair – Financial Information 2021 24
Review of the year 2021
Board of Directors’
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Auditor’s Report
The Report of the
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Financial Statements
Environmental
Performance
The three major global environmental challenges,
climate change, biodiversity loss, and the transition
to a circular economy, are mutually reinforcing.
Addressing these challenges requires our common
attention. Finnair has set its own goals for all three
of these challenges and urges all its stakeholders to
work together to achieve these goals. Finnair aims to
fly carbon-neutral in 2045, and already at the end of
2025 it intends to halve its net emissions compared to
the 2019 level. In addition, the company shall enforce
the circular economy principals and pollution
prevention hierarchy in its operations. Finnair has
zero tolerance for illegal wildlife trading and is a
United for Wildlife -certified airline.
Climate change
In 2021, Finnair’s traffic measured in revenue tonne
kilometres (RTK) increased by 1.6 per cent compared
to 2020. However, carbon dioxide (CO
2
) emissions
decreased by 0.4 per cent year-on-year to 1,146,903
tonnes (1,151,299). When compared to 2019 emissions
they were 67.8 per cent lower.
The fuel efficiency of flying was 296 g/RTK (301)
(without allocation between passengers and
cargo), i.e. fuel efficiency improved by 2.0 per cent
(-20.8) in 2021. Carbon dioxide emissions of flying
have also been calculated by allocating them
between passengers and cargo in accordance
with ICAO recommendations (see the sustainability
appendix, Scope 1 emissions). Calculated in this way,
CO
2
emission efficiencies in 2021 were 131 g CO
2
/
RPK (92) and 606 g CO
2
/RTK-cargo (514). Emissions
per revenue passenger-kilometre (RPK) increased
by 42.5 per cent (17.1) and per revenue cargo tonne-
kilometre (RTK-cargo) by 17.9 per cent (5.3). The
worse performing in 2021 compared to 2020 were
mainly due to the fact that year 2021 operations
were entirely affected by pandemic, with challenges
in targeting supply (ATK +6.4 per cent) with demand
(RTK +1.6 per cent), the average length of the flights
was shortened, and the ICAO allocation calculation
model where each empty seat is adding passenger
weight. The beginning of 2020 was still normal, and
the effects of the pandemic did not start to affect
until March 2020 onwards.
During 2021, strong and effective work was
continued to improve fuel efficiency. Good
progress was made in terms of both optimal fleet
utilisation and fuel-efficient flying. For example,
a new optimising tool introduced in 2021, called
Tail Swapper, helps in planning the optimum
aircraft type used when changes in the number
of passengers are noticed. Thus, it helps to
avoid flying oversized planes and saves on fuel
consumption accordingly. Another tool to help
fleet planning was made specifically for the use
of Technical Services. It is used to optimize wide-
body traffic, where there are some differences
found in fuel consumption between aircraft types.
The tool guides us to find the best combinations
between the aircraft and the route so that
longer connections are flown with the aircraft
having the best fuel efficiency. A third tool was
introduced into the cockpit of the aircraft. It helps
long-distance traffic to be optimized so that we
find the best balance between flight speed and
fuel consumption. The optimization application
transmits speed and consumption information
to the cockpit during the flight, facilitating pilot
decision-making. In this way, for example, fuel is not
wasted due to time savings of a few minutes, unless
there is a very good reason for this.
To reduce CO
2
emissions from flying, it is very
important to increase the use of sustainable
aviation fuels (SAF). We are very grateful to our
customers who want to participate in Finnair’s long-
term goal of flying carbon-neutral in 2045. In 2021,
business passengers compensated for their travel
by purchasing 310 tonnes of sustainable fuel for
Finnair’s aircraft. This cooperation reduced 909
tonnes of CO
2
emissions. In December 2021, the
Finnish Parliament approved an amendment to the
law that will allow companies to sell compensation
services. Finnair will open a compensation service
for customers at the beginning of 2022. We hope that
it will be well received and that our customers will be
more involved in the fight against climate change.
The energy consumption of the Finnair facilities
increased by 12.2 per cent 2021 (-29.1). Year 2021 the
total electricity consumption of the facilities was
21,130 MWh (21,259) and heat consumption 24,238
MWh (18,592). Total energy efficiency was 21.0
kWh/m
3
(18.5), including both electricity and heat
consumptions. The decrease in electricity use was
due to reduced activity, but the increase in heating
energy may be explained by the cold winter.
Correspondingly, CO
2
emissions from energy
consumption in buildings increased by 8.9 per cent
(-57.8) to a total of 8,138 tonnes (7,414).
17 18 19 20 21
931
g CO
2
/RTK
Development in Finnair's emissions
and emission efficiency
Total CO
2
Emissions Efficiency
RTK = revenue tonne kilometres, i.e. capacity use
according to payload weight
Total CO
2
,
thousand tonnes
4,000
3,200
2,400
1,600
800
0
1,000
800
600
400
200
0
1,147
Finnair – Financial Information 2021 25
Review of the year 2021
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The Report of the
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Financial Statements
Circular economy
Total amount of waste generated by Finnair in
Finland decreased by 40.4 per cent (64.8), or over
618 tonnes (2,816), from the previous year total
mass being 914 tonnes (1,532). These figures do not
account the material streams generated during
the Airbus A319 recycling, which Finnair Technical
Services performed in 2021. The largest waste
stream has been mixed waste generated from
the in-flight service. This waste stream is so called
international food waste and cannot be recycled
but is recovered as energy, whereas the rest of the
food waste is composted. Food waste has been
reduced in a target-orientated manner since 2018,
and primarily it is donated to charity. In total 18 per
cent of inflight waste was recycled in 2021. This is a
very high recycling rate for inflight waste.
During the review period, Finnair renewed its
in-flight catering concept to be more sustainable.
Plastic cutlery was replaced with wooden and the
availability of vegetarian food was increased. In
addition, the previous target of halving food waste
was extended with an additional 30% reduction
target. Measures to achieve this goal included
simplifying the menu and transferring fresh
products to the pre-order menu.
Finnair, together with Kuusakoski, dismantled
and recycled one Airbus A319 aircraft, which had
reached the end of its economic life. Finnair initially
estimated that about 90-95 per cent of the materials
could be reutilised. The final recovery rate turned
out to be higher than expected, with only 0.8 per
cent of the material ending up as waste. This was
the first passenger aircraft ever recycled in Finland.
The recycling project created a positive mood,
employed staff, and supported the profitability of
the narrow-body fleet spare parts service.
Recovered
7.4%
Disposal
0.8%
Research
4.2%
Reused
38.5%
Recycled
49.1%
Finnair Airbus A319 recycling
Supply chain
Supply chain management focused on managing
demand and availability during the pandemic,
addressing cost pressures, and supply chain risk
management. Due to a shrinking route network
and fewer flights, the number of active suppliers
decreased by 27 per cent.
Finnair – Financial Information 2021 26
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The Report of the
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Topic Targets and KPIs Performance Key actions during the reporting period
2021 2020
Environmental responsibility Halving net CO
2
emissions by the end of 2025, compared to 2019 figures, %* -67.8 -67.7 Due to the COVID-19, 2021 figures are showing unusual performance,
since passenger demand was low and unnecessary flying was
minimised.
Carbon free flying by the end of 2045 (net emissions, gCO
2
/RTK) 931 949
Improving the fuel efficiency of flying by 1% annually. Company’s internal Fuel
Efficiency Index (FEI) is used here as a basis for the KPI where e.g. wind and
payload impacts are normalised.
0.0%
improvement
1.7%
improvement
One narrow body aircraft at the end of its lifecycle was recycled at
Vantaa.
Operative methods to reduce weight of the flight continued (e.g.
rationalise fuelling, on-board printed material was reduced, potable
water intake was optimised).
The flying procedures were further improved (e.g. pilots’ situational
awareness of network was improved, this reduces unnecessary high Cost
Index flying. Continuous Decent Approaches at Helsinki-Vantaa were
further increased).
Fleet utilisation was improved (aircraft type allocation corresponding to
the passenger and Cargo amounts).
Reducing single used plastics in Kitchen operations by 50% by the end of
2022
-40.0 -23.0 Finnair’s renewed its onboard service in 2021 to be more sustainable.
Plastic cutlery was replaced with a wooden version and the share of
vegetarian options was increased.
Recycle 50 % of plastics in Kitchen operations for reuse by the end of 2022 37.0 20.7 The number of recyclable waste fractions was successfully increased
when green plastic wine bottles were added to the list of recyclable
plastics.
Reducing food waste from Kitchen operations by 30% by the end of year
2022
New New The previous target of halving food waste was achieved and further
extended with an additional 30% reduction target.
Social responsibility Arrival punctuality at least 85% 82.3 90.2 Arrival punctuality declined, in particular due to the difficult weather
conditions in December 2021 and the challenges associated with
COVID-19, such as new travel restrictions requiring additional travel
document checks, as well as higher sickness rates.
Customer satisfaction, NPS increase on the previous year, long-term target
level 60
38 47 We continued to invest in customer health-safety measures and
repayment processes. The NPS dropped late in 2021 and was mainly
related to Omicron variant which increased the number of sick leaves,
and caused a backlog in customer care channels.
Employee satisfaction, eNPS increase on the previous year -31 -1 eNPS decreased as a result of e.g., furloughs which Finnair was forced to
continue due to the clearly lower operational volumes compared to the
pre-pandemic era.
Absences due to illness decrease from the previous year 2.3 3.8
LTIF (Lost-time injury frequency) of less than 14.8 5.6 4.4
Ethical Business conduct Code of Conduct awareness grade in WeTogether@Finnair survey at least 4
on scale 1–5
3.8 4.3 Continuous training of employees, Renewal of Finnair Ethics helpline
* Net emissions in 2021 and 2020 are exceptionally low due to reduced number of flights during the COVID-19 pandemic.
Finnair – Financial Information 2021 27
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The Report of the
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Financial Statements
During Q1–Q3, there were no changes in the
company’s management.
Finnair announced on 13 October 2021 that Tomi
Pienimäki, Finnair’s Chief Digital Officer and a
member of Finnair’s Executive Board, will leave
Finnair by the end of January 2022.
Changes in company
management
Finnair – Financial Information 2021 28
Review of the year 2021
Board of Directors’
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The Report of the
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Financial Statements
Shares and share capital
On 31 December 2021, the number of Finnair shares
entered in the Trade Register was 1,407,401,265 and
the registered share capital was 75,442,904.30
euros. The company’s shares are quoted on
Nasdaq Helsinki. Each share has one vote at the
General Meeting.
Share price development
and trading
Finnair’s market capitalisation was 837.7 million
euros at the end of December (1,066.1). The closing
price of the share on 31 December 2021 was 0.60
euros (0.76). In 2021, the highest price for the Finnair
Plc share on the Nasdaq Helsinki was 0.81 euros, the
lowest price 0.56 euros and the average price 0.68
euros. Some 1,143.8 million company shares, with a
total value of 780.5 million euros, were traded on the
Nasdaq Helsinki exchange.
Shares and shareholders
Shareholders
The number of Finnair shareholders increased
by 35.7 per cent in 2021 to 116,129 shareholders
(excluding nominee registered shareholders). The
number of domestic retail shareholders increased
from 83,711 to 113,926, whereas their combined
share of ownership increased by 27.4 per cent.
Nominee registered or foreign investors held 4.6
per cent (7.4) of all shares.
Flagging notifications
No flagging notices were issued in 2021.
Government ovnership
At the end of 2021, the Finnish Government
owned 55.9 per cent of Finnair’s shares and votes.
According to the decision made by the Finnish
Parliament on 20 June 1994, the Government
must own more than half of Finnair Plc’s shares.
Decreasing the ownership below this level would
require the revision of the Parliament’s decision.
Share ownership by management
On 31 December 2021, members of the company’s
Board of Directors did not own any Finnair shares,
while the CEO Topi Manner owned 738,271 shares
and the members of the Executive Board, including
the CEO, owned a total of 1,536,254 shares,
representing 0.11 per cent of all shares and votes.
Own shares
On 31 December 2020, Finnair held a total of
170,660 own shares, representing 0.01 per cent of
the total number of shares and votes.
The Board of Directors of Finnair exercised the
authorisation granted by the 2020 AGM to acquire
own shares. Finnair completed the repurchase of
own shares on 22 February 2021, which started on
19 February 2021. During that time, Finnair acquired
a total of 1,800,000 own shares for an average price
of 0.64 euros per share. The shares were acquired
in public trading on Nasdaq Helsinki Ltd. at the
%
Shareholding by number of shares owned
1–500 0.6%
501–1,000 1.0%
1,001–10,000 10.3%
10,001–100,000 13.8%
100,001–1,000,000 5.4%
1,000,001–10,000,000 0.9%
10,000,001–100,000,000 7.5%
100,000,001– 55.9%
Registered in the name of nominee 4.6%
Finnair – Financial Information 2021 29
Review of the year 2021
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The Report of the
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Financial Statements
market price prevailing at the time of purchase.
The repurchased shares were acquired based
on the authorisation given by the Annual General
Meeting on 29 May 2020 and shall be used as a
part of the Company’s incentive programmes.
Following the repurchase, Finnair Plc held a total
of 1,970,660 own shares, corresponding to 0.14 per
cent of the total number of shares and votes.
In February, Finnair transferred, using the
authorisation granted by the AGM 2020, a
total of 496,564 own shares as incentives to the
participants of the FlyShare employee share
savings plan. It also transferred 36,903 own shares
as a reward to the key personnel included in
Finnair’s share-based incentive scheme 2018–2020
in March.
In Q2 or Q3, Finnair did not exercise the
authorisation granted by the AGM 2021 to acquire
or dispose of its own shares.
In October, Finnair transferred, using the
authorisation granted by the 2021 AGM, a total of
16,060 own shares as incentives to the participants
of the FlyShare employee share savings plan.
On 31 December 2021, Finnair held a total of
1,421,133 own shares, representing 0.10 per cent of
the total number of shares and votes.
Shareholder agreements
Finnair is not aware of any shareholder
agreements pertaining to share ownership or the
use of voting rights.
17 18 19 20 21
Average price
* A rights offering was implemented between
June and July 2020 and, therefore, Finnair's share
prices have been restated accordingly.
Finnair share 2017–2021*
EUR
2.5
2.0
1.5
1.0
0.5
0
350
300
250
200
150
100
50
0
17 18 19 20 21
Finnair
Nasdaq Helsinki
Comparison Nasdaq Helsinki
350
300
250
200
150
100
50
0
17 18 19 20 21
Finnair
Bloomberg Europe Airline Index
Comparison European Airlines
Change of control
provisions in material
agreements
Some of Finnair’s financing agreements include a
change of control clause under which the financier
shall be entitled to request prepayment of the
existing loan or to cancel the availability of a loan
facility in the event that a person other than the
Finnish state acquires control of Finnair either
through a majority of the voting rights or otherwise.
Key Figures - Share
2021 2020 2019 2018 2017
Equity/share* EUR 0.34 0.64 1.39 1.33 1.46
Dividend for the
financial year**
EUR mill. 0 0 0 35 38
Dividend/share* ** EUR 0.00 0.00 0.00 0.05 0.06
Dividend/earnings** % 0.0 0.0 0.0 39.4 24.4
Dividend yield** % 0.0 0.0 0.0 3.9 2.3
Cash flow from
operating activities/
share*
EUR -0.02 -0.99 0.82 0.73 0.55
P/E ratio -1.74 -1.47 12.12 10.18 10.43
* A rights offering was executed between June and July 2020 and, therefore,
2017-2019 key figures based on the number of shares have been restated
accordingly.
** The dividend for year 2021 is a proposal of the Board of Directors to the
Annual General Meeting.
Finnair – Financial Information 2021 30
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Auditor’s Report
The Report of the
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Financial Statements
Breakdown of shares at 31
December 2021
Number of
shares %
Number of
shareholders %
1–500 8,709,146 0.6 47,284 40.7
501–1,000 14,021,968 1.0 17,697 15.2
1,001 –10,000 144,950,124 10.3 42,874 36.9
10,001–100,000 194,217,310 13.8 7,919 6.8
100,001–1,000,000 75,312,250 5.4 342 0.3
1,000,001–10,000,000 13,053,310 0.9 8 0.0
10,000,001–100,000,000 105,089,378 7.5 4 0.0
100,000,001– 786,669,686 55.9 1 0.0
Registered in the name of
nominee
65,378,093 4.6 10 0.0
Total 1,407,401,265 100.0 116,139 100.0
Acquisition and delivery of own
shares and returns of shares Number of shares
Acquisition value, EUR
Average price, EUR
1.1.2017 788,964 4,275,212.39 5.42
2017 -355,597 -1,962,443.86 5.52
2018 452,000 3,206,965.70 7.10
2018 -236,359 -1,264,765.58 5.35
2019 164,651 1,042,355.90 6.33
2019 -261,346 -1,501,496.17 5.75
2020 -381,653 -2,701,783.40 7.08
2021 1,800,000 1,144,440.00 0.64
2021 -549,527 -1,350,674.25 2.46
31.12.2021 1,421,133 887,810.73 0.62
Shareholders by type at 31 December 2021
Number of
shares %
Number of
shareholders %
Public bodies 892,860,788 63.4 8 0.0
Households 391,765 ,11 27.8 113,926 98.1
Private companies 41,294,299 2.9 1 811 1.6
Financial institutions 12,806,183 0.9 33 0.0
Associations 1,717,951 0.1 66 0.1
Finnish shareholders, total 1,340,444,832 95.2 115,844 99.7
Registered in the name of a nominee 65,378,093 4.6 10 0.0
Outside Finland 1,578,340 0.1 285 0.2
Nominee registered and foreign
shareholders, total
66,956,433 4.8 285 0.2
Total 1,407,401,265 100.0 116,139 100.0
Effective authorisations
granted by the annual
general meeting 2021
Finnair’s Annual General Meeting was held
in Vantaa on 17 March 2021 under special
arrangements due to the COVID-19 pandemic.
The AGM authorised the Board of Directors to
decide on the repurchase of the company’s own
shares and/or on the acceptance as pledge and
on the issuance of shares (concerns both the
issuance of new shares as well as the transfer
of treasury shares). The authorisation shall not
exceed 50,000,000 shares, which corresponds to
approximately 3.6 per cent of all the shares in the
company. The authorisations are effective for a
period of 18 months from the resolution of the AGM.
The AGM also authorised the Board of Directors
to decide on donations up to an aggregate
maximum of EUR 250,000 for charitable or
corresponding purposes. The authorisation is
effective until the next Annual General Meeting.
The resolutions of the AGM are available in full on
the company’s website https://investors.finnair.
com/en/governance/general-meetings.
Finnair – Financial Information 2021 31
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Board of Directors’
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The Report of the
Board of Directors
Financial Statements
Risk management
Risk management
framework and principles
Finnair operates in a global and highly competitive
environment that is sensitive to economic
fluctuations. In executing its strategy, Finnair and its
operations are exposed to a broad range of risks
and opportunities.
Risk management is an integral part of effective
management practice to ensure that Finnair is
successful in achieving its business objectives.
Uncertainty (opportunity or threat) is an inevitable
element in all decision-making, and thus an integral
component of running the business.
Finnair’s Risk Management Framework has
been defined and established to ensure the
identification, evaluation and management of
risks and uncertainties associated with the set
objectives. The framework is designed to take a
corporate-wide portfolio view of risks. The risk
management principles are summarised as
follows:
• Risk management extends beyond internal
control to strategy-setting, governance, and
measuring performance
• Risks are managed as an integrated part of
strategic and operational planning, day-to-day
decision making, and operational processes
• The Three Lines of Defence model is applied
as the primary governance principle to ensure
that the segregation of duties is defined and
established between risk management and risk
control
• The performance and efficiency of Finnair’s risk
management and internal control systems are
subject to systematic monitoring
Risk management policy
and process
The framework and principles for risk management
have been defined in the Finnair Internal Control and
Risk Management Policy, which has been approved
by the Board of Directors. The policy is supplemented
by other policies for managing risks in specific areas.
Examples of other risk policies are the Treasury Policy,
the Procurement Policy, the Information Security
Policy, the Data Privacy Policy, the Competition
Policy, and the Trade Sanction Policy.
The Finnair Risk Management Framework and
principles are aligned with the internationally
recognised best practices for risk management
(COSO Enterprise Risk Management – Integrating
with Strategy and Performance, and ISO
31000:2009 standard).
Risk identification and evaluation include the
following phases:
• Identification of external and internal events
affecting the achievement of objectives;
• Distinction between risks and opportunities;
• Analysis of identified risks;
• Integration (aggregation) of risks;
• Evaluation and prioritisation of risks based on
their impact and likelihood.
Finnair – Financial Information 2021 32
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The Report of the
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Financial Statements
Risk governance
1st Line of Defence
Business units and shared functions are responsible
for setting the objectives and managing
day-to-day performance. As risk owners, the
business units and shared functions identify and
evaluate risks and make risk-informed decisions.
They manage risks by, among others, defining
and implementing controls. Thus, the First Line of
Defence is responsible for conducting day-to-day
control and risk management activities in
accordance with Finnair’s Risk Management and
Internal Control Frameworks.
As a part of the First Line of Defence, Finnair’s
CEO and the Executive Board have the overall
accountability for appropriate risk management
practices.
2nd Line of Defence
Risk & Compliance provides expertise in risk
assessment and risk management, and acts as a
control function that is responsible for developing
and maintaining the Risk Management Framework
and Internal Control Framework as well as for
continuously monitoring the implementation of
the policies, rules, procedures and key controls
within the frameworks. Risk & Compliance has a
reporting line to the Audit Committee of the Board
of Directors.
Outside the scope of the Risk & Compliance
function is Finnair’s statutory Safety Management
System, which is required by Finnair’s Air Operator’s
Certificate and applicable Aviation Regulation
and is subject to specific responsibility matrix and
supervision prescribed by the supervisory authorities.
Safety & Compliance acts as a control function with
respect to the Safety Management System.
3rd Line of Defence
Internal Audit performs audits and provides the
Audit Committee with an independent assessment
of the overall effectiveness and maturity of the
internal control and risk management systems.
Inform and
communicate
Monitor and
continuously
improve
Control Environment
Identify risks and opportunities
Analyse risks
Integrate risks
Evaluate risks
Control risks
Establish context and set objectives
Risk management process
Finnair – Financial Information 2021 33
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Board of Directors’
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The Report of the
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Financial Statements
Significant risks and
uncertainties
The effect of the COVID-19 pandemic in the
markets in which Finnair operates has adversely
affected and is expected to continue to adversely
affect the demand for Finnair’s services. The
uncertainty concerning the duration of travel
restrictions, especially in Asia, pose a risk to
demand for air travel, and consequently to
Finnair’s revenue development. The COVID-19
pandemic may also have long-term negative
effects on air travel demand due to potential
changes in traveller’s perception of the air travel
experience and the perceived uncertainty
relating to the current pandemic or other similar
health threats in the future. The recovery of
business travel to pre-COVID-19 levels is likely
to be affected by the adoption of virtual and
teleconferencing tools.
Factors beyond Finnair’s control are related to the
duration of the COVID-19 pandemic and travel
restrictions, as well as the recovery of demand for
air travel. In addition, other general risk factors in
the industry and business, such as the fluctuation
of jet fuel prices, fluctuation in demand in general,
and fluctuations in currency exchange rates,
as well as regulatory and tax changes are also
beyond Finnair’s control.
Other general macroeconomic conditions, such as
deterioration in business or consumer confidence,
changing customer preferences or employment
levels, lower availability of credit, rising interest
rates, inflation, or changes in taxation may have
an adverse impact on private consumption, and
consequently on the demand for air travel.
The key factors affecting revenue and operating
result, that Finnair can affect, are operating cost
adjustments and the ability to respond to changes
in demand. Due to the immense effect of the
COVID-19 pandemics, Finnair has carried out
an extensive cost-saving program. The current
inflationary pressure poses a risk to retaining the
cost level achieved.
As jet fuel costs are the largest variable expense
item, the jet fuel price development has a material
effect on profitability. Fuel price fluctuations may
result in increased uncertainty around Finnair’s
financial performance and cash flow. Jet fuel
prices have historically fluctuated significantly,
and fluctuations are expected to continue in the
future beyond the current COVID-19 crisis. Finnair’s
ability to pass on the increased costs of jet fuel to
its customers by increasing fares is limited by the
competitive nature of the airline industry. Finnair’s
jet fuel costs are also subject to foreign exchange
rate risk as international prices for jet fuel are
denominated in U.S. dollars. The residual effect
of jet fuel price fluctuations is determined by the
hedges in use at a given point in time. Increasing
jet fuel costs, disruptions in fuel supplies and
ineffective hedging in relation to changes in market
The demand for air transportation is generally
driven by macroeconomic factors, as there has
historically been a strong correlation between air
travel and the development of macroeconomic
factors such as GDP. Due to this correlation,
aviation is an industry which is highly sensitive
to global economic cycles and reacts quickly
to external disruptions, seasonal variations
and economic trends, as the global COVID-19
pandemic has demonstrated.
In the implementation of its strategy, Finnair is
faced with various risks and opportunities. Finnair
has a comprehensive risk management process
to ensure that risks are identified and mitigated
as much as possible, although many risks are not
within the company’s full control. The risks and
uncertainties described below are considered as
potentially having a significant impact on Finnair’s
business, financial result and future outlook. This list
is not intended to be exhaustive.
Finnair – Financial Information 2021 34
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Auditor’s Report
The Report of the
Board of Directors
Financial Statements
prices may result in increased expenses, which
may have a material adverse effect on Finnair’s
business, financial result and future outlook.
Derivatives used to hedge against adverse price
movements in jet fuel may prove to be inefficient
resulting in increased jet fuel price in relation to
market prices.
The COVID-19 pandemic potentially continuing
during most of the 2022 would have an adverse
impact on the company’s profitability, cash funds
and equity. Further, prolonged unprofitability
and depletion of equity may have an adverse
effect on the availability and terms of funding and
may also increase the risk of fleet and other fixed
assetimpairment.
Capacity increases and product improvements
among Finnair’s existing or new competitors may
have an effect on the demand for, and yield of,
Finnair’s services. Competition in the industry is
intense and the market situation is continuously
changing as new entrants and/or alliances
expand, industry participants consolidate and
airlines form marketing or operational alliances,
which might gain competitive advantage over
Finnair’s oneword alliance or its joint businesses.
In addition, the cost base restructurings of
Finnair’s competitors, undertaken in response
to the COVID-19 pandemic, may result in further
intensified competition through, among others,
more aggressive pricing.
Finnair, along with other airlines, strives to
distribute its services in increasingly versatile
and flexible ways and at lower cost by adopting
and utilising new distribution technologies
and channels, including the transition towards
differentiation of fare content and availability
between channels. The ability to capitalise
on the commercial possibilities provided
by these technologies is dependent on,
among others, Finnair’s partners to develop
and implement such applications as well as
Finnair’s ability to generate products and
services that best correspond to customer
needs. Hence, introduction of new digital
distribution technologies and channels involves
implementation and commercial risks.
The aviation industry is affected by a number
of regulatory trends. Estimating the impacts of
the regulatory changes on airlines’ operational
activities and/or costs in advance is difficult.
Examples of such regulatory trends include
regulation related to emissions trading,
noise regulation and other environmental
regulation, as well as regulations on privacy and
consumer protection. Due to the extraordinary
circumstances caused by the COVID-19 pandemic,
uncertainties related to agreements and
authority policies as well as interpretation and
implementation of legislation, such as approval
of state aid, may increase. This may increase the
likelihood of litigation processes.
Finnair is exposed to the risk of operating losses
from natural events, pandemics or health
epidemics and weather-related events, influencing
operating costs. Outbreaks of epidemics or
pandemics, such as COVID-19, can adversely
affect the demand for air travel and have a
significant effect on Finnair’s operations. Further,
natural hazards arising from climate change,
such as increased extreme weather conditions,
including substantial snowfall, atmospheric
turbulence, earthquakes, hurricanes, typhoons,
or severe thunderstorms, may result in substantial
additional costs to Finnair. Such weather
conditions may, for example, lead to flight
cancellations, increased waiting times, increased
fuel consumption as well as costs associated with
aircraft de-icing, which could lead to additional
costs to Finnair and thus, have an adverse
effect on Finnair’s results of operations and
financialcondition.
Factors such as geopolitical uncertainty, the threat
of trade wars, the threat of terrorism, cyber-attacks
and pandemics as well as other potential external
disruptions may, if they materialise, significantly
affect Finnair’s operations. Geopolitical
tensions may have an adverse effect on the
global economic environment, and on Finnair’s
network and profitability. In a changing aviation
business environment, it is difficult to predict the
impact the COVID-19 will have on airline market
access and traffic right opportunities in general.
Potentially increasing protectionism in the political
environment may have an adverse impact on the
market access required for the implementation
of Finnair’s strategy. At the same time, it is also
possible that connectivity needs may increase
in some countries, leading to increasing market
access opportunities and new traffic rights.
The overall labour market situation in Finland
is challenging and it may have an impact on
Finnair’s operations. Strikes and other work-related
disruptions may, if they materialise, significantly
affect Finnair’s operations.
Finnair – Financial Information 2021 35
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The Report of the
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Financial Statements
Due to the seasonality of the airline business,
the Group’s revenue and result are, in a normal
situation, generally at their lowest in the first
quarter and at their highest in the third quarter
of the year. The growing proportional share of
Asian traffic increases seasonal fluctuation due to
destination-specific seasons in Asian leisure and
businesstravel.
In addition to operational activities and market
conditions, the fuel price development has a key
impact on Finnair’s result, as fuel costs are the
company’s most significant variable expense item.
Finnair’s foreign exchange risk arises primarily from
fuel and aircraft purchases, divestments of aircraft,
aircraft lease payments, aircraft maintenance,
Seasonal variation and
sensitivities in business
operations
overflight royalties and foreign currency revenue.
Significant dollar-denominated expense items are
fuel costs and aircraft lease payments. The largest
investments, namely the acquisition of aircraft and
their spare parts, are also mainly denominated in
US dollars. The most significant income currencies
after the euro are the Japanese yen, the Chinese
yuan, the US dollar, the South Korean won and the
Swedish krona.
The company hedges its currency, interest rate
and jet fuel exposure using a variety of derivative
instruments, such as forward contracts, swaps and
options, in compliance with the risk management
policy approved annually by the Board of
Directors. Finnair’s policy is to hedge its fuel
Sensitivities in business operations, impact on comparable operating
profit (rolling 12 months from date of financial statements) 1 percentage (point) change
Passenger load factor (PLF, %) EUR 27 million
Average yield of passenger traffic EUR 18 million
Unit cost (CASK excl. fuel) EUR 19 million
Fuel sensitivities (rolling 12 months from date of financial
statements)
10% change,
taking without
hedging
10% change,
takinghedging
into account
Fuel EUR 59 million EUR 57 million
Fuel hedging and average hedged price
(rolling 12 months from date of financial statements)
Hedged fuel,
tonnes*
Average hedge
price, USD/ton* **
December 2021 15,000 528
Q1 2022 20,000 632
Q2 2022 15,000 685
Q3 2022 12,000 647
Q4 2022 and after 6,000 651
Total 68,000 625
* Based on the hedged period, i.e. not hedging related cash flow.
** Average of swaps and bought call options strikes.
Finnair – Financial Information 2021 36
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
purchases 12 months forward on a rolling basis. The
maximum hedging ratio for the 12-month period is
50 per cent and the lower limit is 0 per cent while
the target hedging ratio is set to 25 per cent.
Hedging of foreign currency exposure in
balance sheet
Due to the introduction of IFRS 16 in 2019, Finnair’s
asset-related foreign currency exposure increased
with the recognition of the present value of
qualifying operating lease liabilities in the balance
sheet as right-of-use assets. Unrealised foreign
exchange losses/gains caused by the translation of
the USD denominated liability will have an impact
on Finnair’s net result. In the future, the effect and
amount of the foreign currency exchange could be
positive or negative, depending on the USD-rate at
the closing date. Finnair has mitigated the foreign
exchange volatility introduced by this difference by
using derivatives as well as natural hedges where
possible. The annual effect in net result going
forward is dependent on the size of the qualifying
operating lease portfolio, the duration of the leases
and hedging ratio. At the end of 2021, the hedging
ratio of USD denominated aircraft lease payments
and liabilities was approximately 50 per cent.
Currency distribution, % 2021 2020
Currency sensitivities USD and JPY
(rolling 12 months from date of financial
statements for operational cash flows)
Hedging ratio for
operational cash flows
(rolling next 12 months)
Sales currencies 10% change, without
hedging
10% change, taking
hedging into account
EUR 46 55 - - -
USD* 5 4 see below see below see below
JPY 9 7 EUR 21 m EUR 21 m 7%
CNY 7 6 - - -
KRW 5 3 - - -
SEK 4 3 - - -
Other 25 21 - - -
Purchase currencies
EUR 69 59 - - -
USD* 26 35 EUR 70 m EUR 67 m 14%
Other 5 6 - - -
* Hedging ratio and sensitivity analysis for USD basket, which consists of net cash flows in USD and HKD. The sensitivity analysis
assumes that the correlation of the Hong Kong dollar with the US dollar is strong.
Finnair – Financial Information 2021 37
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Board of Directors’
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Auditor’s Report
The Report of the
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Financial Statements
Outlook
Guidance issued on
26October 2021:
Even though travelling in Europe has opened
and will open to the United States and Thailand
in November, the travel restrictions will continue
to have a dampening impact on demand
especially in Asia. Based on an increased level
of vaccinations, Finnair expects Asia to open to
travelers more meaningfully early 2022 - exclusive
of China, which is expected to open only after
the first half of 2022. While cargo continues to be
strong and the cost savings programme delivers as
planned, due to the travel restrictions, incremental
costs caused by the ramped-up capacity and
higher fuel price, the comparable operating loss in
Q4 2021 is expected to be of a similar magnitude as
in Q3 2021 despite the gradual increase in revenue.
The company estimates that the operating cash
flow remains positive in Q4 2021.
Further, due to the slow recovery of Asian traffic,
Finnair estimates that the comparable operating
losses will continue also during the first half of
2022. Even though Finnair estimates that the
operational environment in the second half of
2022 will be closer to the pre-pandemic era, the
company expects a return to its 2019 traffic levels,
as measured in annual ASKs, in 2023.
Finnair will update its outlook and guidance in
connection with the financial statements bulletin
for 2021.
New guidance on
17February 2022:
Travelling in Europe and to the United States is
open but Asia remains highly restricted for travel,
exclusive of countries such as Thailand, Singapore
and India. There is prolonged uncertainty of when
China or Hong Kong would be opening for travel.
Due to e.g., the Omicron variant, Finnair now
estimates that other Asian markets would gradually
open for travel towards the end of Q2 2022.
In comparison to Q4 2021, Omicron is having a
notable but short-lived adverse effect on revenue
and costs in Q1 2022. Further, the ongoing travel
restrictions will continue to soften demand,
particularly to and from Asia going forward. Due
to these factors as well as increased fuel price and
incremental costs caused by the need to ramp up
capacity for summer 2022, Finnair’s comparable
operating loss in Q1 2022 is expected to be of a
similar magnitude as in Q1 2021. Finnair reiterates its
previous estimate that the comparable operating
losses will continue also during the entire first half
of2022.
The latter half of 2021 demonstrated that there is
robust pent-up demand for travel. During the first
half of 2022, the impact of travel restrictions on
Finnair’s business is expected to fade. Therefore,
the company still estimates that the operational
environment in the second half of 2022 will be
closer to the pre-pandemic era, exclusive of China
and Hong Kong, and expects a return to its 2019
traffic levels, as measured in annual ASKs, in 2023.
Finnair will update its outlook and guidance in
connection with the Q1 2022 interim report.
Finnair – Financial Information 2021 38
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The Report of the
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Financial Statements
Key performance indicators classified
as alternative performance measures
Alternative performance measures Calculation Reason to use the measure
Items affecting comparability Unrealized changes in foreign currencies of fleet overhaul provisions
+ Fair value changes of derivatives where hedge accounting is not
applied + Sales gains and losses on aircraft and other transactions +
Changes in defined benefit pension plans + Restructuring costs
Component used in calculating comparable operating result.
Comparable operating result Operating result - Items affecting comparability Comparable operating result is presented to better reflect the Group's
business performance when comparing results to previous periods.
Comparable operating result, % of revenue Comparable operating result / Revenue x 100 Comparable operating result is presented to better reflect the Group's
business performance when comparing results to previous periods.
Revenue at 2018 and 2019 constant currency Revenue + Currency impact adjustment at 2018 and 2019 currency Component used in calculating comparable operating result at
constant currency and fuel price and RASK at constant currency. All
changes in currency levels and hedging results since 2018 and 2019 are
excluded from the measurement.
Costs at 2018 and 2019 constant currency and fuel price Other operating income + Operating expenses included in comparable
operating result + Currency and fuel price impact adjustment at 2018
and 2019 currency and price
Component used in calculating comparable operating result at
constant currency and fuel price and CASK at constant currency and
fuel price. All changes in fuel price, currency levels and hedging results
since 2018 and 2019 are excluded from the measurement.
Comparable operating result at 2018 and 2019 constant currency
and fuel price
Revenue at 2018 and 2019 constant currency + Costs at 2018 and 2019
constant currency and fuel price
Comparable operating result at constant currency and fuel price aims
to provide a comparative, currency and fuel price neutral measurement
for comparable operating result. All changes in fuel price, currency
levels and hedging results since 2018 and 2019 are excluded from the
measurement.
RASK at 2018 and 2019 constant currency Revenue at 2018 and 2019 constant currency / Available seat kilometres
(ASK)
Unit revenue (RASK) at constant currency aims to provide a
comparative, currency neutral measurement for unit revenues. All
changes in currency levels and hedging results since 2018 and 2019 are
excluded from the measurement.
CASK at 2018 and 2019 constant currency and fuel price Costs at 2018 and 2019 constant currency and fuel price / Available seat
kilometres (ASK)
Unit cost (CASK) at constant currency and fuel price aims to provide
a comparative, currency and fuel price neutral measurement for unit
costs. All changes in fuel price, currency levels and hedging results since
2018 and 2019 are excluded from the measurement.
Finnair uses alternative performance measures (APM) referred to in the European Securities Markets Authority (ESMA) guidelines
to describe its operational and financial performance in order to enhance comparability between financial periods and to
enable better comparability relative to its industry peers. The alternative performance measures do not replace IFRS indicators.
Finnair – Financial Information 2021 39
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
Alternative performance measures Calculation Reason to use the measure
Comparable EBITDA Comparable operating result + Depreciation and impairment Comparable EBITDA is presented to better reflect the Group's business
performance when comparing results to previous periods. Comparable
EBITDA is a common measure in airline business which aims to reflect
comparable operating result excluding capital cost.
Comparable EBITDA, % of revenue Comparable EBITDA / Revenue x 100 Comparable EBITDA is presented to better reflect the Group's business
performance when comparing results to previous periods. Comparable
EBITDA is a common measure in airline business which aims to reflect
comparable operating result excluding capital cost.
Equity ratio, % Equity total / Equity and liabilities total x 100 Equity ratio provides information on the financial leverage used by the
Group to fund its assets.
Adjusted interest-bearing liabilities Lease liabilities + Other interest-bearing liabilities + Cross currency
interest rate swaps in derivative financial instruments
Component used in calculating gearing.
Cash funds Cash and cash equivalents + Other financial assets Component used in calculating gearing. Cash funds represent the total
amount of financial assets that are available for use within short notice.
Therefore, cash funds provide the true and fair view of the Group’s
financial position.
Interest-bearing net debt Adjusted interest-bearing liabilities - Cash funds Interest-bearing net debt provides view of the Group’s total external
debt financing.
Gearing, % Interest-bearing net debt / Equity total x 100 Gearing provides view of the level of the Group’s indebtedness.
Interest-bearing net debt / Comparable EBITDA, LTM Interest-bearing net debt / Comparable EBITDA, for the last twelve
months
The ratio provides information on the Group’s leverage by comparing
the Group’s net debt to the amount of income generated before
covering interest, taxes, depreciation and impairment.
Gross capital expenditure Additions in fixed assets + New contracts in right-of-use assets +
Reassessments and modifications in right-of-use assets
Gross capital expenditure provides information on the Group’s
capitalized investments and lease modifications.
Return on capital employed (ROCE), LTM, % (Result before taxes + Financial expenses + Exchange rate gains and
losses, for the last twelve months) / (Equity total + Lease liabilities + Other
interest-bearing liabilities, average of reporting period and comparison
period)
The ratio provides a view to monitor the return of capital employed.
Finnair – Financial Information 2021 40
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
Reconciliation of key performance indicators
classified as alternative performance measures
Items affecting comparability
EUR in millions 2021 2020
Operating result -454.4 -464.5
Unrealized changes in foreign currencies of fleet overhaul provisions 11.7 -12.2
Fair value changes of derivatives where hedge accounting is not applied 0.0 0.2
Sales gains and losses on aircraft and other transactions -5.6 -0.8
Changes in defined benefit pension plans -20.6 -132.8
Restructuring costs 0.0 14.9
Comparable operating result -468.9 -595.3
Depreciation and impairment 319.8 343.8
Comparable EBITDA -149.0 -251.5
Equity ratio
EUR in millions, unless otherwise indicated 2021 2020
Equity total 475.7 896.6
Equity and liabilities total 4,047.1 3,646.5
Equity ratio, % 11.8 24.6
Comparable operating result, RASK and CASK at 2018 constant currency and fuel price
EUR in millions, unless otherwise indicated 2021 2020
Revenue 838.4 829.2
Currency impact adjustment at 2018 currency -2.5 -0.8
Revenue at 2018 constant currency 835.9 828.4
Other operating income 39.2 48.4
Operating expenses included in comparable operating result -1,346.4 -1,472.9
Currency and fuel price impact adjustment at 2018 currency and price 5.3 37.2
Costs at 2018 constant currency and fuel price -1,301.9 -1,387.3
Comparable operating result at 2018 constant currency and fuel price -466.0 -558.9
Available seat kilometres (ASK), million 12,094 12,937
RASK at 2018 constant currency, cents/ASK 6.91 6.40
CASK at 2018 constant currency and fuel price, cents/ASK 10.76 10.72
Comparable operating result, RASK and CASK at 2019 constant currency and fuel price
EUR in millions, unless otherwise indicated 2021 2020
Revenue 838.4 829.2
Currency impact adjustment at 2019 currency 7.2 2.7
Revenue at 2019 constant currency 845.6 831.9
Other operating income 39.2 48.4
Operating expenses included in comparable operating result -1,346.4 -1,472.9
Currency and fuel price impact adjustment at 2019 currency and price -14.8 17.1
Costs at 2019 constant currency and fuel price -1,322.1 -1,407.4
Comparable operating result at 2019 constant currency and fuel price -476.5 -575.5
Available seat kilometres (ASK), million 12,094 12,937
RASK at 2019 constant currency, cents/ASK 6.99 6.43
CASK at 2019 constant currency and fuel price, cents/ASK 10.93 10.88
Finnair – Financial Information 2021 41
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
Gross capital expenditure
EUR in millions 2021 2020
Additions in fixed assets 28.7 348.3
New contracts in right-of-use assets 380.6 173.3
Reassessments and modifications in right-of-use assets 25.3 -5.7
Gross capital expenditure 434.5 515.9
Return on capital employed (ROCE), LTM
EUR in millions, unless otherwise indicated 31 Dec 2021 31 Dec 2020
Result before taxes, LTM -581.9 -654.4
Financial expenses, LTM 117.8 255.2
Exchange rate gains and losses, LTM 22.5 -26.6
Return, LTM -441.6 -425.8
Equity total 475.7 896.6
Lease liabilities 1,381.0 1,016.2
Other interest-bearing liabilities 1,427.9 1,162.6
Capital employed 3,284.6 3,075.4
Capital employed, average of reporting period and comparison period 3,180.0 2,808.3*
Return on capital employed (ROCE), LTM, % -13.9 -15.2
* Capital employed accounted was EUR 2,541.1 million as at 31 Dec 2019.
Gearing, interest-bearing net debt and interest-bearing net debt / Comparable EBITDA, LTM
EUR in millions, unless otherwise indicated 31 Dec 2021 31 Dec 2020
Lease liabilities 1,381.0 1,016.2
Other interest-bearing liabilities 1,427.9 1,162.6
Cross currency interest rate swaps* -12.3 18.8
Adjusted interest-bearing liabilities 2,796.6 2,197.5
Other financial assets -531.4 -358.3
Cash and cash equivalents -734.3 -465.3
Cash funds -1,265.7 -823.7
Interest-bearing net debt 1,530.9 1,373.8
Equity total 475.7 896.6
Gearing, % 321.8 153.2
Comparable EBITDA, LTM -149.0 -251.5
Interest-bearing net debt / Comparable EBITDA, LTM -10.3 -5.5
* Cross-currency interest rate swaps are used for hedging the currency and interest rate risk of interest-
bearing loans, but hedge accounting is not applied. Changes in fair net value correlate with changes
in the fair value of interest-bearing liabilities. Therefore, the fair net value of cross-currency interest rate
swaps recognised in derivative assets/liabilities and reported in note 3.8, is considered an interest-
bearing liability in the net debt calculation.
Finnair – Financial Information 2021 42
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
Other performance indicators
Revenue and profitability
Earnings per share (EPS), basic (Result for the period - Hybrid bond expenses net of tax) / Average
number of outstanding shares during the period
Earnings per share (EPS), diluted (Result for the period - Hybrid bond expenses net of tax) / Average
number of outstanding shares during the period taking into
account the diluting effect resulting from changing into shares all
potentionally diluting shares
Unit revenue per available seat
kilometre (RASK)
Unit revenue (RASK) represents the Group's revenue divided by
available seat kilometres (ASK).
Unit revenue per revenue
passenger kilometre (yield)
Passenger revenue by product divided by Revenue passenger
kilometres (RPK).
Unit cost per available seat
kilometre (CASK)
Unit cost (CASK) represents the Group's operational costs divided
by available seat kilometres. Other operating income is deducted
from operational costs.
CASK excluding fuel (Comparable operating result - Revenue - Fuel costs) / ASK x 100
Modern premium airline
Net Promoter Score (NPS) Net Promoter Score is based on a question: "Thinking about all
aspects of this journey, how likely would you be to recommend
Finnair to a relative, friend or colleague?" Scale is 0-10: The share
of detractors (ratings 0-6) is deducted from the share of promoters
(ratings 9-10). Result is between +100 and -100.
Share of digital direct ticket sales Share of ticket sales in Finnair's own direct channels in relation to
total ticket sales for the period. Direct channels include Finnair.com,
Finnair mobile app, New Distribution Capability (NDC) solutions
and Finnair Holidays.
Sustainability
Flight CO emissions CO emissions from jet fuel consumption
Culture and ways of working
Absences due to illness Share of sickness absence hours relating to planned work hours
Lost-time injury frequency (LTIF) The number of workplace accidents per million working hours
Attrition rate, LTM Number of leavers on own request during the last twelve months
compared to active employments on reporting date and leavers
on own request during the last twelve months
Share
Equity/share Equity / Number of outstanding shares at the end of period
Dividend/earnings Dividend per share / Earnings per share (EPS) x 100
Dividend yield, % Dividend per share / Share price at the end of period x 100
Cash flow from operating
activities/share
Net cash flow from operating activities / Average number of
outstanding shares during the period
P/E ratio Share price at the end of period / Earnings per share (EPS) x 100
Traffic
Available seat kilometres (ASK) Total number of seats available × kilometres flown
Revenue passenger kilometres
(RPK)
Number of revenue passengers × kilometres flown
Passenger load factor (PLF) Share of revenue passenger kilometres of available seat kilometres
Operational excellence
On-time performance The share of flights arrived less than 15 minutes late
Finnair – Financial Information 2021 43
Review of the year 2021
Board of Directors’
Proposal on the Dividend
Auditor’s Report
The Report of the
Board of Directors
Financial Statements
Financial
Statements
Finnair – Financial Information 2021 44
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
How to read Finnair Financial Statements?
Finnair’s financial statements are structured to facilitate reading and understanding
of the financial statements and to clarify the overall picture derived from it. The
notes to the financial statements have been combined to business related sections,
separately listing the accounting principles, critical accounting estimates and
sources of uncertainty in each section. In addition, comments on interesting figures
and other highlights are provided in text areas marked with a star. The financial
statements also include illustrative charts to support the understanding of the
figures.
Notes to the financial statement have been combined into sections based on
their context. The aim is to give a more relevant picture of the Finnair Group and its
business. The content of each section is described and explained in the beginning
of that section and marked with
.
Specific accounting principles are attached to the relevant note. The accounting
principles can be recognised from character
.
Critical accounting estimates and sources of uncertainty have been presented
together with the relevant note and specified with character
.
Highlights related to the section are explained in a separate text box to underline
significant matters.
46 Consolidated income statement
46 Consolidated statement of comprehensive income
47 Consolidated balance sheet
48 Consolidated cash flow statement
49 Consolidated statement of changes in equity
50 Notes to the consolidated financial statements
50 Accounting principles
50 Company information
50 Basis of preparation
50 Impact of the COVID-19 pandemic on the consolidated financial statements
51 Board’s assessment of Finnair as a going concern
51 Presentation of consolidated income statement and balance sheet
52 Critical accounting estimates and sources of uncertainty
52 Changes in accounting principles
53 1 Operating result
53 1.1 Segment information
53 1.2 Operating income
53 1.2.1 Revenue by product and traffic area
54 1.2.2 Revenue by currency
54 1.2.3 Receivables related to revenue
54 1.2.4 Deferred income and advances received
55 1.3 Operating expenses
55 1.3.1 Operating expenses by currency
55 1.3.2 Passenger and handling services
55 1.3.3 Property, IT and other expenses
55 1.3.4 Inventories and other current assets
55 1.3.5 Other liabilities
55 1.3.6 Provisions
56 1.3.7 Items affecting comparability
57 1.3.8 Employee benefits
57 1.3.8.1 Employee benefit expenses and share-based payments
60 1.3.8.2 Pensions
62 2 Fleet and other fixed assets and leasing arrangements
62 2.1 Fleet and other fixed asset
64 2.2 Leasing arrangements
66 2.3 Depreciation and impairment
68 3 Capital structure and financing costs
68 3.1 Financial income and expenses
68 3.2 Financial assets
69 3.2.1 Other current financial assets
69 3.2.2 Cash and cash equivalents
69 3.3 Financial liabilities
71 3.4 Contingent liabilities
71 3.5 Management of financial risks
74 3.6 Classification of financial assets and liabilities
75 3.7 Offsetting financial assets and liabilities
75 3.8 Derivatives
78 3.9 Equity-related information
79 4 Consolidation
79 4.1 General consolidation principles
79 4.2 Subsidiaries
80 4.3 Acquisitions and disposals
80 4.4 Investments in associates and joint ventures
80 4.5 Related party transactions
81 5 Other notes
81 5.1 Income taxes
82 5.2 Disputes and litigation
82 5.3 Events after the closing date
83 6 Parent company financial statements
92 Board of directors’proposal on the dividend
93 Auditor’s report
96 Independent Auditor’s Reasonable Assurance Report on
Finnair Plc’s ESEF Financial Statements
Financial
Statements
Finnair – Financial Information 2021 45
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Consolidated income statement
EUR mill. Note 2021 2020
Revenue ., . 838.4 829.2
Other operating income 62.5 49.3
Operating expenses
Staff and other crew related costs .. -229.3 -163.9
Fuel costs -211.4 -232.8
Capacity rents -71.3 -89.3
Aircraft materials and overhaul -117.2 -92.5
Traffic charges -120.4 -112.4
Sales, marketing and distribution costs -38.1 -28.2
Passenger and handling services .. -148.0 -168.6
Depreciation and impairment . -319.8 -343.8
Property, IT and other expenses .. -99.7 -111.6
Operating result -454.4 -464.5
Financial income . 12.8 38.7
Financial expenses . -117.8 -255.2
Exchange rate gains and losses . -22.5 26.6
Result before taxes -581.9 -654.4
Income taxes . 117.6 131.1
Result for the period -464.3 -523.2
Attributable to
Owners of the parent company -464.3 -523.2
Earnings per share attributable to
shareholders of the parent company, EUR
Basic earnings per share . -0.34 -0.51
Diluted earnings per share . -0.34 -0.51
Consolidated statement of comprehensive income
EUR mill. Note 2021 2020
Result for the period -464.3 -523.2
Other comprehensive income items
Items that may be reclassified to profit or loss in subsequent periods
Change in fair value of hedging instruments 30.1 -29.9
Translation differences -0.7
Tax effect -6.0 6.0
Items that will not be reclassified to profit or loss in subsequent periods
Actuarial gains and losses from defined benefit plans ... 43.0 -13.1
Tax effect -8.6 2.6
Other comprehensive income items total 58.4 -35.1
Comprehensive income for the period -405.9 -558.4
Attributable to
Owners of the parent company -405.9 -558.4
The COVID-19 pandemic had a significant impact on Finnair’s revenue and profitability also in 2021
The financial year 2021 was Finnair’s second annual reporting period impacted by the COVID-19 pandemic. Although
the gradual recovery of passenger air traffic began in the second half of 2021, the annual revenue remained at the
level of the comparison period amounting to 838.4 million euro (829.2). Despite the notable cost-saving measures
taken in 2021, the reported operating result remained close to the previous year’s level due to the significant non-
recurring items included in the result of the comparison period. Non-recurring items are presented in more detail in
note 1.3.7 Items affecting comparability.
= Highlights
Finnair – Financial Information 2021 46
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Consolidated balance sheet
EUR mill. Note 2021 2020
ASSETS
Non-current assets
Fleet . 946.3 1,440.3
Right-of-use fleet . 1,025.3 772.5
Fleet total 1,971.6 2,212.7
Other fixed assets . 162.3 185.3
Right-of-use other fixed assets . 156.4 145.0
Other fixed assets total 318.7 330.2
Pension assets ... 80.9 31.8
Other non-current assets 6.9 25.1
Deferred tax assets . 191.9 84.8
Non-current assets total 2,569.9 2,684.7
Current assets
Receivables related to revenue .. 110.9 57.5
Inventories and other current assets .. 55.8 68.1
Derivative financial instruments . 26.1 12.4
Other financial assets .. 531.4 358.3
Cash and cash equivalents .. 734.3 465.3
Current assets total 1,458.5 961.8
Assets held for sale 18.7
Assets total 4,047.1 3,646.5
EUR mill. Note 2021 2020
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital 75.4 75.4
Other equity 400.2 821.2
Equity total 475.7 896.6
Non-current liabilities
Lease liabilities ., . 1,204.1 880.6
Other interest-bearing liabilities . 986.2 1,111.0
Pension obligations ... 0.7 1.5
Provisions and other liabilities .. 200.7 161.1
Non-current liabilities total 2,391.6 2,154.2
Current liabilities
Lease liabilities ., . 176.9 135.6
Other interest-bearing liabilities . 441.7 51.5
Provisions .. 13.8 20.0
Trade payables 53.5 24.8
Derivative financial instruments . 0.4 99.7
Deferred income and advances received .. 291.1 133.6
Liabilities related to employee benefits ... 74.4 70.7
Other liabilities .. 128.1 59.8
Current liabilities total 1,179.8 595.7
Liabilities total 3,571.4 2,749.9
Equity and liabilities total 4,047.1 3,646.5
Refinancing plan was continued also in 2021
Finnair continued to execute its refinancing plan in 2021 in order to mitigate the impacts of the COVID-19 pandemic.
This included, among other transactions, issuing a senior unsecured bond totaling to 400 million euro and closing of
five new financing transactions relating to the A350 aircraft. As a result, the total interest-bearing debt increased to
2,808.9 million euro (2,178.7) and the sum of cash and cash equivalents and other financial assets to 1,265.7 million euro
(823.7). The financing transactions of the A350 aircraft comprised of four sale- and leaseback agreements and one
lease financing arrangement which are reflected as an increase in the value of the RoU fleet totaling to 1,025.3 million
euro (772.5) and as a decrease in own fleet to 946.3 million euro (1,440.3).
The deferred tax assets increased to 191.9 million euro (84.8) due to the significant losses caused by the COVID-19
pandemic.
= Highlights
Finnair – Financial Information 2021 47
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Consolidated cash flow statement
EUR mill. 2021 2020
Cash flow from operating activities
Result before taxes -581.9 -654.4
Depreciation and impairment 319.8 343.8
Financial income and expenses 127.5 189.9
Sales gains and losses on aircraft and other transactions -19.4 -0.8
Change in provisions 19.8 3.5
Employee benefits -4.3 -120.8
Other adjustments 3.3 0.7
Non-cash transactions 18.9 -116.6
Changes in trade and other receivables -49.9 112.3
Changes in inventories 1.9 4.6
Changes in trade and other payables 257.3 -672.0
Changes in working capital 209.2 -555.2
Financial expenses paid, net -99.3 -243.4
Income taxes paid -6.4
Net cash flow from operating activities -25.3 -1,043.1
Cash flow from investing activities
Investments in fleet -70.3 -300.7
Investments in other fixed assets -6.0 -24.7
Divestments of fleet, other fixed assets and shares 441.7 221.1
Lease and lease interest payments received 11.7 16.1
Change in other current financial assets (maturity over 3 months) -67.5 439.9
Change in other non-current assets 0.0 0.0
Net cash flow from investing activities 309.6 351.6
Cash flow from financing activities
Proceeds from loans 396.7 872.8
Loan repayments -154.8 -218.0
Repayments of lease liabilities -146.8 -134.9
Share issue 511.7
Share issue costs -11.1
Hybrid bond repayments -200.0
Proceeds from hybrid bond 200.0
Hybrid bond interests and expenses -20.5 -18.5
Acquisitions of own shares -1.1
Net cash flow from financing activities 73.4 1,001.9
Change in cash flows 357.8 310.5
Liquid funds, at beginning 792.2 481.7
Change in cash flows 357.8 310.5
Liquid funds, at end* 1,150.0 792.2
* Liquid funds
EUR mill. 2021 2020
Other financial assets 531.4 358.3
Cash and cash equivalents 734.3 465.3
Cash funds 1,265.7 823.7
Other current financial assets (maturity over 3 months) -115.7 -31.5
Liquid funds 1,150.0 792.2
Changes in equity and liabilities arising from financing activities are disclosed in the note 3.3 Financial liabilities
and in the note 3.9 Equity-related information.
The Group’s liquidity remained strong in 2021
The net cash flow from operating activities improved significantly during 2021 but remained negative at -25.3 million
euro (-1,043.1). The improvement was mainly due to the exceptionally large volume of cash refunds (relating to prepaid
flight tickets) paid to customers in 2020 and on the other hand, the gradual increase in sales during the second half of
2021. The Group’s total liquid funds grew to 1,150.0 million euro (792.2). The increase in liquid funds during the period was
largely related to the positive investment cash flow resulting from the financing transactions of the A350 aircraft as well
as the issuance of the senior unsecured bond of 400 million euro included in cash flow from financing activities.
= Highlights
Finnair – Financial Information 2021 48
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Consolidated statement of changes in equity
EUR mill. Share capital
Other
restrictedfunds
Hedging reserve
and other OCI items
Unrestricted
equityfunds Retained earnings Hybrid bond Equity total
Equity 1 Jan 2021 75.4 168.1 -41.8 759.5 -262.6 198.0 896.6
Result for the period -464.3 -464.3
Change in fair value of hedging instruments 24.0 24.0
Actuarial gains and losses from defined benefit plans 34.4 34.4
Comprehensive income for the period 58.4 -464.3 -405.9
Hybrid bond interests and expenses -16.4 -16.4
Acquisitions of own shares -1.1 -1.1
Share-based payments 2.4 2.4
Equity 31 Dec 2021 75.4 168.1 16.6 762.0 -744.5 198.0 475.7
EUR mill. Share capital
Other
restrictedfunds
Hedging reserve
and other OCI items
Unrestricted
equityfunds Retained earnings Hybrid bond Equity total
Equity 1 Jan 2020 75.4 168.1 -6.7 256.1 275.2 198.2 966.4
Result for the period -523.2 -523.2
Change in fair value of hedging instruments -23.9 -23.9
Actuarial gains and losses from defined benefit plans -10.5 -10.5
Translation differences -0.7 -0.7
Comprehensive income for the period -35.1 -523.2 -558.4
Share issue 511.7 511.7
Share issue costs -8.8 -8.8
Proceeds from hybrid bond 200.0 200.0
Hybrid bond repayments -200.0 -200.0
Hybrid bond interests and expenses -14.6 -0.2 -14.8
Share-based payments 0.6 0.6
Equity 31 Dec 2020 75.4 168.1 -41.8 759.5 -262.6 198.0 896.6
Equity ratio at 11.8% in 2021 (24.6%)
The COVID-19 pandemic continued to have a significant negative impact on the Group’s consolidated result for the period as a result of which the Group’s equity decreased to 475.7 million euro (896.6).
Finnair hedges against jet fuel price fluctuations with forward contracts and options according to its risk management policy decscribed in note 3.5 Management of financial risk. The change in fair value of hedging instruments amounting to 24.0
million euro (-23.9) related mainly to increased jet fuel prices at the year-end 2021. Changes in hedging reserve and other OCI (other comprehensive income) items are presented in more detail in note 3.9 Equity-related information.
= Highlights
Finnair – Financial Information 2021 49
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Basis of preparation
Finnair Plc’s consolidated financial statements for 2021 have been prepared in accordance with the International
Financial Reporting Standards (IFRS) as adopted by the European Union, and they comply with the IAS and
IFRS standards and respective SIC and IFRIC Interpretations effective on 31 December 2021. The notes to the
consolidated financial statements also comply with Finnish accounting and corporate law. Changes applied
in accounting principles in 2021 and future periods are described in the below section Changes in accounting
principles.
The consolidated financial statements are presented in euros, which is the parent company’s functional
currency. Transactions denominated in foreign currencies are translated into functional currency by using the
exchange rates prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies and outstanding at the end of the reporting period are translated using the exchange rates of the
closing date. Foreign exchange gains and losses arising from monetary assets and liabilities as well as fair value
changes of related hedging instruments are recognized in the income statement.
The 2021 consolidated financial statements have been prepared based on original acquisition costs, except
for financial assets recognised through profit and loss at fair value and derivative contracts measured at fair
value. Financial statement data is presented in millions of euros, rounded to the nearest hundred thousand euro.
The sum of the individual figures may differ from the total shown.
Impact of the COVID-19 pandemic on the consolidated financial statements
The financial year 2021 was the second annual reporting period severely impacted by the COVID-19 pandemic.
The COVID-19 pandemic and the subsequent travel restrictions continued to have a significant negative impact
on passenger demand also in 2021, which was heavily reflected in Finnair’s revenue and profitability. Despite
the gradual improvement in passenger demand in the second half of 2021, enabled by the increase in vaccine
coverage and the partial lifting of travel restrictions, the number of passenger kilometers (ASK) offered in 2021
was slightly below the level of the comparison period totaling to 12,094 million (12,937 million). This is around one
quarter of the pre-COVID-19 levels of 2019 (47,188 million). Finnair’s revenue in 2021 totalled to 838.4 million euro
(829.2) and the total number of passengers was 2.9 million (3.5). The relative improvement in revenue relative to
the passenger volume was due to the record high revenues of the cargo business, which was boosted by the
increased demand for air cargo resulting from the COVID-19 pandemic and global supply chain challenges.
Cargo revenue increased by 88.3 percent to 334.7 million euro (177.7). Although Finnair was able to significantly
reduce its variable costs during 2021 as part of its cost savings program, the Group’s operating result of -454.4
million euro (-464.5) remained close to the comparison period due to the impact from non-recurring items. The
positive impact of non-recurring items in 2020 operating result was 130.8 million euro, whereas for the financial
year 2021 it was 14.4 million euro. The loss for the period 2021 amounted to -464.3 million euro (-523.2).
The negative result for the period caused by the COVID-19 pandemic also had an impact impact on the
consolidated balanse sheet. The Group’s equity declined by 47% to 475.7 million euro (896.6). Total net deferred
tax asset recognized in the consolidated balance sheet as at the end of 2021 increased to 191.9 million euro
(84.8). Further, the Group’s total non-current liabilities increased to 2,391.6 million euro (2,154.2) mainly because of
the four A350 sale and leaseback transactions and one leased A350 aircraft. Finnair also issued an unsecured
bond of 400 million euro, which was raised repay some of the earlier, maturing bonds and to provide general
funding for the Group. Finnair’s current liabilities increased to 1,179.8 million euro (595.7) resulting mainly from the
reclassification of the first pension premium loan repayment of 300 million euro (due in December 2022) to short-
term liabilities and an increase in deferred income resulting from the increase in passenger ticket sales.
The Group’s net cash flow from operating activities improved significantly during 2021 amounting to -25.3
million euro (-1,043.1). The improvement was mainly due to the exceptionally large volume of cash refunds
(relating to prepaid flight tickets) paid to customers in 2020 and, on the other hand, the increase in ticket sales
during the second half of 2022. Finnair’s liquid funds grew by 357.8 million euro during the reporting period and
totaled to 1,150.0 million euro (792.2) as at 31.12.2021. The increase in cash funds during the year was mainly due to
aircraft financing transactions of the A350 aircraft and an issuance of the unsecured bond totaling to 400 million
euro.
Further detail on the Group’s financial figures can be found in the following notes: revenue and operating
expenses (note 1.2 and 1.3), deferred income and advances received (note 1.2.4), pensions (note 1.3.8.2), aircraft
Notes to the consolidated financial statements
Accounting principles
How should Finnair’s accounting principles be read?
Finnair describes the accounting principles in conjunction with each note with the aim of providing an enhanced
understanding of each accounting area. The basis of preparation is described as part of this note at a general level,
while the principles more directly related to a specific note are attached to the corresponding note. The Group focuses
on describing the accounting choices made within the framework of the prevailing IFRS policy and avoids repeating
the actual text of the standard, unless Finnair considers it particularly important to the understanding of the note’s
content. The table below shows in which notes the related accounting principles are presented and to which IFRS
standard the accounting principle is primarily based on.
Accounting principle Note Nr. IFRS
Segment reporting Segment information . IFRS 
Revenue recognition, other income and trade
receivables Operating income .
IFRS , IFRS ,
IFRS
Provisions and contingent liabilities Provisions .. IAS 
Employee benefits and share-based payments Employee benefits .. IAS , IFRS 
Pensions Pensions ... IAS 
Tangible and intangible assets Fleet and other fixed assets .
IAS , IAS ,
IAS
Leases Leasing arrangements . IFRS 
Impairment of assets Depreciation and impairment . IAS 
Interest income and expenses Financial income and expenses . IFRS , IAS 
Financial assets Financial assets . IFRS , IFRS 
Cash and cash equivalents Financial assets . IFRS , IFRS 
Financial liabilities Financial liabilities . IFRS , IFRS 
Derivative contracts and hedge accounting Derivatives . IFRS , IFRS 
Equity, dividend and treasury shares Equity-related information . IAS , IAS 
Consolidation principles of subsidiaries Subsidiaries . IFRS 
Non-controlling interests and transactions with
non-controlling interests Subsidiaries . IFRS 
Investments in associates and joint ventures
Investments in associates and
joint ventures . IFRS , IAS 
Related party disclosures Related party transactions . IAS 
Income tax and deferred taxes Income taxes . IAS 
Company information
Finnair Group engages in worldwide air transport operations and supporting services. The Group’s parent
company is Finnair Plc, which is domiciled in Helsinki at the registered address Tietotie 9, Vantaa. The parent
company is listed on the NASDAQ OMX Helsinki Stock Exchange.
The consolidated financial statements of Finnair Group for the year ended 31 December 2021 were authorized
for issue by the Board of Directors of Finnair Plc on 16 February 2022. Under Finland’s Limited Liability Companies
Act, shareholders have the option to accept, or reject the financial statements in the Annual General meeting of
the shareholders, which will be held after the publication of the financial statements.
Finnair – Financial Information 2021 50
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
in its current operating environment that are negatively impacting the Group’s cash flows. The maturities of
the Group’s interest-bearing liabilities are presented in note 3.3. and information about hedging policies and
management of liquidity risk is described in notes 3.5 and 3.8. Finnair had no debt covenants at the end of the
financial year 2021.
The main identified uncertainties relating to the management estimates relate to the eventual duration of
the COVID-19 pandemic as well as the timing of the expected demand recovery which depends on the timing
and effectiveness of the vaccination programs and potential new virus variants, functioning of a vaccine
passport solution, lifting of the travel restrictions and increased competition all of which cannot be known with
certainty at the time of the publication of the financial statements. In addition, the price of fuel is subject to
higher than average uncertainty, which is further increased by the possibility of an escalation of the geopolitical
situation in Eastern Europe. The escalation and prolongation of the geopolitical situation could negatively
affect the overflight permits, routings and costs of Finnair’s flights to Asia. These events are not in the sphere of
Finnair management’s influence. The management has been required to apply material judgement relating
to the duration of the COVID-19 pandemic and make estimates about the effectiveness and realization of the
vaccination programs as well as the pace of the demand recovery for air passenger travel. This again is heavily
impacted by the actions of the governments in many parts of the world and the time that it takes to get the
pandemic under control.
Despite of the abovementioned uncertainties, Finnair’s management has at its disposal other mitigating
measures that are within the sphere of its influence and with which it believes it will be able to meet its obligations
for at least 12 months after the date the financial statements are issued. These include utilization of the undrawn
state hybrid loan totaling to 400 million euro, further to which Finnair’s management will continue to seek
additional financing and cost adjustment opportunities.
Considering the above-mentioned circumstances and uncertainties, as well as the already realized and
planned measures to mitigate the impacts of the COVID-19 pandemic, the Board of Directors has concluded
that the assessment does not cast significant doubt on the Group’s ability to continue as a going concern and
that consequently, the Group continues to adopt the going concern basis of accounting in preparing these
consolidated financial statements. The Board of Director’s conclusion is based on the information available
as at the date of the issuance of the consolidated financial statements and an assessment conducted based
on the information assuming, that the company is able to conduct its adjusted business operations according
to the plan and to maintain sufficient financing for period of at least 12 months after the date that the financial
statements are issued. The management and the Board of Directors have also considered events and
developments taking place after the balance sheet date and concluded that there is no material impact on the
scenarios approved by the Board of Directors and the going concern assessment of the Group.
Despite the various mitigating measures implemented by Finnair, the upcoming months will continue to
be significantly affected by the pandemic and the resulting decreased demand for air travel causing lower
revenues and weaker financial performance for a duration that is currently uncertain. Should future events or
conditions cause the Group to be unable to continue its operations in accordance with current assessment of the
Board of Directors, using the going concern principle may prove to be no longer justified and the carrying values
as well as the classification of the Group’s assets and liabilities would have to be adjusted accordingly.
Presentation of consolidated income statement and balance sheet
Finnair has changed the presentation of its consolidated income statement on 1 January 2021 in order to clarify
the structure and will present the items ‘Comparable EBITDA’ and ‘Comparable operating result’ previously
reported on the face of the income statement only in the notes to the financial statements. Similarly, items
affecting comparability that were previously presented individually on the face of the income statement are
included in those line items in the income statement to which they belong by their nature. Due to the change in
the presentation of the income statement, the line items ‘Items affecting comparability’ and ‘Comparable EBITDA’
are no longer presented in the consolidated cash flow statement. In connection with the change in presentation,
the income statement and cash flow statement for the comparison period 2020 have been adjusted accordingly
to facilitate comparability between the periods. The changes are presented in more detail in Note 1.3.7. ‘Items
affecting comparability and changes in the presentation of the income statement and cash flow statement’.
financing transactions in notes 2.1, 2.2 and 3.3), derivatives and jet fuel hedges in notes 3.1 and 3.8, changes in
liabilities and equity (notes 3.3 and 3.9) and income taxes (note 5.1).
The COVID-19 pandemic has also had an impact on the critical accounting estimates and sources of
uncertainty. This have been dislosed in more detail in the below section Critical accounting estimates and
sources of uncertainty.
Board’s assessment of Finnair as a going concern
The consolidated financial statements have been prepared based on the going concern assumption. The Finnair
Board of Directors has assessed the Group’s ability to continue as a going concern based the Group’s ability
to meet its obligations as they fall due at least 12 months after the financial statements are issued. The Board of
Directors’ assessment is based on the Group’s strategy and the latest three-year business plan approved by the
Board of Directors. Due to the current uncertainty embedded in the economic environment and the difficulty in
forecasting the ultimate duration and impact of the COVID-19 pandemic, the Board of Directors have reviewed
three different scenarios prepared by the management that cover a period of 36 months from January 2022
to December 2024. The abovementioned scenarios have been sensitised to reflect differences in the expected
pace of the recovery. Under all three scenarios, Finnair will be able to meet its obligations as they fall due at least
12 months after the date that the financial statements are issued.
Finnair’s customer demand started to recover materially in September 2021 and the main differences
between the most recent forecast scenarios prepared in connection with the 2021 financial statements relate
to the pace of the expected demand recovery and unit revenue development. The demand and revenue are
expected to recover somewhat slower during 2022 than what was estimated at the time of the preparation of
the 2020 financial statements, which is caused by the prolonged impacts of the COVID-19 pandemic on travel
restrictions. In the base case scenario, which is considered as the most probable of the three, Finnair expects
to operate around 83% of its capacity (measured in annual available seat kilometres) in 2022 as compared to
the pre-pandemic levels of the year 2019 (financial statements 2020: 95%). In the optimistic scenario, the annual
capacity is expected to reach 87% of the 2019 levels in 2022, whereas in the most pessimistic scenario, it is
expected to remain at 75%. Despite the differences in the pace of the recovery, the business is expected to return
to the pre-covid levels of 2019 in 2023 under all but the pessimistic scenario, in which the 2023 annual operational
capacity is expected to reach 98% of the pre-pandemic levels. All of the management forecast scenarios are
based on the development of passenger demand and capacity levels that depend on the implementation
of the vaccination programs, lifting of travel restrictions (especially in Asia) and global acceptance of vaccine
passports. It is assumed in all scenarios, that the unit revenue (RASK) will remain below the 2019 levels throughout
the period of the business plan due to lower passenger volumes and lower share of corporate travel. At the same
time, the committed cost saving program included in the scenarios will decrease unit costs. Flight related variable
expenses depend on the planned capacity, whereas aircraft maintenance investments are assumed to stay
rather constant between all scenarios.
In 2021, Finnair continued to safeguard its strong cash position by optimizing investments, reducing costs,
adjusting capacity to meet the demand and executing new funding transactions. Finnair continued targeting
both temporary and permanent cost reductions and announced on 15th July 2021, that it had increased its
earlier cost savings target to 200 million euro (based on 2019 operational volumes) from the beginning of 2022.
The temporary measures of the program included temporary layoffs of employees, limiting spending only to
the mandatory and compliance driven items and the temporary grounding of a large part of its fleet in order to
accommodate its cost base to lower level of operations until the demand for flying returns again. In addition to
the operational measures, Finnair continued its extensive financing programme to secure adequate funding and
liquidity, consisting of e.g. an unsecured and undrawn hybrid loan agreement of 400 million euros signed with the
State of Finland and the completion of five aircraft financing transactions related to A350 aircraft. In addition,
Finnair issued a senior unsecured bond totaling to 400 million euro in order to repay its existing, maturing bonds
and to provide general purpose financing.
As a result of the aforementioned actions, Finnair’s liquidity position remained strong and as at 31 December
2021, the Group held liquid funds of 1,150.0 million euro (792.2). The cash funds including other current financial
assets (maturity over 3 months) totalled to 1,265.7 million euro (823.7). The Group management and the Board
of Directors continue to pay close attention to the Group’s cash position considering the challenging dynamics
Finnair – Financial Information 2021 51
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
The change in presentation had no effect on the Group’s reported operating result or profit for the period in the
current or previous financial year. The change also has no effect on the consolidated balance sheet.
The consolidated income statement includes a subtotal ‘operating result’ which is not defined in the IAS 1
Presentation of Financial Statements standard. The Group has defined it as the net amount of operating income
and expenses, including revenue and other operating income, less operating expenses, such as employee
benefits, fuel costs, maintenance expenses, lease payments for aircraft and depreciations. Exchange rate
differences and realised changes in fair values of derivatives are included in the operating result if they arise
from items related to business operations; otherwise, they are recognised in financial items. The operating result
excludes financial items, share of results from associates and joint ventures and income taxes.
In the consolidated balance sheet, assets and liabilities are classified as current when they are expected to
realise within 12 months or when they are classified as liquid funds or as financial assets or liabilities classified
at fair value through profit or loss. Other assets and liabilities are classified as non-current assets or liabilities.
Interest-bearing liabilities include loans from financial institutions, bonds, loans taken for aircraft financing
(JOLCO-loans & export credit support), lease liabilities and commercial papers. Interest-bearing net debt is the
net amount of interest-bearing assets and liabilities and cross-currency interest rate swaps that are used for
hedging the currency and interest rate risk arising from interest-bearing loans.
Critical accounting estimates and sources of uncertainty
The preparation of IFRS financial statements requires Group management to make certain estimates,
assumptions and judgements in applying the accounting principles that affect the reported amounts of assets
and liabilities as well as income and expenses. The application of the accounting policies prescribed by IFRS
require making estimates and assumptions relating to the future where the actual outcome may differ from the
earlier estimates and assumptions made. In addition, management discretion has to be exercised in applying the
accounting principles especially when the IFRS has alternative accounting, valuation or presentation methods.
The estimates and assumptions made are based on past experience and management’s best estimate of future
events and other factors, that are believed to be reasonable given the current circumstances. The estimates and
associated assumptions are continuously evaluated and any changes therein are reflected in the period that the
changes occur.
The COVID-19 pandemic has increased the level of uncertainty relating to the near- and long-term
development of the economy and its impact on Finnair’s future operating environment. Despite increased
vaccination rates and significant actions taken by the governments to contain the virus, it is difficult to forecast
how long it will take to bring the global pandemic under control. In addition, the price of fuel is subject to higher
than average uncertainty, which is further increased by the possibility of an escalation of the geopolitical
situation in Eastern Europe. The escalation and prolongation of the geopolitical situation could affect the
overflight permits, routings and costs of Finnair’s flights to Asia. Given the unpredictability of the duration
and the reach of the pandemic, price of jet fuel and the geopolitical situation, their impact on Finnair’s future
profitability, financial position and cash flows may eventually differ from the current management estimates and
assumptions made.
In order to reflect the increased uncertainty in its estimates and assumptions caused by the COVID-19
pandemic, Finnair’s management has considered three different forecast scenarios incorporating possible
variations of the expected pace of the business recovery based on its best estimate at the time. These scenarios
are discussed in more detail in the earlier section of the notes called Board’s assessment of Finnair as a going
concern. Further, in order to consider the increased uncertainty also in its impairment testing performed at the
year-end, Finnair is using the expected cash flow approach which incorporates expectations about all forecast
scenarios instead of relying on just a single, most likely, cash flow estimate.
Information about the estimates and judgement exercised by management in applying the Group’s
accounting principles and the areas where estimates and judgements have biggest impact on the financial
statements are highlighted in the following table Critical accounting estimates and sources of uncertainty.
The consolidated financial statements have been prepared on a going concern basis. Assessment of the going
concern is made based on management estimates about future events and other information that is available to
the management and the Board of Directors at the time of the assessment. The main identified critical estimates
and sources of uncertainty related to the assessment are presented earlier in this note in section Board’s assessment
of Finnair as going concern. The identified main critical estimates and sources of uncertainty related to separate
sections of the financial statements are presented in connection to the financial items considered to be affected and
attached to the corresponding note. The table below shows where to find more information about those estimates and
uncertainties.
Critical accounting estimates
and sources of uncertainty Note number Note
Finnair Plus Customer Loyalty Program 1.2 Operating income
Maintenance reserves of the fleet 1.3.6 Provisions
Pension obligations 1.3.8.2 Pensions
Leasing arrangements 2.2 Leasing arrangements
Impairment testing of the fleet and other fixed assets 2.3 Depreciation and impairment
Derivative contracts and hedge accounting 3.8 Derivatives
Deferred taxes 5.1 Income taxes
Changes in accounting principles
New and amended IFRS standards and IFRIC interpretations
The changes in the IFRS standards and IFRIC-interpretations effective from periods beginning 1 January 2021
included mainly amendments or improvements to current standards and did not have material effect on Finnair
financial statements.
Other standards issued that are effective from periods on or after 1st of January 2022 mainly include
amendments and improvements to current standards that are not expected to have a material impact on the
Group’s consolidated financial statements.
= Critical accounting estimates
Finnair – Financial Information 2021 52
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
1 Operating result
Operating result includes notes related to revenue and operating result from the point of view of income
statement and balance sheet.
1.1 Segment information
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Group’s Executive Board. Segments are defined
based on Group’s business areas. Group has one business and reporting segment: Airline business.
The Finnair Executive Board, defined as the chief operative decision maker according to IFRS 8 Segment
reporting, considers the business as one operating segment. Therefore, segment information is not reported.
The revenue by product and geographical area is presented in the note 1.2.1 Revenue by product and traffic
area. The division is based on the destination of Finnair flights. Finnair operates international and domestic
routes, but the assets are almost solely owned in Finland. The fleet composes the major part of the non-current
assets (see note 2.1 Fleet and other fixed assets). The fleet is owned or leased by Finnair’s Finnish subsidiary
and the aircraft are operated flexibly across different traffic (geographical) areas. More details about fleet
management and ownership can be found in the management report in the section “Fleet”.
Despite the increase in vaccination coverage and partial lifting of the travel restrictions, and the resulting
gradual increase in passenger demand and revenue during the second half of 2021, the number of passengers
was slightly below the prior year level. The various travel restrictions due to COVID-19 continued to have a
significant negative impact on passenger demand which was reflected in Finnair’s revenue and profitability
also in 2021. During the financial year Finnair transported 2.9 million passengers (3.5), which was 18.2 per cent
less than in 2020. Decrease in passenger volumes was compensated by the record high revenues of the cargo
business, which was boosted by the increased demand for air cargo resulting from the COVID-19 pandemic and
global logistical challenges. Finnair was able to significantly reduce its variable costs during 2021 as a result of
its cost savings program. The effects on revenue and operating expenses as well as the related receivables and
liabilities are presented in more detail in the following notes 1.2 and 1.3.
Due to the wide scale of customers and nature of the business, sales to any individual customer is not material
compared to Finnair’s total revenue.
1.2 Operating income
The operating income section includes both income statement and balance sheet notes that relate to
revenue. The aim is to provide a more coherent picture of income related items affecting Finnair’s result and
financial position. Trade receivables and deferred income containing mainly prepaid flight tickets and travel
tour services are presented in connection with this section, because those are an essential part in revenue
recognition.
Revenue recognition
Revenue is recognised when goods or services are delivered. Revenue is measured at fair value of the consideration
received or receivable, net of discounts and indirect taxes.
Passenger revenue includes sale of flight tickets, and is recognised as revenue when the flight is flown in accordance
with the flight traffic program. Recognition of unused tickets as revenue is based on the expected breakage amount of
tickets remaining unused in proportion to the pattern of rights exercised by the passenger.
Sales price is allocated to a flight ticket and points in Finnair Plus’ Customer Loyalty Program. Finnair loyalty customers
can earn Finnair Plus Points from tickets or services purchased, and use the earned points to buy services and products
offered by Finnair or its cooperation partners. The points earned are measured at fair value and recognised as a
= Content of the section
= Accounting principles
= Critical accounting estimates
decrease of revenue and debt at the time when the points-earning event (for example, flight is flown) is recognised as
revenue. Fair value is measured by taking into account the fair value of those awards that can be purchased with the
points and the customer selection between different awards based on historical customer behaviour. In addition, the
fair valuation takes into account the expiry of the points. The debt is derecognised when the points are used or expire.
Customer compensations for delays or cancellations is a variable consideration in the contract and it is recognised
as an adjustment to revenue.
Ancillary revenue includes sale of ticket related services, such as advance seat reservations, additional baggage
fees as well as different service fees, and sale of goods in the aircraft. The service revenue is recognized when the flight
is flown in accordance with the flight traffic program, since it is considered as a contract modification instead of a
separate revenue transaction. The sale of goods is recognized when the goods are delivered to the customer.
Cargo revenue is recognized when the cargo has been delivered to the customer.
Tour operations revenue includes sale of flight and hotel considered as separate performance obligations, which are
recognized as the service is delivered.
Public subsidies due to COVID-19 pandemic decreased slightly compared to previous year and they were not
material in overall. Subsidies are recognised as other operating income.
Trade receivables
Finnair Group recognises impairment provisions based on lifetime expected credit losses from trade receivables
in accordance with IFRS 9. Finnair has chosen to apply a simplified credit loss matrix for trade receivables as trade
receivables do not have a significant financing component. Accordingly, the credit loss allowance is measured at an
amount equal to the lifetime expected credit losses. The expected credit loss model is forward-looking, and expected
default rates are based on historical realised credit losses. The lifetime expected credit loss allowance is calculated
using the gross carrying amount of outstanding trade receivables in each aging bucket and an expected default rate.
The changes in expected credit losses are recognised in other operating expenses.
Finnair Plus Customer Loyalty Program
Valuation and revenue recognition related to Finnair Plus debt requires management judgment especially related
to fair valuation of points and timing of revenue recognition related to points expected to expire. The fair value of the
point is defined by allocating the point to award selection based on historical behaviour of customers, after which the
fair value of each award is defined. The liability is calculated by taking the total amount of points earned by customers,
decreased by the expected expiry of the points. These points are then fair valued as described above, and the result is
recognised as liability on the balance sheet.
Estimating customer behaviour relating to the expiry of the points continued to be somewhat more challenging during
financial year 2021 as a result of the COVID-19 pandemic, which has led to a low number of passenger flights and less
recent activity of Finnair Plus members. This leads Finnair to have less recent data available that can be used as a basis
of the estimates and thus increase the level of uncertainty about the expected customer behaviour and the point expiry
rates in the future.
1.2.1 Revenue by product and traffic area
2021
EUR mill. Asia
North
Atlantic Europe
Domestic
Unallo-
cated Total
Share, % of
revenue by
product
Passenger revenue . . . . . . .
Ancillary and retail revenue . . . . . . .
Cargo . . . . . . .
Travel services . . . . . . .
Total . . . . . .
Share, % of revenue by
traffic area . . . . .
The division of revenue by traffic area is based on the destination of the Finnair flight.
Finnair – Financial Information 2021 53
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Despite the gradual increase seen in passenger demand during the second half of 2021, the passenger
revenue, ancillary and retail revenue as well as travel services decreased from the comparison period due to
the COVID-19 related travel restrictions. The cargo revenue nearly doubled due to the increased demand for
air cargo resulting from the COVID-19 pandemic and challenges in the global logistic chains. The Group’s total
revenue remained at the prior year level.
2020
EUR mill. Asia
North
Atlantic Europe
Domestic
Unallo-
cated Total
Share, % of
revenue by
product
Passenger revenue . . . . . . .
Ancillary and retail revenue . . . . . . .
Cargo . . . . -. . .
Travel services . . . . -. . .
Total . . . . . .
Share, % of revenue by
traffic area . . . . .
1.2.2 Revenue by currency
EUR mill. 2021 2020
EUR . .
JPY . .
CNY . .
KRW . .
USD . .
SEK . .
Other currencies . .
Total . .
The hedging policies against foreign exhange rate fluctuations are described in note 3.5 Management of
financial risks.
1.2.3 Receivables related to revenue
EUR mill. 2021 2020
Trade receivables . .
Accrued income . .
Total . .
Most of the accrued income represents contract assets, for which Finnair has met the performance requirement
prior to receiving payment from customers and these have not yet been recognized as trade receivables.
Contract assets mainly include accrued income related to cargo sales and receivables from airlines involved
in the Siberian Joint Business on flights between Europe and Japan, and the Atlantic Joint Business on flights
between Europe and North America.
The increase in revenue related receivables at the end of 2021 results from the increase in passenger and
cargo demand and the related revenues which took place during the second half of the year. The fair value of
trade receivables does not materially differ from balance sheet value.
2021 2020
Aging analysis
of trade
receivables
Trade
receivables,
EUR mill.
Probability
of not
collecting, %
Expected
uncollectible,
EUR mill.
Trade
receivables,
EUR mill.
Probability
of not
collecting, %
Expected
uncollectible,
EUR mill.
Not overdue . .% . . .% .
Overdue less than
60 days . .% . -. .% .
Overdue more
than 60 days . .% . . .% .
Total . .% . . .% .
During the financial year, the Group recognised credit losses in total of 1.5 million euros (0.0). The uncertainty
caused by the COVID-19 pandemic has not resulted in increased credit risk because of the diversified customer
base. The maximum exposure to credit risk at the reporting date equals to the total carrying amount of trade
receivables. The Group does not hold any collateral as security related to trade receivables.
Trade receivables by currency
EUR mill. 2021 2020
EUR . .
THB . .
KRW . .
JPY . .
NOK . .
USD . .
CNY . .
HKD . .
SEK . .
Other currencies . .
Total . .
1.2.4 Deferred income and advances received
EUR mill. 2021 2020
Deferred revenue on ticket sales . .
Loyalty program Finnair Plus . .
Advances received for tour operations . .
Other items . .
Total . .
Most of the deferred income and advances received represents contract liabilities, for which payments have
been received from customers before the performance obligation is discharged by Finnair.
Deferred income and advances received includes prepaid flight tickets and package tours for which the
departure date is in the future. The Finnair Plus liability is related to Finnair’s customer loyalty program, and
equals the fair value of the accumulated, unused Finnair Plus points. Other items mainly include gift voucher
liabilities and liabilities to airlines involved in the Siberian Joint Business on flights between Europe and Japan, and
the Atlantic Joint Business on flights between Europe and North America.
Deferred revenue on ticket sales and advances received for tour operations increased significantly during the
second half of 2021 as a result of the partial lifting of travel restrictions and the gradual increase in passenger demand.
The debt balance related to the Finnair Plus loyalty program increased as the expiry of points was further prolonged for
the benefit of customers, who have not been able to use earned points in a normal manner during COVID-19 pandemic.
Finnair – Financial Information 2021 54
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
1.3 Operating expenses
The operating expenses section includes the income statement and balance sheet notes related to operating
expenses, aiming to provide a better overview of business operations and related expenses. Maintenance
provisions of leased aircraft that inherently relate to aircraft overhaul costs are included in this operating
expenses section. Also accrued expenses, such as liabilities related to jet fuel and traffic charges, are presented
in this section. In addition, items related to employee benefits are presented at the end of this section in a
separate note 1.3.8. Employee benefits. It includes the different forms of benefits received by Finnair employees,
including share-based payments and pensions, their effect on staff costs and balance sheet as well as
information on management remuneration.
Although Finnair was able to significantly reduce its variable costs during 2021 as a result of its cost savings
program, the Group’s operating expenses remained on the prior year level due to significant non-recurring items
in the comparison period 2020 which had costs decreasing effect of 130.8 million euro.
Finnair continued significant cost adjustment initiatives due to the effects of COVID-19 pandemic on Finnair’s
operations, such as temporary layoffs and certain amendments to the collective labour agreement relating to a
curtailment of occupational disability pensions. These are presented more detailed in note 1.3.8.
Changes in depreciation and impairment are presented in note 2.3.
1.3.1 Operating expenses by currency
EUR mill. 2021 2020
EUR . .
USD . .
Other currencies . .
Total ,. ,.
The hedging policies against foreign exchange rate fluctuations are described in note 3.5 Management of
financial risks.
1.3.2 Passenger and handling services
EUR mill. 2021 2020
Ground and cargo handling expenses . .
Expenses for tour operations . .
Catering expenses . .
Other passenger services . .
Total . .
Passenger and handling costs reduced as a result of the lower passenger traffic volumes.
1.3.3 Property, IT and other expenses
EUR mill. 2021 2020
IT expenses . .
Property expenses . .
Other expenses . .
Total . .
Property, IT and other expenses mainly consist of fixed costs, where significant cost savings were also achieved.
Audit fees
EUR mill. 2021 2020
Auditor's fees . .
Tax advising .
Other fees . .
Total . .
The auditor’s fees of KPMG Oy Ab included fees of 332 thousand euro (519) for audit and 15 thousand euro (3) for
auditor’s statements. Non-audit services to entities of Finnair Group were 1 thousand euro (285), which included
relocation services as well as during the comparison period capital markets services.
1.3.4 Inventories and other current assets
EUR mill. 2021 2020
Inventories . .
Receivables from sublease contracts . .
Aircraft materials and overhaul . .
Capacity rent receivables . .
Jet fuels . .
VAT receivables . .
Interest and other financial items . .
Other items . .
Total . .
1.3.5 Other liabilities
EUR mill. 2021 2020
Jet fuel and traffic charges . .
Passenger and handling services . .
Interest and other financial items . .
Aircraft materials and overhaul . .
Sales, marketing and distribution cost accruals . .
Other items . .
Total . .
Other liabilities increased significantly as a result of the increased air traffic when the travel restrictions were
lifted. It mainly includes liabilities relating to variable operating expenses such as jet fuel and traffic charges,
passenger and handling services as well as aircraft materials and overhaul for which the amounts are largely
correlated with the actual operational volumes.
1.3.6 Provisions
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as the result of a past event,
the fulfilment of the payment obligation is probable, and a reliable estimate of the amount of the obligation can be
made. The amount to be recognised as provision corresponds to the management’s best estimate of the expenses
that will be necessary to meet the obligation at the end of the reporting period.
In most cases, the Group is obliged to return leased aircraft and their engines according to the redelivery condition set
in the lease agreement. If at the time of redelivery, the condition of the aircraft and its engines differs from the agreed
redelivery condition, Finnair needs to either maintain the aircraft so that it meets the agreed redelivery condition or
= Content of the section
= Accounting principles
Finnair – Financial Information 2021 55
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
settle the difference in cash to the lessor. To fulfil these maintenance obligations, the Group has recognised airframe
heavy maintenance, engine performance maintenance, engine life limited part, landing gear, auxiliary power unit and
other material maintenance provisions. The provision is defined as a difference between the current condition and
redelivery condition of these maintenance components. The provision is accrued based on flight hours flown until the next
maintenance event or the redelivery and recognised in the aircraft overhaul costs in the income statement. The provision is
reversed at the maintenance event or redelivery. The price of the flight hour depends on the market price development of
the maintenance costs. Estimated future cash flows are discounted to the present value. The maintenance market prices are
mainly denominated in US dollars, which is why the amount of maintenance provision changes due to currency fluctuation
of the dollar. The unrealised changes in currencies are recognised in changes in exchange rates of fleet overhauls.
The final check and painting required at redelivery are considered unavoidable maintenance costs that realise when the
aircraft is redelivered to the lessor, irrespective of the time or flight hours. The counterpart of the provision is recorded in the book
value of the right-of-use asset at the commencement of the lease. Respectively, costs depending on the usage of the aircraft
are not considered as part of the right-of-use asset cost, but these are recognised according to the principles presented above.
Restructuring provisions are recognised when the Group has prepared a detailed restructuring plan and has begun
to implement the plan or has announced it.
Maintenance reserves of the fleet
The measurement of aircraft maintenance provisions requires management judgement especially related to the
timing of maintenance events and the valuation of maintenance costs occurring in the future. The future maintenance
costs and their timing are dependent on, for example, how future traffic plans actually realise, the market price
development of maintenance costs and the actual condition of the aircraft at the time of the maintenance event. The
ultimate duration of the COVID-19 pandemic may have an impact on the level of future maintenance expenses, which
could cause the actual outcome to differ from the estimates currently made.
EUR mill.
Aircraft
maintenance
provision
Other
provisions 2021
Aircraft
maintenance
provision
Other
provisions 2020
Provision at the
beginning of period . . . . . .
Provision for the period . . . . . .
Provision used -. -. -. -. -. -.
Provision reversed -. -. -. -. -. -.
Provision for right-of-use
assets redelivery . . . .
Unwinding of discount . . . .
Exchange rate
differences . . -. -.
Total . . . . . .
Of which non-current . . . . . .
Of which current . . . . . .
Total . . . . . .
Non-current aircraft maintenance provisions are expected to be used by 2033. Items related to restructuring
actions due to COVID-19 impacts included in other provisions were mainly used by the end of 2021.
On balance sheet, non-current provisions and other liabilities 200.7 million euro (161.1) includes, in addition to
provisions, other non-current liabilities 14.7 million euro (5.2), which mainly consist of long-term incentives for the
Executive Board and other personnel as well as received lease deposits.
1.3.7 Items affecting comparability
Finnair uses alternative performance measures in its internal reporting to the chief operative decision maker,
or Finnair Executive Board. The figures are referred to in the European Securities Markets Authority (ESMA)
Guidelines on Alternative Performance Measures, which Finnair uses to describe its business and financial
performance development between periods. The alternative performance measures do not replace IFRS
indicators, but shall be read in conjunction with key figures in accordance with IFRS financial statements.
Unrealised exchange rate differences of mainly in US dollars denominated aircraft maintenance provisions
and unrealised fair value changes of derivatives where hedge accounting is not applied are excluded from
comparable operating result. These exchange rate and fair value effects are included in the comparable
operating result only when they will realize. In addition, gains and losses on aircraft and other transactions,
certain changes in defined benefit pension plans and restructuring costs are not included in the comparable
operating result.
In the table below, ‘Reported’ corresponds to the presentation of consolidated income statement adopted on
1 January 2021. Items affecting comparability previously individually indentified on the income statement have
been included in those line items in the income statement to which they belong by their nature. ‘Comparable’
corresponds to the presentation of consolidated income statement previously used, which presented items
affecting comparability, ‘Comparable EBITDA’ and ‘Comparable operating result’.
2021 2020
EUR mill. Reported
Items
affecting
compara-
bility
Comparable
Reported
Items
affecting
compara-
bility
Comparable
Revenue . . . .
Other operating income . -. . . -. .
Operating expenses
Staff and other crew
related costs -. -. -. -. -. -.
Fuel costs -. . -. -. . -.
Capacity rents -. -. -. -.
Aircraft materials and
overhaul -. . -. -. -. -.
Traffic charges -. -. -. -.
Sales, marketing and
distribution costs -. -. -. -.
Passenger and handling
services -. -. -. -.
Property, IT and other
expenses -. . -. -. . -.
EBITDA - -. - -.
Depreciation and
impairment -. -. -. -.
Operating result -. -. -. -. -. -.
Items affecting comparability of 23.3 million euro (0.9) in other operating income mainly consist of the gain on the
sale and leaseback of four A350 aircraft and the sale of Suomen Ilmailuopisto Oy. Items affecting the comparability
of -25.5 million euro (12.2) in aircraft materials and overhaul include maintenance provisions related to the sale and
leaseback arrangement of four A350 aircraft in addition to unrealised exchange rate differences.
Staff and other crew related costs include items affecting the Group’s result positively by 19.5 million euro
(119.7). This mainly consists of amendments made to the collective labour agreement relating to a curtailment
of occupational disability pensions and withdrawn pilots’ early retirement announcements. In 2020, these costs
included a 132.8 million euro positive one-off effect relating to amendments made to Finnair’s pension fund terms
and pilots’ early retirement announcements as well as termination benefit costs of 13.1 million euro.
= Accounting principles
= Critical accounting estimates
Finnair – Financial Information 2021 56
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
1.3.8 Employee benefits
1.3.8.1 Employee benefit expenses and share-based payments
Share-based payments
Finnair provides a number of share-based compensation plans for its employees, under which the Group receives
services from employees as consideration for share-based payments. Regarding share-based incentive plans for
key personnel, the awards are paid only if performance criteria set by the Board of Directors is met. Share-based
savings plan for employees (FlyShare) requires the employees to remain in Finnair’s service for the defined period, but
payment does not depend on any performance criteria.
The total expense for share-based payments is recognised over the vesting period, which is the period over which
all of the specified vesting conditions are to be satisfied. Share-based payments that are settled net of taxes are
considered in their entirety as equity-settled share-based payment transactions. The reward is valued based on the
market price of the Finnair share as of the grant date, and recognised as an employee benefit expense over the vesting
period with corresponding entry in the equity. Income tax paid to tax authorities on behalf of employee is measured
based on the market price of the Finnair share at the delivery date and recognised as a decrease in equity. If the
reward includes the portion settled in cash, it is accounted for as a cash-settled transaction. The liability resulting from
the cash-settled transactions is measured based on the market price of the Finnair share at the balance sheet date
and accrued as an employee benefit expense for service period with corresponding entry in the liabilities until the
settlement date.
Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date,
or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises
termination benefits when it is demonstrably committed to a termination. Group is demonstrably committed when
it has a detailed formal plan to terminate the employment of current employees without possibility of withdrawal. In
the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the
number of employees expected to accept the offer.
Accounting principles related to pension benefits are described in the note 1.3.8.2 Pensions.
Staff and other crew related costs
EUR mill. 2021 2020
Wages and salaries . .
Defined contribution schemes . .
Defined benefit schemes -. -.
Pension expenses total . -.
Other social expenses . -.
Salaries, pension and social costs . .
Operative staff related costs . .
Leased and outsourced crew . .
Other personnel related costs . .
Total . .
At Finnair, the total salary of personnel consists of fixed pay, allowances, short- and long-term incentives, fringe
benefits and other personnel benefits. The total amount of short-term incentives excluding social security costs
recognised for 2021 were 5.8 million euro. Short-term incentives for the financial year 2020 were cancelled due to
the implementation of the savings program resulting from the pandemic.
In 2020, Finnair established a new long-term Rebuild incentive program for the personnel. As part of the
program, employee can earn a cash reward equaling to one month base salary, when the targets set by the
Board of Directors are met. A maximum of two months’ base salary can be paid when targets are exceeded.
The possible reward is paid during third quarter 2023. The program is available to those employee groups
which have agreed to actions related to staff cost savings. In 2021, the cost recognised for the Rebuild incentive
established for personnel was 3.8 million euro (2.2) excluding social security costs. The performance criteria are
= Accounting principles
the same as those of the Rebuild incentive plan established for the Executive Board, which is described in the
section Share-based payments of this note.
Staff and other crew related costs include one-off items which had a positive 19.5 million euro (119.7) impact on
the Group’s result. This mainly consists of amendmends made to the collective labour agreement relating to a
curtailment of occupational disability pensions and withdrawn pilots’ early retirement announcements. In 2020,
the one-off items included a 132.8 million euro positive effect relating to amendments made to Finnair’s pension
fund terms and pilots’ early retirement announcements as well as termination benefit costs of 13.1 million euro.
Transfer to Personnel Fund
Finnair has a Personnel Fund that is owned and controlled by the personnel. A share of Finnair’s profits is
allocated to the fund. The share of profit allocated to the fund is determined based on the targets set by the
Board of Directors. The participants of the performance share plan (LTI) are not members of the Personnel
Fund. Personnel Fund is obliged to invest part of the bonus in Finnair Plc’s shares. In 2021 and 2020, no profit was
allocated to the fund because the set performance criteria were not met.
Liabilities related to employee benefits
EUR mill. 2021 2020
Holiday payments . .
Other employee related accrued expenses . .
Liabilities related to employee benefits . .
Other employee related accrued expenses mainly include witholding tax and accrued expenses related to
social security costs and remunerations. Other non-current liabilities include the Rebuild incentives of 7.8 million
euro. In addition, restructuring provisions related to termination benefits (see note 1.3.6 Provisions) amounted to 1.1
million euro (8.1).
Management remuneration
The President and CEO and Executive Board remuneration
Thousand euros
President
and CEO
Topi Manner
Executive
Board Total 2021
President
and CEO
Topi Manner
Executive
Board Total 2020
Fixed pay  , ,  , ,
Short-term incentives
Fringe benefits      
Share-based payments   ,   
Pensions (statutory)*      
Pensions (voluntary,
defined contribution)    
Total , , ,  , ,
* Statutory pensions include Finnair’s share of the payment to Finnish statutory “Tyel” pension plan.
Management remuneration is presented on an accrual basis. Share-based payments include LTI plans and
employee share savings plans and are recognised over the vesting period until the end of the lock-up period,
according to IFRS 2. Therefore the costs accrued and recognised for the financial year include effects from
several share-based payment plans independent of when the shares are delivered. Management has not been
provided any other long-term incentives in addition to share-based payments.
During 2020, the CEO and Executive Board voluntarily cut their base salaries for a temporary period and
during 2021, they were not paid holiday bonus.
In conjunction with the rights offering in 2020, the EU commission set restrictions to CEO and Executive Board
remuneration covering years 2020-2022. The restrictions cover variable compensation payouts and any
Finnair – Financial Information 2021 57
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
changes to fixed compensation during the years 2020-2022. As a result, the Board of Directors decided to cancel
the 2018-2020, 2019-2021 and 2020-2022 LTI plans as well as the 2020 and 2021 STI plan for the CEO and Executive
Board. A new share-based long-term Rebuild incentive program was established for the CEO and Executive
Board for the period 7/2020-6/2023.
During 2021, the voluntary pension plans of one member of the Executive Board have been arranged through
a Finnish pension insurance company. At the end of 2020 only one member of the Executive Board had this
voluntary pension plan. The retirement age for this members of the Executive Board is 63 years. The plan is a
defined contribution plan.
More information on share-based payment schemes can be found later in this note and in a separate
Remuneration report as well as on company website.
Remuneration paid to Board of Directors
Compensation paid
for board service, EUR Total 2021
Fixed
remuneration
Meeting
compensation
Fringe
benefits Total 2020
Board of Directors , , ,  ,
Alahuhta-Kasko Tiina , , ,
Barrington Colm , , ,
Brewer Montie , , ,
Du Mengmeng, until 17
March 2021 , , ,
Erlund Jukka , , ,
Jakosuo-Jansson Hannele,
from 17 March 2021
onwards , , ,
Karvinen Jouko , , , 
Kjellberg Henrik , , ,
Strandberg Maija , , ,
Tuominen Jaana, until 17
March 2021 , , ,
The remuneration of the Board of Directors is presented on an accrual basis. The compensation paid to the
members of the Board of Directors include annual remuneration and meeting compensation. The members of
the Board of Directors are entitled to a compensation for travel expenses in accordance with Finnair’s general
travel rules. In addition, the members of the Board of Directors and their spouses have a limited right to use staff
tickets in accordance with Finnair’s staff ticket rules. These tickets constitute taxable income in Finland and are
reported as fringe benefits in the table above.
During 2020 the Board of Directors voluntarily cut their annual remunerations for a temporary period, until the
Annual General Meeting 2021.
Share-based payments
The note below provides description and information on effects of the Group’s share-based incentive schemes.
More information on share-based personnel bonus schemes can be found in Remuneration report.
Performance share plan for key personnel (LTI)
Finnair’s share-based incentive plan is a performance-based, annually commencing long-term incentive (LTI)
arrangement, and the commencement of each new plan is subject to a separate decision made by Finnair’s
Board of Directors. The purpose of these plans is to encourage the management to work to increase long-term
shareholder value. The Finnish Government’s guidance regarding the remuneration of executive management
and key individuals have been taken into consideration when designing the plans.
In all ongoing LTI plans, the members of Finnair’s Executive Board are expected to accumulate their share
ownership in Finnair until it corresponds to their annual gross base salary and thereafter retain it for as long as
they are members of the Executive Board.
The potential reward will be delivered in Finnair shares. The shares are delivered to the participants during
the year following the performance period, except for the new Rebuild incentive where the performance period
ends in June 2023 and the reward is delivered in the same year.
The target levels and maximum levels set for the criteria are based on the long-term strategic objectives set
by the company’s Board of Directors. Criteria are monitored against the performance on a quarterly basis.
The performance criteria of the plan for 2018-2020 were met at 22% level while the target was at 100% and the
maximum earning level at 200%. In the comparison period, the performance criteria applied to the 2017-2019
plan was met at 194% level.
The expense recognised for 2021 amounted to 1.7 million euros (0.6). The amount expected to be transferred to
the tax authority to settle the employee’s tax obligation is 5.3 million euros (6.0). The cost related to share-based
payments is recognised in staff and other crew related costs and unrestricted equity funds, except the cash-
settled portion of the Rebuild incentive plan in liabilities related to employee benefits.
Rebuild incentive plan 7/2020-6/2023
In 2020, a new Rebuild incentive plan for CEO and Executive Board was launched. The program contains a three-
year performance period (7/2020–6/2023) and it is designed to contain only this one plan. The potential share
rewards will be delivered to the participants in a pre-determined proportion of shares and cash after the end
of the performance period and the rewards are at the participants’ free disposal after delivery. If the combined
value of incentive rewards in 2023 exceeds 120% of executive’s annual salary, the exceeding part is deferred to
coming years so that the combined incentive payout in any year does not exceed 120% of the executive’s annual
base salary. The total expense for the plan is recognised over the vesting period, which is three years. The grant
date is at the beginning of performance period and the compensation is measured in shares.
The payout opportunity is defined in the beginning of each plan in relation to the participants annual base
salary. If the performance criteria set for the plan are met at the target level, the incentive paid in Finnair shares to
Finnair share-based payment plans
2016 2017 2018 2019 2020 2021 2022 2023 2024
LTI 2016–2018
LTI 2017–2019
LTI 2018–2020
LTI 2019–2021
LTI 2020–2022
LTI 2021–2023
Earnings / savings period Lock-up period for Executive Board
Lock-up period Share delivery
Fly Share 2018
Fly Share 2019
Fly Share 2020
Fly Share 2021
LTI Rebuild
7/2020–6/2023*
* Total incentive rewards cannot exceed 120% of annual base salary in any year,
possible exceeding amount is deferred from 2023 to following years.
Finnair – Financial Information 2021 58
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
the President and CEO or other member of the Executive Board participating in the plans will be a total of 180% of
the participant’s annual base salary. If the performance criteria set for the plan are met at the maximum level, the
incentive paid in Finnair shares will be a total of 360% of the participant’s annual base salary.
The amount corresponding to tax payable at the time of payment is first deducted from the gross reward
defined as shares. The net reward is delivered in a combination of cash and shares in a proportion decided by
the Board of Directors.
The performance criteria are set for the whole 3-year period as well as for three 12-month mid-term periods:
• 7/2020–6/2021: comparable EBITDA, gearing, Lost Time Injury Frequency and CO
2
emissions (measured
through fuel efficiency) as well as
• 7/2021–6/2022: comparable EBIT, revenue, employee retention and CO
2
emissions (measured through fuel
efficiency).
The criteria for the whole 3-year period, is cash flow from operating activities which functions as a multiplier
(0-2) for the whole program. This means that the threshold level needs to be reached in order for any reward to
be paid.
Incentive plans commencing from 2017 onwards
In 2017, a new LTI arrangement was launched and there are three plans ongoing (2019–2021, 2020–2022 and
2021–2023). In the revised structure the annually commencing performance share plans retain the three-year
performance period like before. The potential share rewards will be delivered to the participants in one tranche
after the performance period and they are at the participants’ free disposal after delivery. In conjunction with
the rights offering in 2020, according to the restrictions set by EU commission, the Board of Directors decided to
cancel the 2018–2020, 2019–2021 and 2020–2022 LTI plans for the CEO and Executive Board. The total expense
for the plans is recognised over the vesting period, which is three years. The grant date is at the beginning of
performance period and the compensation is measured in shares.
The payout opportunity is defined as a fixed share amount in the beginning of each plan in relation to the
participants annual base salary. Therefore, changes in the share price during the performance period impacts
the value of the payout opportunity. If the performance criteria set for the plan are met at the target level, the
incentive paid in Finnair shares to the President and CEO or other member of the Executive Board participating
in the plans will be 20% of the participant’s annual base salary. If the performance criteria set for the plan are met
at the maximum level, the incentive paid in Finnair shares will be 60% of the participant’s annual base salary. The
maximum level for incentives for other key personnel is 20–50% of the person’s annual base salary. As a result of
the rights issue in 2020, the share allocations for the ongoing 2018–2020, 2019–2021 and 2020–2022 plans were
adjusted 5.5-fold in order for the earning opportunities to retain their value.
The maximum combined value of all variable compensation (including both short- and long-term incentives)
paid to an individual participant in any given calendar year may not exceed 120% of the participant’s annual
gross base salary. The amounts of shares paid are stated before tax. The number of shares delivered will be
deducted by an amount corresponding to the income tax and transfer tax payable for the incentive at the time
of payment.
The performance criteria applied to the plans are:
• 2018–2020 plan: earnings per share (EPS, 50% weight) and revenue growth (50% weight),
• 2019–2021 plan: earnings per share (EPS, 50% weight), revenue growth (16.7% weight) and unit cost with
constant currencies and fuel price (CASK, 33.3% weight),
• 2020–2022 plan: earnings per share (EPS, 50% weight) and unit cost with constant currencies and fuel price
(CASK, 50% weight) as well as
• 2021–2023 plan: earnings per share (EPS, 45% weight), unit cost with constant currencies and fuel price
(CASK, 45% weight) and fuel efficiency (10% weight).
Incentive plan commenced in 2016
The restriction period of three years is ongoing for the 2016–2018 plan of the Executive Board, during which the
participant may not sell or transfer the shares received as a reward. The total expense for the plan is recognised
over the vesting period, which is six years. The compensation was measured during performance period in cash,
and only after performance period at grant date translated into shares.
The payout opportunity was defined as a fixed euro amount in the beginning of plan in relation to the
participants annual base salary. If the performance criteria set for the plan were met at the target level, the
incentive paid in Finnair shares to the President and CEO or other member of the Executive Board participating
in the plans was 30% of his or her annual base salary. If the performance criteria set for the plan were met at
the maximum level, the incentive paid in Finnair shares was 60% of the participant’s annual base salary. The
performance criteria applied to the plan 2016–2018 were Return on Capital Employed (ROCE, 50% weight) and
Total Shareholder Return (TSR, 50% weight).
2015–
2017
2016–
2018
2018–
2020
2019–
2021
2020–
2022
Rebuild
2020–
2023
2021–
2023 Total
Grant date
 Dec

 Feb

 Feb

 Feb

 Feb

 Oct

 Jan

Grant price, euros* . . . . . . .
Number of persons at the
end of the reporting year   
Expenses recognised for
the financial year, LTI’s total
(million euros) . . . . . . . .
of which share-settled
(net of taxes) . . . . . . . .
of which cash-settled . .
Liability related to LTI’s total . .
Shares granted, million
shares** . . .*** .*** .*** . . .
* Grant price until plan granted on 7 February 2020 has been adjusted by a bonus element included in the rights issue in 2020.
** At the end of the performance period of 2015–2017 and 2016–2018 plans, the vested euros were translated into shares, and
granted and delivered. In the other plans shares are earned during vesting period, from the beginning of the program.
*** As a result of the rights issue in 2020, the share allocations for the ongoing 2018–2020, 2019–2021 and 2020–2022 plans
were adjusted 5.5-fold in order for the earning opportunities to retain their value. These plans were cancelled for the CEO and
Executive Board.
FlyShare employee share savings plan 2013 onwards
Finnair offers an annually commencing share savings plan for its employees. Commencing of each plan is
subject to the decision of Finnair’s Board of Directors. The first plan commenced in 2013, and for the time being
there are three plans ongoing. The objective of the plan is to encourage employees to become shareholders
in the company, and to thereby strengthen the employees’ interest in the development of Finnair’s shareholder
value and reward them in the long-term.
Each plan consists of one year savings period followed by two year lock-up period. Through the plan, each
eligible Finnair employee is offered the opportunity to save part of his or her salary to be invested in Finnair
shares. The maximum monthly savings are 8% and the minimum 2% of each participant’s gross base salary per
month. Shares are purchased with the accumulated savings at the market price quarterly, after the release of
Finnair’s interim reports.
Finnair awards 110 bonus shares (was 20 prior the share issue in 2020) to each employee that participates in
the plan for the first time, and continues savings at least the first three months of the plan. The bonus shares are
delivered in October each year, and the effect is recognised as expense for the period. The plan lasts for three
years, and Finnair awards each participating employee with one share for each two shares purchased and held
at the end of three-year period. The awarded bonus and additional shares are taxable income for the recipient.
The number of shares delivered will be deducted by an amount corresponding to the income tax and transfer
tax payable for the shares at the time of payment. The cost related to additional shares delivered is recognised
as expense during vesting period.
Finnair – Financial Information 2021 59
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
The expense recognised for FlyShare employee share saving plans in 2021 amounted to 1.3 million euros (1.3).
The amount expected to be transferred to the tax authority to settle the employee’s tax obligation is 1.0 million
euros (0.7). The cost related to employee share saving plans is recognised in staff and other crew related costs
and unrestricted equity funds.
1.3.8.2 Pensions
Defined benefit and defined contribution plans
Pension plans are classified as defined benefit and defined contribution plans. Payments made into defined
contribution pension plans are recognised in the income statement in the period to which the payment applies.
Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement,
usually dependent on one or more factors such as age, years of service and compensation. Current service cost is the
present value of the post employment benefit, which is earned by the employees during the year and it is recognised
as staff and other crew related costs. The liability recognised in the balance sheet in respect of defined pension plans
is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets.
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
The present value of the defined benefit obligations is determined by discounting the estimated future cash flows using
interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid,
and that have terms to maturity approximating to the terms of the related pension obligation. Actuarial gains and
losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in
other comprehensive income in the period in which they arise. If fair value of plan assets is higher than present value of
funded obligations, the net amount is presented as pension assets in the Group’s balance sheet.
Pension obligations
The present value of the pension obligations depends on a number of factors that are determined on an actuarial
basis using a number of assumptions. Any changes in these assumptions will impact the carrying amount of pension
obligations. The note below includes a description of exposure to most significant risks and a sensitivity analysis on
impacts of changes in actuarial assumptions.
Description of pension plans at Finnair
The statutory pension cover of the employees of the Group’s Finnish companies has been arranged in a Finnish
pension insurance company. The statutory pension cover is a defined contribution plan. The Group’s foreign
sales offices and subsidiaries have various defined contribution plans that comply with local rules and practices.
CEO has no supplementary pension plan. The supplementary defined contribution pension plan of one member
of the Executive Board is arranged in a pension insurance company. The retirement age for this member is 63
years.
Other supplementary pension cover of the Group’s domestic companies has been arranged mainly in the
Finnair Pension Fund, in which the pension schemes are defined benefit plans. These pension plans cover old
age supplementary pensions and disability pensions exceeding the pension cover under the Employment
Pensions Act. The survivors’ pensions under the supplementary pension cover applies on a limited basis to
pensioners who have retired on 1 January 2005 at the latest, as well as to recipients of benefits previously in
accordance with Finnair Plc’s survivor’s pension rules who transferred to the pension fund on 31 December 2015.
The Pension Fund’s old age and occupational disability pension scheme has been closed to other employees
since 1 February 1992 and to pilots since 1 January 2010. After this, pilots have only been covered by the
occupational disability pension scheme if they have not switched to another work offered by the employer. The
pension fund as a whole has been closed on 31 May 2021.
Old age pensions of pilots recruited in 2015 or later are defined contribution schemes arranged in a life
insurance company. Supplementary pension cover has also vested pension right on a limited basis and
the retirement age of the pension fund’s vested pension is tied to a change in the retirement age under the
Employment Pensions Act that came into force in 2017 or an event under disability pension cover under the
Employment Pensions Act. Beginning from 2021, the earnings or supplementary pensions payable on which the
= Accounting principles
= Critical accounting estimates
pension fund’s defined benefit supplementary pension cover is based are not adjusted by the pension index
increment. The supplementary pension liability of the pension fund is fully covered in accordance with Finnish
legislation. In addition, approximately 500 Finnair pilots have a separate defined contribution supplementary
pension arranged in a life insurance company in addition to the pension fund’s defined benefit old age pension
cover, if the pilot continues to work as pilot over the age of 55 years and retires from his/her job.
Exposure to most significant risks
Volatility of plan assets: Some of the plan assets are invested in equities which causes volatility but are in the long
run expected to provide higher returns than corporate bonds. The discount rate of plan obligations is defined
based on the interest rates of corporate bonds.
Changes in bond yield: A decrease in corporate bond yields increases plan obligations due to the fact that
the pension obligation is discounted to net present value with a rate that is based on corporate bond rates. This
increase in plan obligations is partially mitigated by a corresponding increase in the value of corporate bonds in
plan assets.
Life expectancy: The most significant part of the provided pension benefits relate to old age pensions.
Therefore, an increase in the life expectancy rate results in an increase of plan obligations.
Defined benefit pension plans
EUR mill. 2021 2020
Items recognised in the income statement
Current service costs . .
Past service cost -. .
Amendments . -.
Settlements and curtailments -.
Service cost total, recognised in staff costs -. -.
Net interest expenses and foreign exchange differences -. .
Total included in the income statement -. -.
Amounts recognised through other comprehensive income
Experience adjustment on plan obligation . -.
Changes in financial actuarial assumptions -. .
Changes in demographic actuarial assumptions .
Net return on plan assets -. -.
Amounts recognised through other comprehensive income total -. .
Number of persons involved, pension fund , ,
Number of persons involved, other defined benefit plans  
Items recognised in the balance sheet
EUR mill. 2021 2020
Pension
assets
Pension
obligations
Pension
assets
Pension
obligations
Present value of funded obligations -. -. -. -.
Fair value of plan assets . . . .
Pension assets (+) / pension obligations (-) in the balance sheet . -. . -.
Pension assets 80.9 million euro (31.8) includes 78.9 million euro (31.0) related to defined benefit plans insured
through the pension fund and 2.0 million euro (0.9) related to other defined benefit plans. Pension obligations
Finnair – Financial Information 2021 60
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
includes 0.7 million euro (1.5) related to other defined benefit plans. The change during 2021 mainly is due to net
return on plan assets, the amendments made to the collective labour agreement relating to a curtailment of
occupational disability pensions and withdrawn pilots’ early retirement announcements.
Changes in pension obligations
EUR mill. 2021 2020
Fair value of pension obligations at 1 January . .
Current service costs . .
Past service cost -. .
Settlements and curtailments -.
Amendments -. -.
Interest expenses and foreign exchange differences . .
Expense recognised in income statement -. -.
Changes in actuarial assumptions -. .
Experience adjustment on plan obligation . -.
Remeasurements recognised through OCI -. .
Benefits paid -. -.
Net present value of pension obligations . .
Changes in plan assets
EUR mill. 2021 2020
Fair value of plan assets at 1 January . .
Administration expenses -. -.
Settlements and curtailments -.
Amendments -.
Interest income and foreign exchange differences . .
Items recognised through profit and loss . .
Acturial gain (loss) on plan assets . .
Items recognised through OCI . .
Contributions paid . .
Benefits paid -. -.
Fair value of plan assets at 31 December . .
Plan assets are comprised as follows
% 2021 2020
Listed shares . .
Debt instruments . .
Property . .
Other . .
Total . .
Plan assets of the pension fund include Finnair Plc shares with a fair value of 0.9 million euros (1.1) and buildings
used by the Group with a fair value of 12.8 million euros (18.2).
Defined benefit plans: principal actuarial assumptions
% 2021 2020
Discount rate % .% .%
Annual rate of future salary increases % .% .%
Future pension increases % .% .%
Estimated remaining years of service
Sensitivity analysis
The sensitivity analysis describes the effect of a change in actuarial assumptions on the net defined benefit
obligation. The analyses are based on the change in the assumption while holding all other assumptions
constant. The method used is the same as that which has been applied when measuring the defined benefit
obligation recognised in the balance sheet.
Sensitivity analysis on principal actuarial assumptions
Actuarial assumption
Change in
assumption
Impact when
increase in
assumption,
EUR mill. %
Impact when
decrease in
assumption,
EUR mill. %
Discount rate % .% -. -.% . .%
Annual rate of future salary
increases % .% . .% -. -.%
Life expectancy at birth  year . . %
According to Finnish legislation, the pension fund needs to be fully funded. Finnair does not expect to pay
contributions to the pension fund in 2022. The duration of defined benefit obligation is 10 years. The duration is
calculated by using a discount rate of 0.74%.
Finnair – Financial Information 2021 61
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
2 Fleet and other fixed assets and leasing
arrangements
Fleet and other fixed assets and leasing arrangements includes notes particularly related to the aircraft fleet.
Notes related to the aircraft operated by the Group are combined in this section so that the general view of the
fleet is easier to understand. In addition to owned aircraft, the notes cover leased aircraft under different kinds of
aircraft lease arrangements.
The assets owned and leased by Finnair consist mostly of aircraft operated by Finnair and Norra. In 2021, the
number of owned aircraft was 41 (45) and leased 43 (38). As at the end of 2021, four narrow-body aircraft were
recognised as assets held for sale.
Fleet in Finnair balance sheet
EUR mill. 2021 2020 Change
Advances paid for aircraft . . .
Owned aircraft . ,. -.
Right-of-use fleet  . . ,
Fleet total  . ,. -,
Fleet sublease receivables . . -.
Fleet lease liabilities ,. . .
Depreciation for the period of owned aircraft -. -. .
Depreciation for the period of right-of-use fleet -. -. -.
Impairment for the period related to owned aircraft -. -. .
Assets held for sale (fleet) . .
= Content of the section
= Accounting principles
Fleet
A350 (17) A330 (8) A321 (19) A320 (10) A319 (6)
E190 Norra operated (12) ATR Norra operated (12)
Narrow-body, 59
Owned, 41 Lease, 43
Wide-body, 25
During 2021, Finnair executed several aircraft financing transactions as part of its refinancing plan resulting from
the COVID-19 pandemic. The most significant transactions comprised four sale and leaseback arrangements of
the A350 aircraft which decreased the number of the owned aircraft and increased the number of the Finnair’s
right-of-use fleet. In addition, Finnair’s right-of-use fleet increased due to a lease financing arrangement of one
A350 aircraft, where Finnair assigned the purchase right of the aircraft to a third party and leased it back for its
own operation. Further details on these transactions is presented in notes 2.1-2.3 and 3.3.
The number of aircraft operated by Finnair increased with one A350 aircraft during 2021. However, due to the
continuing COVID-19 pandemic, not all fleets were used in its full capacity. As at the balance sheet date, 71 out
of Finnair’s 80 aircraft recognised in fixed assets were kept at Helsinki-Vantaa airport and maintained in such a
condition that they are flight-ready. Three wide-body aircraft and 6 narrow-body aircraft were not actively used
in the operations and were temporarily stored. This represents approximately 11% or 82.4 million euro of the year-
end carrying value of the total fleet. All temporarily stored aircraft are expected to be used in their full capacity
within next two to three years.
2.1 Fleet and other fixed asset
Fleet and other fixed assets are stated at historical cost less accumulated depreciation and accumulated
impairment loss if applicable. Fleet includes aircraft and aircraft prepayments. The acquisition cost of aircraft
is allocated to the aircraft frame, cabin components, engines and maintenace components as separate assets.
Maintenance components include heavy maintenance, C-checks, APU (auxiliary power unit) restorations, landing gear
overhauls and thrust reversers of aircraft frames, as well as performance restoration and maintenance of life limited
parts of engines. Aircraft frames and engines are depreciated over the useful life of the aircraft. The maintenance
components are depreciated during the maintenance cycle. Cabin components are depreciated over their expected
useful life. Significant modifications of owned or leased aircraft are capitalised as separate items and depreciated
over their expected useful life, which in the case of leased aircraft cannot exceed the lease period. Replaced
components are derecognised from the balance sheet.
Advance payments for aircraft are recorded as fleet fixed assets. Interest costs related to advance payments are
capitalised as acquisition cost for the period at which Finnair is financing the manufacturing of the aircraft. Hedging
gains or losses related to the fair value changes of firm, USD nominated purchase commitments for aircraft are
recognised in advance payments. Advance payments, realised foreign exchange hedges and capitalised interests are
recognised as part of the aircraft acquisition cost once the aircraft is delivered and taken to commercial use.
Other fixed assets include rotable aircraft spare parts, other fixed assets and their prepayments. Other fixed assets
are depreciated during their expected useful life.
Intangible assets mainly include computer software and connection fees. Connection fees are not depreciated.
Gains and losses on disposal of tangible and intangible assets are included in other operating income and expenses.
Useful life and residual value
Depreciation of fleet and other fixed assets is based on the following expected economic lifetimes:
• New aircraft and engines as well as flight simulators (other equipment) on a straight-line basis as follows:
– Airbus A350 fleet, over 20 years to a residual value of 10 %
– Airbus A320 and Embraer fleet, over 20 years to a residual value of 10 %
– Airbus A330 fleet, over 18 years to a residual value of 10 %
– Turboprop aircraft (ATR fleet), over 20 years to a residual value of 10 %
• Heavy maintenance, C-checks, APU and landing gear restorations and thrust reversers of aircraft frame, as well
as performance maintenance and life limited parts of the engines, on a straight-line basis during the maintenance
period
• Cabin components, over 7–20 years
• Rotable spare parts and components, over 15–20 years to a residual value of 10 %
• Buildings, over 10–50 years from the time of acquisition to a residual value of 10 %
• Other tangible assets, over 3–15 years
• Computer software, over 3–8 years
The residual values and estimated useful lives of the assets are assessed at each closing date and if they differ
significantly from previous estimates, the depreciation periods and residual values are changed accordingly.
As part of the investment optimizations resulting from the COVID-19 pandemic, the useful life of Finnair’s current
Airbus A320 fleet was prolonged. As a result, the depreciation period and the residual values of the existing A320
Finnair – Financial Information 2021 62
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
fleet’s aircraft and engines was extended from 20 years to a period of 25-29 years with 0% residual value. The change
decreased the depreciations of 2021 by 4.7 million euro. The decrease in 2022 is approximately 10 million euro.
Assets held for sale
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be
recovered principally through a sale transaction, a sale is considered highly probable and expected to take place
within the next twelve months. Assets classified as held for sale are stated at the lower of the carrying amount or fair
value less cost to sell. Assets classified as held for sale are no longer depreciated.
Impairment
The Group reviews its fleet and other fixed assets for indication of impairment on each balance sheet date. Impairment
loss is recognized if an asset’s recoverable amount is below its carrying amount. The recoverable amount is determined
as the higher of the asset’s fair value less costs to sell or its value in use. The recoverable amount is defined for a cash
generating unit, and the need for impairment is evaluated at the cash generating unit level. The value in use is based on
the present value of the expected net future cash flows obtainable from the asset or cash-generating unit. Individual
assets are excluded from the cash generating unit if they no longer are held for service or are intended to be sold, and
are tested for impairment based on their fair value less costs to sell. Impairment testing, including the critical accounting
estimates and sources of uncertainty inherent in the calculations, is described in more detail in note 2.3.
Fleet 2021
EUR mill. Aircraft Advances Total
Acquisition cost 1 Jan 2021 ,. . ,.
Additions . . .
Disposals -. -.
Currency hedging of aircraft acquisitions -. -.
Reclassifications -. -. -.
Transfer to assets held for sale -.
Acquisition cost 31 Dec 2021 ,. . ,.
Accumulated depreciation and impairment 1 Jan 2021 -,. -,.
Disposals . .
Transfer to assets held for sale . .
Depreciation for the financial year -. -.
Impairment for the financial year -. -.
Accumulated depreciation and impairment 31 Dec 2021 -. -.
Book value 31 Dec 2021 . . .
During 2021, Finnair executed four sale and leaseback transactions of A350 aircraft which are shown as disposals
of own aircraft. Additionally, four A321 aircraft with a total book value of 18.5 million euro were transferred to
assets held for sale. Impairment for the financial year is presented in more detail in the note 2.3 Depreciation and
impairment. Currency hedging of aircraft acquisitions is described in the notes 3.5 Management of financial risks
and 3.8 Derivatives.
= Accounting principles
Fleet 2020
EUR mill. Aircraft Advances Total
Acquisition cost 1 Jan 2020 ,. . ,.
Additions . . .
Disposals -. -.
Currency hedging of aircraft acquisitions . .
Reclassifications* -. -. -.
Acquisition cost 31 Dec 2020 ,. . ,.
Accumulated depreciation and impairment 1 Jan 2020 -,. -,.
Disposals . .
Reclassifications* . .
Depreciation for the financial year -. -.
Impairment for the financial year -. -.
Accumulated depreciation and impairment 31 Dec 2020 -,. -,.
Book value 31 Dec 2020 ,. . ,.
* The presentation of fixed asset note has been clarified and for the comparison period the adjustment is included in the
reclassifications of fixed assets.
Other fixed assets 2021
EUR mill.
Aircraft
rotable
parts
Buildings
and land
Other
equipment
Intangible
assets Advances Total
Acquisition cost 1 Jan 2021 . . . . . .
Additions . . . . .
Disposals -. -. -. -. -.
Reclassifications . . -. -. -.
Transfer to assets held for sale -. -. -.
Acquisition cost 31 Dec 2021 . . . . . .
Accumulated depreciation
and impairment 1 Jan 2021 -. -. -. -. -.
Disposals . . . . .
Reclassifications . .
Depreciation for the
financial year -. -. -. -. -.
Accumulated depreciation
and impairment 31 Dec 2021 -. -. -. -. . -.
Book value 31 Dec 2021 . . . . . .
In addition to the aircraft rotable parts included in the other fixed assets, Finnair’s inventories include non-rotable
aircraft parts amounting to 16.9 million euro (19.2).
Finnair – Financial Information 2021 63
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Other fixed assets 2020
EUR mill.
Aircraft
rotable
parts
Buildings
and land
Other
equipment
Intangible
assets Advances Total
Acquisition cost 1 Jan 2020 . . . . . .
Additions . . . . .
Disposals -. -. -. -.
Reclassifications* -. . . -. -.
Acquisition cost 31 Dec 2020 . . . . . .
Accumulated depreciation
and impairment 1 Jan 2020 -. -. -. -. -.
Disposals . . . .
Reclassifications* . . -. -. .
Depreciation for the
financial year -. -. -. -. -.
Accumulated depreciation
and impairment 31 Dec 2020 -. -. -. -. . -.
Book value 31 Dec 2020 . . . . . .
* The presentation of fixed asset note has been clarified and for the comparison period the adjustment is included in the
reclassifications of fixed assets.
Capitalised borrowing costs
Aircraft Advances Total
EUR mill. 2021 2020 2021 2020 2021 2020
Book value 1 Jan . . . . . .
Additions . . . .
Disposals -. -. -. -.
Reclassifications . -. -. -. .
Depreciation . -. . -.
Book value 31 Dec . . . . . .
In 2021 borrowing costs of 1.4 million euro (3.3) were capitalised in tangible assets related to the Airbus A350
investment program. Finnair uses the effective interest rate to calculate the capitalised borrowing costs,
that represents the costs of the loans used to finance the investment. The average yearly interest rate in 2021
was 3.66% (4.29%). The general borrowings used to fund the acquisition of capital assets are included in the
calculation of the capitalisation rate.
Assets and liabilities held for sale
During 2021 Finnair transferred four A321 aircraft to assets held for sale with a total balance sheet value of
18.5 million euro. Impairment of 1.5 million euro was recognised in the profit and loss in connection with the
reclassification. In addition, the assets held for sale include spare parts held for sale totaling to 0.2 million euro.
Pledged assets and other restrictions on fixed assets
Finnair does not have fixed assets pledged as a security for bank loans. Fleet assets include three A350 aircraft
financed with JOLCO-loans and two owned A330 aircraft and one A350 aircraft where the legal title is transferred to
Finnair after loans are repaid. More details on these arrangements are presented in the note 3.3. Financial liabilities.
Investment commitments
Investment commitments as at the end of the year totalled 355.3 million euro (429) and it includes firm aircraft
orders, other aircraft related investments as well as committed maintenance investments. The amount of the
total commitments fluctuates between the order and the delivery date of the aircraft mainly due to EUR/USD
exchange rate changes and escalation clauses included in airline purchase agreements. The exact amount of
the commitments in relation to each aircraft is only known at the time of the delivery.
2.2 Leasing arrangements
The Group as lessee
Finnair assesses whether a contract that relates to tangible assets is, or contains, a lease in accordance with the IFRS
16. Lease agreements for tangible assets, where the contract conveys the right to use an identified asset for a period of
time in exchange for consideration, are classified as leases.
The lease term is the non-cancellable period for which a lessee has the right to use an underlying asset, together
with both periods covered by an option to extend the lease if Finnair is reasonably certain to exercise that option; and
periods covered by an option to terminate the lease if Finnair is reasonably certain not to exercise the option.
The lease recognition requirements are not applied to short-term leases, where at the commencement date, the
lease term is 12 months or less and does not contain a purchase option. Finnair considers the lease period to be the
period that is enforceable. Hence, for contracts where the contract term is non-fixed and Finnair has the right to
terminate the contract without the permission from the other party with no more than an insignificant penalty and
there are no other indications that the contract is enforceable, Finnair classifies these contracts as short-term. The
lease recognition requirements are also not applied to leases that are not material to Finnair.
For short-term leases and immaterial leases to which these exemptions are applied, the lease payments are
recognised as an expense on either a straight-line basis over the lease term, or on another systematic basis if that basis
is more representative of the pattern of Finnair’s benefit.
At the commencement date of a lease, Finnair recognises both a right-of-use asset and a lease liability.
The lease liability is the present value of future lease payments. At Finnair, lease payments for aircraft leases typically
contain typically payments that depend on interest rates and indices, that are included in the measurement of the lease
payments included in the measurement of the lease liability, using the interest or index rate at the commencement date of
the lease.
The right-of-use asset is measured at cost, comprising
• the amount of the initial measurement of the lease liability;
• any lease payments made at or before the commencement date, less any incentives received;
• any initial direct costs incurred by Finnair; and
• an estimate of costs to be incurred by Finnair in restoring the assets to the condition required by the terms and
conditions of the lease.
In most cases, Finnair is obliged to return leased aircraft and their engines according to the redelivery condition set
in the lease agreement. If at the time of redelivery, the condition of the aircraft and its engines differs from the agreed
redelivery condition, Finnair needs to either maintain the aircraft so that it meets the agreed redelivery condition or
settle the difference in cash to the lessor.
The maintenance costs can be divided into two main groups:
1) costs that are incurred independent of the usage of the aircraft / leasing period and
2) costs that are incurred dependent on the usage of the aircraft / leasing period
The final check and painting required at redelivery are considered unavoidable maintenance costs that realise
when the aircraft is redelivered to the lessor, irrespective of the time or flight hours. The counterpart of the provision is
recorded in the book value of the right-of-use asset at the commencement of the lease.
Respectively, costs depending on the usage of the aircraft are not considered as part of the right-of-use asset cost.
Finnair remeasures the lease liability when there is a lease modification that changes the scope of a lease or the
consideration for the lease, that was not part of the original terms and conditions of the lease, including changes in
lease payments resulting from a change in indices and rates used in variable aircraft lease payments. The amount of
the remeasurement of the lease liability is generally recognised as an adjustment to the right-of-use asset. However, if
the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of
the lease liability, the remaining measurement is recognised in profit or loss.
After initial recognition, right-of-use assets are measured at cost less any accumulated depreciations and accumulated
impairment losses. The assets are depreciated with a straight-line method from the commencement date to the shorter of
end of useful life of the right-of-use asset and the end of lease term. However, if the lease transfers ownership of the asset
to Finnair by the end of lease term or if the cost of the right-of-use asset reflects that Finnair will exercise a purchase option,
the right-of-use asset is depreciated from the commencement date to the end of useful life of the asset.
= Accounting principles
Finnair – Financial Information 2021 64
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
At Finnair aircraft lease contracts contain the interest rate implicit in the lease, even if the aircraft lease agreements
do not clearly define the interest rate implicit in the lease. Since the fair values of the aircraft are provided publicly
by third parties, Finnair is able to calculate the implicit interest rate for each qualifying aircraft operating lease. The
rate implicit in the lease is defined as the rate that causes the sum of the present value of the lease payments and
the present value of the residual value of the underlying asset at the end of the lease to equal the fair value of the
underlying asset. The implicit interest rate is determined by each aircraft lease contract separately.
For other lease contracts at Finnair, an implicit interest rate cannot be usually determined. The incremental borrowing
rate is therefore used and it is determined by each class of assets separately, based on management estimate.
Aircraft lease contracts are usually denominated in foreign currency (US dollars) and the foreign currency lease
liabilities are revalued at each balance sheet date to the spot rate. The lease payments (lease payments made) are
accounted for as repayments of the lease liability and as interest expense.
The Group as lessor
Agreements, where the Group is the lessor, are accounted for as operating leases, when a substantial part of the risks
and rewards of ownership are not transferred to the lessee. The assets leased under operating lease are included
in the tangible assets and they are depreciated during their useful life. Depreciation is calculated using the same
principles as the tangible assets for own use. Under the provisions of certain aircraft lease agreements, the lessee is
required to pay periodic maintenance reserves which accumulate funds for aircraft maintenance. Advances received
for maintenance are recognised as liability, which is charged, when maintenance is done. The rents for premises and
aircraft are recognised in the income statement as other operating income over the lease term.
Agreements, where the Group is the lessor, are accounted for as finance leases, when a substantial part of the risks and
rewards of ownership are transferred to the lessee. Finnair recognises assets held under a finance lease in its statement of
financial position and presents them as a receivable at an amount equal to the net investment of the lease.
Finnair subleases aircraft and buildings as well as ground equipment if needed, which are classified either as finance
leases or operating leases based on the individual contract terms.
At the commencement date, for the subleases, a net investment (lease receivable), equaling to the present value of
lease payments and the present value of the unguaranteed residual value, is recognised. The proportion of the right-
of-use asset subleased is derecognised from the balance sheet and the difference between the right-of-use asset and
the net investment is recognised in the profit or loss, in other operating income and expenses. Subsequently, the lease
payments received are accounted for as repayments of the lease receivable and as interest income.
Sale and leaseback
In sale and leaseback transactions, where Finnair sells and then leases back aircraft, Finnair measures the right-of-use
asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right-
of-use retained by the Group. Accordingly, Finnair recognises only the amount of any gain or loss that relates to the
rights transferred to the buyer-lessor.
Impairment
The Group reviews its leased assets for indication of impairment on each balance sheet date. Impairment loss is
recognized if the recoverable amount is below its carrying amount. The recoverable amount is defined for a cash
generating unit, and the need for impairment is evaluated at the cash generating unit level. The recoverable amount
is determined as the higher of the asset’s fair value less costs to sell or its value in use. The value in use is based on the
present value of the expected net future cash flows obtainable from the asset or cash-generating unit. Individual assets
are excluded from the cash generating unit if they no longer are held for service or are intended to be sold, and are
tested for impairment based on their fair value less costs to sell. Impairment testing, including the critical accounting
estimates and sources of uncertainty inherent in the calculations, is described in more detail in note 2.3.
Leasing arrangements
Determining the interest rate and lease term used in discounting the lease payments, estimating the redelivery
obligations of aircraft leases and the classification of sublease agreements to operating and financial leases require
management discretion in interpretation and application of accounting standards.
The COVID-19 pandemic did not have a significant impact on the terms of the leasing arrangements of the Group,
neither did it significantly increase the amount of discretion related to abovementioned critical accounting estimates
and sources of uncertainty. The pandemic did not, for example, have significant impact on the estimated lease terms
as extension options are usually not considered in the initial lease term determination. Additionally, the impact of
contracts terminated early during the period was not significant. The carrying value of the right-of-use assets are tested
for impairment as part of cash generating unit at the balance sheet date. More details is presented in the note 2.3.
= Accounting principles
= Critical accounting estimates
Right-of-use assets 2021
EUR mill. Aircraft
Buildings
andland
Other
equipment Total
Book value 1 Jan 2021 . . . .
Additions . . . .
Changes in contracts . . -. .
Depreciation for the financial year -. -. -. -.
Book value 31 Dec 2021 ,. . . ,.
Additions to right-of-use assets in 2021 are mainly related to the four sale and leaseback arrangements of A350
aircraft and one leased A350 aircraft which were all part of the Group’s refinancing plan in response to the
pandemic. The changes in contracts relate to changes either in the scope, or consideration, of leases.
Right-of-use assets 2020
EUR mill. Aircraft
Buildings
andland
Other
equipment Total
Book value 1 Jan 2020 . . . .
Additions . . . .
Changes in contracts -. . -. -.
Disposals -. . . .
Depreciation for the financial year -. -. -. -.
Book value 31 Dec 2020 . . . .
Lease liabilities
Aircraft Buildings and land Other equipment
EUR mill. 2021 2020 2021 2020 2021 2020
less than one year . . . . . .
1–5 years . . . . . .
more than 5 years . . . . .
Total ,. . . . . .
The Group leases aircraft, premises and other fixed assets, for which the lease liability is recorded on the balance
sheet. The lease agreements have different terms of renewal and include index-linked terms and conditions. The
Group was operating 34 leased aircraft at the end of the year with lease agreements of different tenors.
Lease liabilities related to aircraft increased significantly during the financial year 2021 due to the aircraft
transactions implemented as part of the refinancing program, including the sale and leaseback of four A350
aircraft and one leased A350 aircraft.
The leased aircraft, that Finnair is subleasing to other operators and which are classified as finance leases are
shown in the table below.
Finnair – Financial Information 2021 65
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Finance lease receivables, Group as lessor
Aircraft Buildings and land
EUR mill. 2021 2020 2021 2020
less than 12 months . . .
13-24 months . . .
25-36 months . .
37-48 months .
49-60 months .
more than 60 months .
Total . . . .
Subleases mainly include sublease arrangements of 6 aircraft that are classified as finance leases. Due to
contract modifications, some of the sublease contracts classified earlier as finance leases, have been classified
as operating leases.
Leasing arrangements in profit and loss
EUR mill. 2021 2020
Depreciation expense of right-of-use assets -. -.
Interest expense on lease liabilities -. -.
Interest income on sublease receivables . .
Exchange rate changes of lease liabilities -. .
Hedging result of lease liabilities . -.
Short-term wet leases -. -.
Short-term office rents -. -.
Variable purchase traffic and cargo capacity rents -. -.
Gains and losses on sale and leaseback transactions . -.
Total -. -.
Operating expenses include costs related to short-term and capacity based rental agreements, that are not
material for the Group or do not contain a lease according to IFRS 16, and are therefore not recognised in the
balance sheet. In the income statement, the short-term wet leases and variable purchase traffic and cargo
capacity rents are included in capacity rents and the short-term office rents are included in property, IT and other
expenses. Gains related to sale and leaseback transactions are recorded in other operating income in profit and
loss. Total cash outflow relating to leases was -284.2 million euro (-284.5).
Off-balance sheet lease commitments, Group as lessee
Premises rents Other rents
EUR mill. 2021 2020 2021 2020
less than one year . . . .
1–5 years . . . .
more than 5 years . . - .
Total . . . .
= Accounting principles
Off-balance sheet lease commitments are short-term lease agreements and other lease agreements for which
the underlying asset is of low value or contracts that do not contain a lease according to IFRS 16. Therefore, these
contracts are not recognised as right-of-use assets and lease liabilities in the balance sheet. The most significant
item in the premises rents is the right-to-use a test cell, which is excluded from the lease liabilty on the basis that it
is not for the exclusive use of Finnair. Other rents include IT equipment leases, that are not material.
Off-balance sheet lease receivables, Group as lessor
Aircraft Buildings and land
EUR mill. 2021 2020 2021 2020
less than 12 months . . . .
13-24 months . . . .
25-36 months . . . .
37-48 months . . .
49-60 months . . .
more than 60 months . . .
Total . . . .
The Group has leased 15 owned aircraft as well as premises with irrevocable lease agreements. Additionally,
Finnair has subleased 6 aircraft classified as operating leases. These agreements have different terms of
renewal and other index-linked terms and conditions.
2.3 Depreciation and impairment
Depreciation
Depreciation of assets is determined based on their expected useful life or maintenance cycle and residual value.
The depreciation for all assets is calculated using straight-line method. The depreciation is started when the asset is
available for use. Depreciation is ceased when the asset is either classified as held for sale or derecognised. The useful
life and residual value for assets are described in more detail in the note 2.1.
EUR mill. 2021 2020
Amortisation of intangible assets . .
Depreciation of own fleet . .
Depreciation of right-of-use fleet . .
Depreciation of other tangible assets . .
Depreciation of other right-of-use assets . .
Amortisation and depreciation . .
Impairment . .
Impairment total . .
Total depreciation and impairment in income statement . .
Depreciation and impairment include both planned depreciations on fixed assets as well as impairment. The
depreciation of own fleet decreased and the depreciation of right-of-use fleet increased in 2021 mainly as a
result of the four A350 sale and leaseback transactions. The impairment recognized in 2021 relates mainly to the
revaluation and reclassification of the four A321 aircraft to assets held for sale.
Finnair – Financial Information 2021 66
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Impairment testing
Impairment testing
The Group reviews its fleet, other fixed assets and other non-current assets for indication of impairment on each
balance sheet date. The recoverable amount of an asset or a cash generating unit is determined as the higher of value
in use and the fair value less cost to sell. Impairment loss is recognized if an asset’s recoverable amount is below its
carrying amount. The recoverable amount is defined for the cash generating unit, and the impairment is evaluated at
the cash generating unit level.
Impairment testing of the fleet and other fixed assets
Finnair applies the value in use model as its primary method for determining the recoverable amount of the assets. The
preparation of the calculations used for impairment testing requires significant management judgement and the use
of management estimates. These estimates are based on budgets and forecasts, which already inherently contain
some degree of uncertainty. The level of uncertainty has remained high in 2021 as a result of the continued COVID-19
pandemic, where the impact of the pandemic on the pace of the passenger demand recovery and Finnair’s revenues
is not known in advance. In addition, the price of fuel is subject to higher than average uncertainty, which is further
increased by the possibility of an escalation of the geopolitical situation in Eastern Europe. Thus the actual outcome
may differ from the current management estimates and assumptions made.
The main factors requiring significant management judgement in impairment testing include the ultimate duration
of the pandemic and the speed of demand recovery, unit revenue development and the cost of jet fuel. Further, the
value in use calculation is sensitive to changes in the EBITDA margin, terminal growth rate and discount rate. The key
assumptions used and the related sensitivities are described in more detail below.
In order to consider the increased uncertainty in its estimates and assumptions caused by the COVID-19 pandemic,
the management has considered three different forecast scenarios incorporating plausible variations of the expected
pace of the recovery and unit revenue development based on its best estimate at the time. These scenarios, as well
as the main identified uncertainties, are discussed in more detail in the beginning of the notes, in the section Board’s
assessment of Finnair as a going concern. In order to consider the possibility of various outcomes also in its impairment
testing performed at the year-end 2021, Finnair is applying the expected cash flow approach which incorporates
expectations about all three forecast scenarios instead of relying on just a single, most likely, cash flow estimate. The
determination of the probabilities used for each of the senarios requires the use of significant management judgement
and is based on the management’s best estimate at the time. The expected cash flow approach used in Finnair’s year-
end impairment testing is described in more detail below in this note.
During the fiscal year 2021, Finnair has reviewed quarterly whether indications for impairment exist. Finnair
considers various adverse economic and business implications resulting from the COVID-19 pandemic as
indications of possible impairment and therefore, impairment testing has been carried out as at the balance
sheet date. Such indicators include the unprecedented global market disruption, the negative impacts of the
pandemic on the Group’s own operating environment as well as the adverse impact of the currently extremely
low passenger demand on the Group’s financial performance and low capacity utilization rates.
The impairment review is carried out at the level of a cash-generating unit (‘CGU’). Finnair is a network
carrier with highly integrated fleet operations and it considers all its fleet (including right-of-use fleet) and other
closely related assets as one CGU. The intangible assets with indefinite useful life, including goodwill, have been
identified to belong to the aircraft CGU for impairment testing purposes. At year-end 2021, the amount other
intangible assets with indefinite useful life in Finnair’s balance sheet totaled to 1.4 million euro (1.7). The Group had
no goodwill at the end of year 2021 (0.5 million euro). Assets that are held for sale are excluded from CGU and
reviewed separately for impairment. The cash generating unit has been tested for impairment using the value in
use model based on which the recoverable amount of the CGU exceeds its carrying value at the balance sheet
date. The recoverable amount of the CGU as at 31.12.2021 was 2,748.6 million euros (2,897.3) based on expected
cash flow approach as described below, and the carrying value of the assets was 2,155.8 million euros (2,498.3).
The value in use measurement is based on a discounted cash flow model where the cash flow projections
are based on the Group’s strategy and the latest, updated management forecast covering a four year period.
The cash flows beyond the four-year period are projected to increase in line with the Group’s strategy and
the management’s long-term growth assumptions. In order to consider the uncertainty caused by the current
COVID-19 pandemic and the future outlook, Finnair is utilizing the expected cash flow approach which is using
= Accounting principles
= Critical accounting estimates
multiple, probability-weighted cash flow projections based on the three different forecast scenarios prepared
by the management. The scenarios and probabilities allocated to each scenario have been reviewed and
approved by the Board of Directors. When determining the probabilities, the management has reflected on
the uncertainty caused by the duration of the COVID-19 pandemic and the uncertainty related to the speed of
recovery. The optimistic scenario, in which the annual capacity is expected to reach 87% of the pre-covid 2019
levels in 2022 (measured in annual available seat kilometres), is considered to have a probability weight of 5%.
The base case scenario, which expects Finnair to be able to operate around 83% of its 2019 capacity in 2022, is
considered to have a probability of 60%. The pessimistic scenario, which has a probability of 35%, is assumed to
reach 75% of the 2019 operational volumes in 2022. The business is expected to return to the pre-covid levels of
2019 in 2023 under all but the pessimistic scenario, in which the 2023 annual operational capacity is expected to
reach 98% of the pre-pandemic levels.
In connection with the financial statements 2021, the demand and revenue are expected to recover somewhat
slower during 2022 than what was estimated at the time of the preparation of the 2020 financial statements,
which is caused by the prolonged impacts of the COVID-19 pandemic on travel restrictions.
Key assumptions used in impairment review
Dec 31, 2021 Dec 31, 2020
Discount rate (post-tax long-term weighted average cost of capital), % . .
Discount rate (pre-tax, derived from the long-term weighted average
cost of capital), % . .
Long-term growth rate, % . .
Fuel cost range per ton (USD) - -
Key assumptions used in the impairment review are presented in the table above. The assumptions are the same
for all scenarios.
The discount rate used is based on the weighted average cost of capital (WACC), which reflects the market
assessment of the time value of money and the risks specific to Finnair’s business. Both pre-tax and post-tax
discount rates are presented above. The increased uncertainty related to the COVID-19 pandemic is considered
through the multiple scenarios and the expected cash flow approach used in impairment testing rather than in
the discount rate.
EBITDA and estimated business growth are based on management’s best assessment of the speed of
recovery from the current COVID-19 pandemic as well as the future market demand and environment, which are
benchmarked against external information sources, such as long-term average growth estimates for industry.
Fuel price is based on the hedge-weighted fuel price based on the forward curve, estimated fuel consumption
based on planned flights and the historical data of fuel consumption for each aircraft type.
Sensitivities of the key assumptions
The calculations used in impairment testing require significant use of management estimates and assumptions.
The Group has prepared a sensitivity analysis to reflect, how the results of the impairment test would react to
changes in the key assumptions. The sensitivity analysis considers changes in one assumption at a time, whereby
the other assumptions are kept unchanged. The results of the sensitivity analysis reflect the sensitivity of the
recoverable amount based on expected cash flow model. The uncertainty related to the future pace of the
recovery of the business is taken into account in the calculation by using multiple forecast scenarios and the
expected cash flow approach in impairment testing.
The table below shows the changes required to decrease the difference between the recoverable amount
and the carrying value of the assets to zero.
Dec 31, 2021 Dec 31, 2020
EBITDA margin % -. %-p -.%-p
Discount rate % +. %-p +. %-p
Terminal growth rate % -. %-p -. %-p
Fuel cost, % change in cost level + %  %
Finnair – Financial Information 2021 67
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
3 Capital structure and financing costs
3.1 Financial income and expenses
The notes related to financial assets, liabilities and equity have been gathered into the capital structure and
financing costs-section in order to give a better overview of the Group’s financial position. The note ´Earnings per
share´ has been added to the equity section.
Interest income and expenses
Interest income and expenses are recognised on a time-proportion basis using the effective interest method. Interest
expenses related to the financing of significant investments are capitalised as part of the asset acquisition cost and
depreciated over the useful life of the asset.
More detailed information about financial assets can be found in Note 3.2 and about interest bearing liabilities in
Note3.3.
EUR mill. 2021 2020
Financial income from discontinued hedges . .
Interest income on leases . .
Gains on investment instruments held at FVPL -. .
Interest from assets held at amortised cost . .
Other interest income . .
Other financial income . .
Dividend income . .
Financial income total . .
Financial expenses for discontinued hedges -. -.
Interest on leases -. -.
Other financial expenses -. -.
Interest expenses for liabilities measured at amortised cost -. -.
Financial expenses total -. -.
Foreign exchange gains and losses -. .
Financial expenses, net -. -.
In the effectiveness testing of the Group’s hedge accounting, both cash flow and fair value hedging were found
to be effective at year end 2021. Thus, as in the comparison year 2020, no inefficiency is included in the financial
items for 2021. The COVID-19 pandemic has continued to have a negative impact on Finnair’s business during the
years 2020 and 2021; as a result, Finnair has discontinued the application of hedge accounting to the majority of
its hedges related to jet fuel price risk and foreign exchange risk during the year 2020. The discontinued hedges
are shown in profit and loss instead of other compherensive income. The remaining discontinued hedges
matured during the last quarter of 2021. Financial income and expenses include an identical amount of profit and
loss for fair value hedging instruments and for hedged items resulting from the hedged risk.
In 2021, foreign exchange gains and losses recognised in financial expenses consist of a net realised exchange
gain of 22.2 million euro and a net unrealised exchange loss of 44.9 million euro. In the financial year 2021, Finnair
recognized an expense of 5.2 million euro from discountinued hedges and a gain of 11.6 million euro. During the
year 2021, 1.4 million euros of interest expense was capitalised in connection with the A350 investment program
(3.3) and due to one A350 leasing arrangement, 1.5 million euros of capitalised interest cost was written down
resulting in an increase in interest costs amounting to 0.1 million euros. More information about the capitalised
interest can be found in note 2.1 Fleet and other fixed assets.
Other financial expenses include revolving credit facility and guarantee fees as well as interest and penalties
related to taxes.
3.2 Financial assets
Financial assets
In the Group, financial assets have been classified into the following categories according to the IFRS 9 standard
“Financial Instruments”: amortised cost and fair value through profit and loss. The classification is made at the time of
the original acquisition based on the objective of the business model and the characteristics of contractual cash flows
of the investment, or by applying a fair value option. All purchases and sales of financial assets are recognised on the
trade date.
Financial assets at fair value through profit and loss include such assets as investments in bonds and money market
funds. Financial assets at fair value through profit and loss have mainly been acquired to obtain a gain from short-term
changes in market prices. All those derivatives that do not fulfil the conditions for the application of hedge accounting
are classified as financial assets at fair value through profit and loss and are valued at fair value in each financial
statement. Realised and unrealised gains and losses arising from changes in fair value are recognised in the income
statement in the period in which they arise. Financial assets recognised at fair value through profit and loss, as well as
those maturing within 12 months, are included in current assets.
In Finnair Group, unquoted shares are valued at their acquisition price in the absence of a reliable fair value.
Investments in debt securities are measured at amortised cost, but only when the objective of the business model is
to hold the asset to collect the contractual cash flows and the asset’s contractual cash flows represent only payments
of principal and interest. Financial assets recognised at amortised cost are valued using the effective interest method.
Financial assets valued at amortised cost include trade receivables and security deposits for aircraft operating lease
agreements. Due to the nature of short-term receivables and other receivables, their book value is expected to be
equal to the fair value.
Derecognition of financial assets takes place when the Group has lost its contractual right to receive cash flows or
when it has substantially transferred the risks and rewards outside the Group.
Impairment of financial assets
Finnair Group recognises impairment provisions based on lifetime expected credit losses from trade receivables
in accordance with IFRS 9. Finnair has chosen to apply a simplified credit loss matrix for trade receivables as trade
receivables do not have a significant financing component. Accordingly, the credit loss allowance is measured at an
amount equal to the lifetime expected credit losses. The expected credit loss model is forward-looking, and expected
default rates are based on historical realised credit losses. The lifetime expected credit loss allowance is calculated
using the gross carrying amount of outstanding trade receivables in each aging bucket and an expected default rate.
The changes in expected credit losses are recognised in other expenses in the consolidated income statement. More
information on the credit loss provision on trade receivables can be found in the note 1.2.3. Receivables related to
revenue.
The impairment model does not apply to financial investments, such as bonds and money market funds, included
in other financial assets as those are measured at fair value through profit and loss under IFRS 9, which already takes
into account expected credit losses. With respect to the assets measured at amortised cost, Finnair is actively following
such instruments and will recognise impairment through profit and loss if there is evidence of deterioration in credit
quality.
Cash and cash equivalents
Cash and cash equivalents consist of cash reserves and short-term bank deposits with maturity of less than three
months. Foreign exchange-denominated items have been converted to euro using the mid-market exchange rates on
the closing date.
= Content of the section
= Accounting principles
Finnair – Financial Information 2021 68
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
3.2.1 Other current financial assets
EUR mill. 2021 2020
Commercial paper, certificates and bonds .
Money market funds . .
Total . .
Ratings of counterparties
Better than A
A
BBB .
BB
Unrated . .
Total . .
As of 31 December 2021, investments in instruments issued by unrated counterparties mostly include investments
in money market funds (EUR 512.4 million euro).
The Group’s financial asset investments and risk management policy are described in more detail in Note 3.5
Management of financial risks. The IFRS classifications and fair values of the financial assets are presented in
Note 3.6 Classification of financial assets and liabilities.
3.2.2 Cash and cash equivalents
EUR mill. 2021 2020
Cash and bank deposits . .
Total . .
The items include cash and bank deposits realised on demand. Foreign currency cash and bank deposits have
been valued using the closing date mid-market exchange rates. The reconciliation of cash and cash equivalents
is illustrated in the notes of the consolidated cash flow statement.
3.3 Financial liabilities
Financial liabilities
Finnair Group’s financial liabilities are classified into two different classes: amortised cost and fair value through profit
and loss. Financial liabilities are initially recognised at fair value on the basis of the original consideration received.
Transaction costs have been included in the original book value of financial liabilities. Thereafter, all non-derivative
financial liabilities are valued at amortised cost using the effective interest method. Financial liabilities are included
in long- and short-term liabilities, and they can be interest-bearing or non-interest-bearing. Loans that are due for
payment within 12 months are presented in the short-term liabilities. Foreign currency loans are valued at the mid-
market exchange rate on the closing date, and translation differences are recognised in the financial items.
Accounts payable are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method.
Derecognition of financial liabilities takes place when the Group has fulfilled the contractual obligations.
Non-current liabilities
EUR mill. 2021 2020
Loans from financial institutions, non-current . .
JOLCO loans and other . .
Bonds . .
Lease liabilities ,. .
Interest-bearing liabilities total ,. ,.
Non-interest-bearing liabilities . .
Total ,. ,.
Finnair’s interest-bearing liabilies continued to increase during the financial year 2021 as a result of the
financing transactions carried out by the Group in response to the continuing COVID-19 pandemic. The most
significant financing transactions during 2021 were the issuance of a 400 million euro bond during the second
quarter of 2021, and the completion of two leasing transactions: one sale and leaseback for four of its Airbus
A350 aircraft worth over 400 million dollars and one lease financing arrangement for one Airbus A350 aircraft
worth over 100 million dollars during the years 2021 - 2022. Non-interest-bearing liabilities mainly include leases
and maintenance reserves related to the aircraft leased to other airlines.
The Group’s lease liabilities include five new lease agreements for A350 aircraft as a result of the completion of
four sale- and leaseback transactions and one lease arrangement transaction during the financial year. JOLCO
loans and other include the JOLCO loans (Japanese Operating Lease with Call Option) for three A350 aircraft
and Export Credit Support for one A350 and two A330 aircraft. Export credit support is a debt arrangement to
finance aircraft. The transactions are treated as loans and owned aircraft in Finnair’s accounting. Non-interest-
bearing liabilities mainly include leases and maintenance reserves related to the aircraft leased to other airlines.
Current interest-bearing liabilities
EUR mill. 2021 2020
Loans from financial institutions, current .
JOLCO loans and other . .
Bonds .
Lease liabilities . .
Total . .
JOLCO loans and other include the JOLCO loans (Japanese Operating Lease with Call Option) for three A350
aircraft and Export Credit Support for one A350 and two A330 aircraft. The transactions are treated as loans and
owned aircraft in Finnair’s accounting.
Short-term
borrowings
Long-term
borrowings
Short-
term lease
liabilities
Long-
term lease
liabilities Total
Total liabilities from financing
activities, 1 January 2021 . ,. . . ,.
Repayments . -. -. -.
Acquisitions . . . .
Decreases -. -.
Foreign exchange adjustments . . . .
Reclassification between short-
term and long-term liabilities . -. . -. .
Other non-cash movements -. -.
Total liabilities from financing
activities, 31 December 2021 . . . ,. ,.
= Accounting principles
Finnair – Financial Information 2021 69
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Short-term
borrowings
Long-term
borrowings
Short-
term lease
liabilities
Long-
term lease
liabilities Total
Total liabilities from financing
activities, 1 January 2020 . . . . ,.
Repayments -. -. -. -.
Additions . . . . ,.
Decreases -. -.
Foreign exchange adjustments -. -. -. -.
Reclassification between short-
term and long-term liabilities . -. . -. .
Other non-cash movements . -. -. .
Total liabilities from financing
activities, 31 December 2020 . ,. . . ,.
Maturity dates of interest-bearing
financial liabilities 31 Dec 2021 EUR mill. 2022 2023 2024 2025 2026 Later Total
JOLCO loans and other, fixed interest . . .
JOLCO loans and other, variable interest . . . . . . .
Loans from financial institutions, variable interest . . .
Bonds, fixed interest . . .
Lease liabilities, fixed interest . . . . . . ,.
Lease liabilities, variable interest . . . . . . .
Interest-bearing financial liabilities total . . . . . . ,.
Payments from currency derivatives . .
Income from currency derivatives -. -. -. -.
Commodity derivatives -. -. -.
Trade payables and other liabilities . .
Interest payments . . . . . . .
Total . . . . . . ,.
Maturity dates of interest-bearing
financial liabilities 31 Dec 2020 EUR mill. 2021 2022 2023 2024 2025 Later Total
JOLCO loans and other, fixed interest . . .
JOLCO loans and other, variable interest . . . . . . .
Loans from financial institutions, variable interest . . .
Bonds, fixed interest . .
Lease liabilities, fixed interest . . . . . . .
Lease liabilities, variable interest . . . . . . .
Interest-bearing financial liabilities total . . . . . . ,.
Payments from currency derivatives . . .
Income from currency derivatives -. -. -.
Commodity derivatives . . .
Trade payables and other liabilities . .
Interest payments . . . . . . .
Total . . . . . . ,.
The interest rate re-fixing period is three months for variable interest loans and six months for variable interest
lease liabilities. The bonds maturing do not include the amortised cost of 43 thousand euros paid in 2017 and due
in 2022 and 2.8 million paid in 2021 and due on 2025. JOLCO loans do not include the amortised cost of 3.1 million
euros paid in 2016 and due in 2025 and loans from financial institutions do not include 0.6 million euros paid as
arrangement fees on the pension premium loan in 2020. Therefore, the total amount of interest-bearing financial
liabilities differs from the book value by the amount equal to the amortised costs. The COVID-19 pandemic
has continued to impact Finnair’s business and it has also increased the interest bearing liabilities in 2021 in
comparison to 2020. The increase mainly consists of the issued 400 million bond and aircraft related sale and
leaseback agreements. Also, Finnair has a 600 million euros of pension premium loan maturing during the next
two years. The loan matures in two 300 million euro instalments. The first instalment is due during the last quarter
of 2022 and the second one is due during the second quarter of 2023.
The currency mix of interest-bearing liabilities is as follows:
EUR mill. 2021 2020
EUR ,. .
USD ,. ,.
JPY . .
HKD . .
SGD . .
INR . .
,. ,.
The weighted average effective interest rate on interest-bearing liabilities was 3.8% (3.3%).
Interest rate re-fixing period of interest-bearing liabilities
2021 2020
Up to 6 months .% .%
6–12 months .% .%
1–5 years .% .%
More than 5 years .% .%
Total .% .%
700
600
500
400
300
200
100
0
2022 2023 2024 2025 2026
JOLCO-loans and other, fixed
interest
JOLCO-loans and other, variable
interest
Bonds, fixed interest
Lease liabilities, fixed interest
Lease liabilities, variable interest
Loans from financial institutions,
variable interest
€ million
Maturity dates of interest-bearing financial liabilities
L a t e r
518.7
223.4
690.9
167.3
596.2
618.9
Finnair – Financial Information 2021 70
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
State aid relating to Finnair’s refinancing
State aid in pension premium loan and rights offering
The European Commission has concluded that the State of Finland’s guarantee of Finnair’s pension premium
loan up to EUR 540 million, which was approved by the European Commission on 18 May 2020, and the State
of Finland’s participation in the rights offering are so closely linked that they must be regarded as an overall
transaction that constitutes State aid within the meaning of Article 107(1) of the Treaty on the Functioning of the
European Union. Under the Commission’s decision, the Company has agreed to certain conditions following
the offering, which include, among other things, a ban on acquisitions, restricting the Company from acquiring a
stake of more than 10 per cent in competitors or other operators in the same line of business, including upstream
or downstream operations for a period of three years from the offering.
As a result of the restrictions based on the Commissions decision, the remuneration of each member
of Finnair’s management will not go beyond the fixed part of his/her remuneration on 31 December 2019.
For persons becoming members of the management on or after the rights issue, the applicable limit of the
remuneration for such new member will be benchmarked to the remuneration of comparable managerial
positions and areas of responsibility in Finnair applied on 31 December 2019. Finnair will not pay bonuses and
other variable or comparable remuneration elements during the three fiscal years 2020–2022 to the members of
the management.
Further, Finnair is committed to publishing information about the use of the aid received within 12 months from
the date of the offering and thereafter periodically every 12 months, for a period of three years. In particular, this
should include information on how the company’s use of the aid received supports its activities in line with EU
objectives and national obligations linked to the green and digital transformation, including the EU objective of
climate neutrality by 2050.
State aid in hybrid loan
Finnair and the State of Finland signed an agreement in 17 March 2021 for a hybrid loan of a maximum of
400 million euros to support Finnair. The decision was made by the Plenary Session of the Government on 18
February 2021. The arrangement has the approval of the EU Commission’s competition authority in line with
the European Union’s state aid rules. Of the credit limit, approximately 350 million euros can be used by Finnair
based on the state aid decision made by the Commission on 12 March 2021. Finnair is able to access the funds, if
its cash or equity position would drop below the limits to be defined in the facility’s terms and conditions. The EU
Commission’s competition authority approved the remaining, ca. 50-million-euro share of the hybrid loan facility
on 10 February 2022. Therefore, as disclosed also in the note 5.4 Events after the closing date, the whole 400
million euro hybrid loan facility is at the company’s disposal according to the terms and conditions of the facility.
3.4 Contingent liabilities
EUR mill. 2021 2020
Guarantees on behalf of group companies . .
Total . .
3.5 Management of financial risks
Principles of financial risk management
The nature of Finnair Group’s business operations exposes the company to a variety of financial risks: foreign
exchange, interest rate, credit, liquidity and commodity price risks. The Group’s policy is to limit the uncertainty
caused by such risks on cash flow, financial performance, balance sheet items and equity.
The management of financial risks is based on the risk management policy prepared by the Financial Risk
Steering Committee and approved by the Board of Directors. The policy specifies the minimum and maximum
levels permitted for each type of risk. Financial risk management is directed and supervised by the Financial Risk
Steering Committee. Practical implementation of the risk management policy and risk management have been
centralized to the parent company’s treasury department.
For the management of foreign exchange, interest rate and jet fuel the company uses different derivative
instruments, such as forward contracts, swaps and options. At inception, derivatives are designated as hedges
of highly probable cash flows (cash flow hedges), hedges of firm orders (hedges of the fair value of firm
commitments) or as financial derivatives where the hedging relationship does not qualify for hedge accounting
(economic hedges). Finnair Group implements cash flow hedging through foreign exchange hedging of highly
probable forecasted sales and costs denominated in foreign currencies and jet fuel price risk, in accordance
with the hedge accounting principles of IFRS 9. Hedge accounting compliant fair value hedges of Finnair Group
consist of interest rate hedges of the issued bond and fair value hedges of firm aircraft purchase commitments.
Fuel price risk in flight operations
Fuel price risk means the cash flow and financial performance uncertainty arising from fuel price fluctuations.
Finnair hedges against jet fuel price fluctuations using jet fuel forward contracts and options. The Jet Fuel CIF
Cargoes NWE index is used as the underlying asset of jet fuel derivatives, since over 60 per cent of Finnair’s fuel
purchase contracts are based on the benchmark price index for Northwest Europe jet fuel deliveries.
Finnair applies the principle of time-diversification in its fuel hedging. According to the risk management
policy, the hedging horizon is one year. The risk management policy states that hedging must be increased
during each quarter of the year, so that the hedge ratio is maximum of 50 per cent, with target ratio being 25 per
cent per quarter. Due to hedging, the fuel cost per period is not as low as the spot-based price when prices fall,
but when spot prices rise, the fuel cost rises more slowly.
The hedges of jet fuel consumption are treated as cash flow hedges in accounting, in accordance with the
hedge accounting principles of IFRS 9. During 2021, Finnair has hedged the jet fuel price risk in its entirety, without
separating it into underlying risk components, such as crude oil price risk. However, Finnair has used proxy
hedging for certain layer components of its jet fuel consumption, as described below.
In the hedging of jet fuel price risk, Finnair Group designates layer components of its jet fuel consumption
as hedged items. The layer components are defined as jet fuel consumption linked to different jet fuel price
benchmarks. The first layer is defined as jet fuel purchases based on the Jet Fuel CIF Cargoes NWE index, with
consumption linked to other price benchmarks, notably Cargoes FOB Singapore, representing other layers.
Since the Jet Fuel CIF Cargoes NWE index is used as the underlying of all jet fuel derivatives, they are designated
as proxy hedges for consumption based on other price benchmarks. Therefore, ineffectiveness may arise if
the correlation between the NWE index and the price benchmark for the underlying consumption is not high
enough for the fair value changes in the hedged item and the hedging instrument to be exactly offsetting. Any
ineffectiveness resulting from overhedging or insufficient correlation is recognised in fair value changes in
derivatives and changes in exchange rates of fleet overhauls.
Update in financial risk management
The COVID-19 pandemic has continued to impact Finnair’s business and therefore Finnair’s hedging operations
regarding foreign currency and jet fuel price risk during the years 2021 and 2020. The decrease in demand due
to the COVID-19 pandemic meant that the amount of underlying risk was significantly lower than the forecasted
amounts forcing Finnair to discontinue applying hedge accounting to the majority of its hedges in foreign
currency and jet fuel. Updated risk management principles mainly concern the hedging horizon and hedging
limits in jet fuel and foreign currency. The hedging horizon was lowered permanently from 24 months to 12 months
for jet fuel and foreign currency and the lower bound of the hedging limits for jet fuel and foreign currency was
lowered to zero. The higher bound of the hedging limit is set to 50% throughout the hedging horizon for jet fuel
and foreign currency, while keeping the target level at 25%. Additionally, the balance sheet hedging limit was
lowered to 0%, with the target level remaining at 50%.
Finnair – Financial Information 2021 71
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Timing of the notional
and hedged price
Hedged price
$/tonne
Notional amount
(tonnes)
Maturity
Under 1 year 1 to 2 years
31 December 2021
Jet fuel consumption priced with NWE index . , , ,
Jet fuel consumption priced with SING index
31 December 2020
Jet fuel consumption priced with NWE index . , , ,
Jet fuel consumption priced with SING index
. , ,
The average hedged price of the instruments hedging highly probable jet fuel purchases is calculated by taking into account
only the hedging (bought) leg of collar option structures, and therefore represents the least favorable hedged rate. The most
favorable rate, calculated by including only the sold leg of collar option structures, is 625.0 US dollars per tonne for NWE
consumption. Options excluded from hedge accounting are excluded.
At the end of the financial year, Finnair had hedged 8 per cent of its forecasted fuel purchases for the first six
months of 2022 and 3 per cent of the purchases for the second half of the year. In the financial year 2021, fuel
used in flight operations accounted for approximately one quarter of Group’s turnover. At the end of the financial
year, the forecast for 2022 is approximately 29 per cent of the Group’s turnover. On the closing date, a 10 per cent
rise in the market price of jet fuel – excluding hedging activity – increases annual fuel costs by an estimated 59
million euro. On the closing date – taking hedging into account – a 10 per cent rise in the market price if jet fuel
lowers the operating profit by around 57 million euro.
The COVID-19 pandemic continued to impact Finnair’s business during the financial year 2021 and therefore
Finnair’s hedging operations regarding foreign currencies and jet fuel price risk. During the year 2021 all
discontinued hedging relationships have matured and are no longer visible in Finnair’s balance sheet and Finnair
restarted its hedging operations in the last quarter of 2021.
Foreign exchange risk
Foreign exchange risk means the uncertainty in cash flows and financial performance arising from exchange
rate fluctuations.
Finnair Group’s foreign exchange risk mainly arises from fuel purchases, aircraft lease liabilities, acquisition
and divestment of aircraft, aircraft maintenance, overflight royalties and foreign currency revenue. About 46
per cent of the Group’s revenue is denominated in euros. The most important foreign revenue currencies are
the Japanese yen (9 per cent, percentage of revenue), the Chinese yuan (7 per cent), the US dollar (5 per cent)
and the Swedish krona (4 per cent). Approximately 30 per cent Group’s operating costs are denominated in
foreign currencies. The most important purchasing currency is the US dollar, which accounts for approximately
25 per cent of all operating costs. The most significant US dollar-denominated expense is fuel costs. The largest
investments – aircraft and their spare parts – are also mainly made in US dollars.
The risk management policy divides the foreign exchange position into three parts, namely exposure to
forecasted cash flows, balance sheet position and investment position.
The cash flow exposure mainly consists of sales denominated in a number of different currencies and dollar-
denominated expenses. Forecasted jet fuel purchases, aircraft materials and overhaul expenses and traffic
charges form a group of similar items that are hedged with the same hedging instrument. The purpose of
currency risk hedging – for cash flow exposure – is to reduce the volatility of cash flows and the comparable
operating result due to fluctuating currency prices. This is done using a layered hedging strategy for the two
biggest sources of currency risk and utilising diversification benefits of the portfolio of various currencies. The
contracts are timed to mature when the cash flows from operating expenses are expected to be settled. The
hedging limits are set only for the main contributors to currency risk: the Japanese yen and the US dollar basket
consisting of the US dollar and the Hong Kong dollar. For both of these, the hedging horizon is one year, which is
divided into four three-month periods. The maximum hedging ratio for the whole period is 50% and the minimum
is 0% while maintaining the target hedging ratio at 25%.
The investment position includes all foreign currency denominated aircraft investments for which a binding
purchase agreement has been signed as well as commitments for sale and leaseback transactions in the next
four years. According to its risk management policy, Finnair Group hedges 50–100% of its aircraft investment
exposure. New hedges of investments in aircraft are made as an IFRS 9 fair value hedge of a firm commitment.
Balance sheet exposure consists of foreign currency denominated financial assets and liabilities, as well as
other foreign currency denominated balance sheet items, such as provisions, trade receivables, trade payables
and assets held for sale. Finnair Group hedges 0–100% of net positions with target set in 50% in foreign currency
denominated financial assets and financial liabilities exceeding 10 MEUR.
At the end of the financial year, Finnair had a hedge level for net operating cash flows of 9 per cent in the USD-
basket and 2 per cent in JPY for the coming 12 months. On the closing date – excluding hedges – a 10 per cent
strengthening of the US dollar against the euro has a negative impact on the 12-month result of around 70 million
euro and a 10 per cent weakening of the Japanese yen against the euro has a negative impact on 12-month of
around 21 million euro. On the closing date – taking hedging into account – a 10 per cent strengthening of the US
dollar weakens the result by around 67 million euro and a 10 per cent weakening of the Japanese yen weakens
the result by around 21 million euro. In the above numbers, the USD-basket risk includes the Hong Kong dollar,
which historical correlation with the US dollar is high. The hedge levels for balance sheet position at the end of
the financial year were 57 per cent for USD and 94 per cent for Japanese yen. On the closing date – excluding
hedges – a 10 per cent strengthening of the US dollar against the euro has a negative impact on the result of
around 146 million euro and a 10 per cent strengthening of the Japanese yen against the euro has a negative
impact of around 6 million euro. On the closing date – taking hedging into account – a 10 per cent strengthening
of the US dollar weakens the result by around 64 million euro and a 10 per cent strengthening of the Japanese
yen weakens the result by around 0.3 million euro.
Maturity
Timing of the notional
EUR mill. 31 December 2021
Notional amount
(gross)
Less than
1year 1 to 2 years 2 to 4 years
USD . . . .
JPY . .
Cross-currency interest rate swaps are included in the nominal amount calculation.
Foreign exchange P&L exposure
EUR mill. 31 December 2021 JPY USD-basket
Net forecasted operating cash flows, next 24m . -,.
Net operating cash flow hedges, next 24m -. .
Weighted average exchange rate of hedging instruments against the euro . .
Foreign exchange exposure from operating cash flows after hedging, next 24m . -,.
The average exchange rate of the instruments hedging highly probable forecasted sales and purchases
denominated in foreign currencies is calculated by taking into account only the hedging (bought) leg of collar
option structures, and therefore represents the least favorable hedged rate. The most favorable rate, calculated
by including only the sold leg of collar option structures, is 1.14 for USD contracts and 119.60 for JPY instruments.
Foreign exchange balance sheet exposure
EUR mill. 31 December 2021 JPY USD
Net balance sheet items -. -,.
Net hedges of balance sheet items . .
Weighted average exchange rate of hedging instruments against the euro . .
Foreign exchange exposure from balance sheet items after hedging -. -.
Finnair – Financial Information 2021 72
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Foreign exchange investment exposure
EUR mill. 31 December 2021 USD
Net investment position -.
Net hedges of investment position .
Weighted average exchange rate of hedging instruments against the euro .
Foreign exchange exposure from investment position after hedging -.
Foreign exchange P&L exposure
EUR mill. 31 December 2020 JPY USD-basket
Net forecasted operating cash flows, next 24m . -,.
Net operating cash flow hedges, next 24m -. .
Weighted average exchange rate of hedging instruments against the euro . .
Foreign exchange exposure from operating cash flows after hedging, next 24m . -,.
Foreign exchange balance sheet exposure
EUR mill. 31 December 2020 JPY USD
Net balance sheet items -. -.
Net hedges of balance sheet items . .
Weighted average exchange rate of hedging instruments against the euro . .
Foreign exchange exposure from balance sheet items after hedging -. -.
Foreign exchange investment exposure
EUR mill. 31 December 2020 USD
Net investment position -.
Net hedges of investment position .
Weighted average exchange rate of hedging instruments against the euro .
Foreign exchange exposure from investment position after hedging -.
Interest rate risk
Interest rate risk means the cash flow, financial performance and balance sheet uncertainty arising from interest
rate fluctuations.
In Finnair Group, the interest rate risk is measured using the interest rate re-fixing period. If necessary,
interest rate derivatives are used to adjust the interest rate re-fixing period. According to the risk management
policy, the mandate for the investment portfolio’s interest rate re-fixing period is 0–12 months and for interest-
bearing liabilities 36–72 months. On the closing date, the investment portfolio’s interest rate re-fixing period
was approximately 1month and approximately 53 months for interest-bearing liabilities. On the closing date, a
one percentage point rise in interest rates increases the annual interest income of the investment portfolio by
approximately 11.9 million euros and the interest expenses of the loan portfolio by approximately 3.3 million euros.
The situation as of December 31 2020 is a reasonable representation of the conditions throughout the year given
the current market environment.
Future lease agreements expose the group to interest rate risk, as the interest rate is one component of the
lease price. The interest rate is fixed when the lease payments start. If necessary, the group can hedge this
exposure with cash flow hedges.
Maturity
Timing of the notional and hedged
price range
EUR mill. 31 December 2020
Notional amount
(gross)
Less than
1year 1 to 2 years 2 to 4 years
Interest rate derivatives . . . .
Cross-currency interest rate swaps are included in the nominal amount calculation. Finnair has not entered into
any interest rate derivatives on which it is paying a fixed rate.
Credit risk
The Group is exposed to counterparty risk when investing its cash reserves and when using derivative
instruments. The credit risk is managed by only making contracts with financially sound domestic and foreign
banks, financial institutions and brokers, within the framework of the risk management policy for counterparty
risk limits. Liquid assets are also invested in money market funds, bonds and commercial papers issued by
conservatively selected companies, according to company-specific limits. This way, risk exposure to any single
counterparty is not significant. Changes in the fair value of Group loans arises from changes in FX and interest
rates, not from credit risk. The Group’s credit risk exposure arises from other current financial assets presented
in note 3.2.1, cash and cash equivalents presented in note 3.2.2, trade receivables presented in Note 1.2.3 and
derivatives presented in note 3.8.
Liquidity risk
The goal of the Finnair Group is to maintain good liquidity. Liquidity is ensured by cash reserves, bank account
limits, liquid money market investments and committed credit facilities. Counterparties of groups’ long term loans
are solid financial institutions with good reputations.
The COVID-19 pandemic has not had a direct impact on the basic principles of Finnair’s liquidity risk
management. However, due to the continued uncertainty in 2021 Finnair executed several financing transactions
in order to secure liquidity levels. The most significant financing transactions during year 2021 were issuing a 400
million euro bond during the second quarter of 2021, completing a sale and leaseback arrangement for four of
its Airbus A350 aircraft worth over 400 million dollars and completing a lease financing arrangement for one
Airbus A350 aircraft worth over 100 million dollars during the years 2021–2022. Additionally, the State of Finland
and Finnair agreed on a hybrid loan of maximum 400 million euros to support Finnair. The arrangement has
the approval of the EU Commission’s competition authority in line with the European Union’s state aid rules. Of
the credit limit, approximately 350 million euros can be used by Finnair if the conditions defined in the facility’s
terms and conditions are met. The EU Commission’s competition authority approved on 10 February 2022 the
remaining approximately 50-million-euro share of the hybrid loan facility. Therefore the whole 400 million euro
hybrid loan facility is at the company’s disposal according to the terms and conditions of the facility.
The Group’s cash funds were 1265.7 million euro at the end of financial year 2021. Finnair Plc has a domestic
commercial paper program of 200million euro, which was not in use as of the closing date. Finnair announced
on the last quarter of 2021 that it has retired its undrawn revolving credit facility of 175 million euros on 4 October
2021. The credit facility included a financial covenant based on adjusted gearing. As the facility is now retired the
financial covenant is no longer in force.
Capital management
The aim of Finnair’s capital management is to secure access to the capital markets at all times despite the volatile
business environment, as well as to support future business development. Through maintaining an optimal
capital structure Group also aims to minimize the cost of capital and maximize the return on capital employed.
The capital structure is influenced via, for example, dividend distribution and share issues. The Group can vary
and adjust the level of dividends paid to shareholders, the amount of capital returned to them or the number
of new shares issued. The Group can also decide on sales of asset items in order to reduce debt. The aim of
Finnair´s dividend policy is to pay on average at least one third of the earnings per share as dividends during an
economic cycle.
Finnair – Financial Information 2021 73
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
The COVID-19 pandemic still impacts Finnair’s business and therefore the balance sheet and capital structure.
In order to mitigate possible future impacts the State of Finland and Finnair agreed on a hybrid loan of maximum
400 million euros to support Finnair. The arrangement has the approval of the EU Commission’s competition
authority in line with the European Union’s state aid rules. Of the credit limit, approximately 350 million euros can
be used by Finnair if the conditions defined in the facility’s terms and conditions are met. The EU Commission’s
competition authority approved on 10 February 2022 the remaining approximately 50-million-euro share of
the hybrid loan facility. Therefore the whole 400 million euro hybrid loan facility is at the company’s disposal
according to the terms and conditions of the facility. The development of the Group’s capital structure is
continuously monitored using the adjusted gearing ratio. When calculating adjusted gearing, adjusted interest-
bearing net debt is divided by the amount of shareholders’ equity. The Group’s adjusted gearing at the end of
2021 was 321.8 per cent (153.2).
Sensitivity analysis of the fair value reserve
If the price of Jet fuel CIF NWE had been 10 per cent higher, the balance of the reserve would have been 2.6
million euro (6.6) higher. Correspondingly, a 10 per cent weaker Jet fuel CIF NWE price would have reduced the
reserve by 2.6 million euro (6.6). In terms of the US dollar, a 10 per cent weaker level would have lowered the
balance of the fair value reserve by 3.3 million euro (9.9) and a 10 per cent stronger dollar would have had a
positive impact of 3.3 million euro (5.2). In terms of Japanese yen, a 10 per cent stronger yen would have had a
negative impact of 0.5 million euro (5.1), and a 10 per cent weaker level would have increased the balance of the
fair value reserve by 0.5 million euro (5.1). The effect of change in interests to the fair value reserve in own equity
is not material. The enclosed sensitivity figures do not take into account any change in deferred tax liability (tax
assets).
3.6 Classification of financial assets and liabilities
EUR mill.
Hedge
accounting
items
Fair value
through profit
and loss
Amortised
cost Book value
31 Dec 2021
Financial assets
Receivables . .
Other financial assets . .
Trade receivables and other receivables . .
Derivatives . . .
Cash and cash equivalents . .
Book value total . . . ,.
Fair value total . . . ,.
Financial liabilities
Interest-bearing liabilities ,. ,.
Lease liabilities ,. ,.
Derivatives . . .
Trade payables and other liabilities . .
Book value total . . ,. ,.
Fair value total . . ,. ,.
EUR mill.
Hedge
accounting
items
Fair value
through profit
and loss
Amortised
cost Book value
31 Dec 2020
Financial assets
Receivables . .
Other financial assets . .
Trade receivables and other receivables . .
Derivatives . . .
Cash and cash equivalents . .
Book value total . . . .
Fair value total . . . .
Financial liabilities
Interest-bearing liabilities ,. ,.
Lease liabilities ,. ,.
Derivatives . . .
Trade payables and other liabilities . .
Book value total . . ,. ,.
Fair value total . . ,. ,.
In this note interest rate derivatives (currency and interest-rate swaps) are included in derivatives. Item
Receivables mainly includes USD-denominated security deposits for leased aircraft. Trade payables and other
liabilities include: trade payables and other interest-bearing and non-interest-bearing liabilities.
Derivatives are valued at fair value, with further details in the fair value hierarchy. Financial assets valued at
fair value are money market funds (fair value hierarchy level 1) and bonds, or commercial papers (fair value
hierarchy level 2). Loans and receivables are mainly current and the book value is equivalent to the fair value,
because the discount effect is not significant. The current portion of loans valued at amortised cost, excluding
bonds, is 219.9 million euro, and the book value is equivalent to the fair value, because the discount effect is not
significant. The issued bond makes the most significant part of the loans valued at amortised cost. The senior
bond maturing in 2022 was quoted at 99.729 and the senior bond maturing in 2025 was quoted at 101.154, which
explains the difference between book value and fair value. The valuation principles of financial assets and
liabilities are outlined in the accounting principles.
Finnair – Financial Information 2021 74
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Fair value hierarchy of financial assets and liabilities valued at fair value
Fair values at the end of the reporting period
EUR mill. 31 Dec 2021 Level 1 Level 2
Assets
Financial assets at fair value
Securities held for trading . . .
Derivatives
Currency and interest rate swaps and options . .
Currency derivatives . .
- of which in fair value hedge accounting . .
- of which in cash flow hedge accounting . .
Commodity derivatives . .
- of which in cash flow hedge accounting . .
Total . . .
Liabilities
Financial liabilities at fair value
Derivatives
Currency derivatives . .
- of which in cash flow hedge accounting . .
Commodity derivatives . .
- of which in cash flow hedge accounting . .
Total . .
During the financial year, no significant transfers took place between fair value hierarchy Levels 1 and 2.
The fair values of hierarchy Level 1 are fully based on quoted (unadjusted) prices in active markets of the same
assets and liabilities.
The fair values of Level 2 instruments are, to a significant extent, based on input data other than the quoted
prices included in Level 1, but still mainly based on directly observable data (price) or indirectly observable data
(derived from price) for the particular asset or liability.
On the other hand, the fair values of Level 3 instruments are based on asset or liability input data that is not
based on observable market information (unobservable inputs). The fair values are based on confirmations
supplied by counterparties, based on generally accepted valuation models.
3.7 Offsetting financial assets and liabilities
EUR mill. 2021 2020
Derivative assets gross amounts . .
Amounts of financial assets presented in the balance sheet . .
Enforceable master netting agreement -. -.
Derivative assets net amount . .
EUR mill. 2021 2020
Derivative liabilities gross amounts -. -.
Amounts of financial liabilities presented in the balance sheet -. -.
Enforceable master netting agreement . .
Derivative liabilites net amount . -.
For the above financial assets and liabilities, subject to enforceable master netting arrangements or similar
arrangements, each agreement between the Group and the counterparty allows net settlement of the relevant
financial assets and liabilities when both parties choose to settle on a net basis. In the absence of such mutual
decision, financial assets and liabilities will be settled on a gross basis. However, each party of the master
netting agreement, or similar agreement, will have the option to settle on a net basis in the event of default of
the other party. Depending on the terms of each agreement, an event of default includes failure by a party to
make a payment when due, failure by a party to perform any obligation required by the agreement (other than
payment), if such failure is not remedied within periods of 30 to 60 days after notice of such failure is given to the
party, or bankruptcy.
3.8 Derivatives
Derivative contracts and hedge accounting
According to its risk management policy, Finnair Group uses foreign currency, interest rate and commodity derivatives to
reduce the exchange rate, interest rate and commodity risks which arise from the Group’s balance sheet items, foreign
currency denominated purchase agreements, anticipated foreign currency denominated purchases and sales as well as
future jet fuel purchases. It is the Group’s policy not to enter into derivative financial contracts for speculative purposes.
The derivatives are initially recognised as well as subsequently valued at fair value in each financial statement and
interim report. The fair values of the derivatives are based on the value at which the instrument could be exchanged
between knowledgeable, willing and independent parties, with no compulsion to sell or buy in the sales situation. The
fair values of derivatives are determined as follows:
The fair values of all derivatives are calculated using the exchange rates, interest rates, volatilities and commodity
price quotations on the closing date. The fair values of currency forward contracts are calculated as the present value
of future cash flows. The fair values of currency options are calculated using the Black-Scholes option pricing model.
The fair values of interest rate swap contracts are calculated as the present value of future cash flows. The fair values
of cross-currency interest rate swap contracts are calculated as the present value of future cash flows. The fair values
of interest rate options are calculated using generally accepted option valuation models. The fair values of commodity
forward contracts are calculated as the present value of future cash flows. The fair values of commodity options are
calculated using generally accepted option valuation models.
The Group uses credit valuation adjustment for cross-currency interest rate swaps as the maturities of these
derivatives are long. The credit valuation adjustment is not done for the rest of the derivatives as the maturities for these
are short and the impact would not be material. Credit risk management is described in more detail in note 3.5.
Gains and losses arising from changes in the fair value are presented in the financial statements according to the original
classification of the derivative. Gains and losses on derivatives qualifying for hedge accounting are recognised in accordance
with the nature of the risk being hedged. At inception, derivative contracts are designated as hedges of future cash flows,
hedges of the fair value of recognised assets or liabilities and binding purchase contracts (cash flow hedges or fair value
= Accounting principles
Finnair – Financial Information 2021 75
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
hedges) or as derivatives not meeting the hedge accounting criteria or to which hedge accounting is not applied (economic
hedges). Hedging of the fair value of net investments of foreign units or embedded derivatives have not been used.
At the inception of hedge accounting, Finnair Group documents the economic relationship and the hedge ratio
between the hedged item and the hedging instrument, as well as the Group’s risk management objectives and the
strategy for the inception of hedging. At the inception of hedging, and at least at the time of each financial statement, the
Group documents and assesses the effectiveness of hedge relationships by examining the past and prospective capacity
of the hedging instrument to offset changes in the fair value of the hedged item or changes in cash flows. The values of
derivatives in a hedging relationship are presented in the balance sheet item Short–term financial asset and liabilities.
Finnair Group implements the IFRS hedge accounting principles in the hedging of future cash flows (cash flow hedging).
The principles are applied to the price and foreign currency risk of jet fuel, the foreign currency risk of lease payments and
the foreign currency risk of highly probable future sales and costs denominated in foreign currencies. The IFRS fair value
hedge accounting principles are applied to the hedging of foreign exchange and interest rate risk of aircraft.
The change in the fair value of the effective portion of derivative instruments that have been designated and qualify
as cash flow hedges are recognised in comprehensive income and presented within equity in the fair value reserve,
to the extent that the requirements for the application of hedge accounting have been fulfilled and the hedge is
effective. The gains and losses, recognised in the fair value reserve, are transferred to the income statement in the
period in which the hedged item is recognised in the income statement. When a hedging instrument expires or is sold,
terminated or exercised, or the criteria for cash flow hedge accounting are no longer fulfilled, but the hedged forecast
transaction is still expected to occur, the cumulative gain or loss at that point remains in the hedge reserve and is
recognised in accordance with the above policy when the transaction occurs. If the underlying hedged transaction is
no longer expected to take place, the cumulative unrealised gain or loss recognised in the hedge reserve with respect
to the hedging instrument is recognised immediately in the consolidated income statement.
The effectiveness of hedging is tested on a quarterly basis. The effective portion of the hedges is recognised in the fair
value reserve of other comprehensive income, from which it is transferred to the income statement when the hedged
item is realised or, in terms of investments, as an acquisition cost adjustment.
Fair value hedging is implemented on firm orders of new aircraft, and in order to hedge the fixed interest rate bond.
The binding purchase agreements for new aircraft are treated as firm commitments under IFRS, and therefore, the fair
value changes of the hedged part arising from foreign currency movements are recognised in the balance sheet as an
asset item, and corresponding gains or losses recognised through profit and loss. Similarly, the fair value of instruments
hedging these purchases is presented in the balance sheet as a liability or receivable, and the change in fair value is
recognised in profit and loss.
The gain or loss related to the effective portion of the interest rate swap, which hedges the fixed interest rate bond, is
recognised as financial income or expenses in the income statement. The gain or loss related to the ineffective portion is
recognised within other operating income and expenses in the income statement. The change in the fair value attributable
to the interest rate risk of the hedged fixed interest rate loans is recognised in the financial expenses in the income statement.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged
item, for which the effective interest method is used, is amortized to profit or loss over the period to maturity.
Finnair Group uses cross-currency interest rate swaps in the hedging of the interest rate and foreign exchange risks
of foreign currency denominated loans. Cross-currency interest rate swaps are excluded from hedge accounting,
and therefore the fair value changes are recognised in derivative assets and liabilities in the balance sheet, as well as
in the financial income and expenses in the income statement. The fair value changes of the loans are simultaneously
recognised in the financial income and expenses. Realised foreign exchange rate differences, as well as interest
income and expenses, are recognised in the financial income and expenses against the exchange rate differences
and interest income and expenses of the loan.
Finnair Group uses jet fuel swaps (forward contracts) and options in the hedging of jet fuel price risk. Unrealised gains
and losses on derivatives hedging jet fuel, which are designated as cash flow hedges and fulfil the requirements of IFRS
hedge accounting, are recognised in the hedging reserve within other comprehensive income. Accrued derivative
gains and losses, recognised in shareholders’ equity, are recognised as income or expense in the income statement
in the same financial period as the hedged item is recognised in the income statement. If a forecasted cash flow is no
longer expected to occur, and as a result the IFRS hedge accounting criteria are not fulfilled, the fair value changes
and the accrued gains and losses reported in shareholders’ equity are transferred to the items affecting comparability
in the income statement. Changes in the fair value of jet fuel swaps and options excluded from hedge accounting are
recognised in fair value changes in derivatives in the income statement, while realised result is presented in fuel costs.
For forward and option contracts, an economic relationship exists between the hedged item and the hedging
instrument as the hedging instrument and the hedged item are expected to move in opposite directions because of the
same underlying exposure. This is true for all hedge relationships except for the SING consumption hedged with NWE
hedges (as described in section 3.5). In that case, the underlying is different, but the underlying hedged item (SING)
and the hedge (NWE) have a historical correlation of 0.99. Therefore, it can be classified as a relationship where the
underlying and the hedge are economically closely related. Ineffectiveness on fuel derivatives can also arise from
timing differences on the notional amount between the hedged instrument and hedged item, significant changes in
credit risk of parties to the hedging relationship and changes in the total amount of the hedged item, for instance if
the underlying fuel consumption forecast is not accurate enough, that can result in overhedging. However, as Finnair
usually hedges less than 100% of its exposure, the risk of overhedging is insignificant. Finnair has established a hedge
ratio of 1:1 for hedging relationships.
Finnair uses forward contracts and options to hedge its exposure to foreign currency denominated cash flows. The
hedges of cash flows denominated in foreign currencies are treated as cash flow hedges in accounting, in accordance
with the hedge accounting principles of IFRS 9. Unrealised gains and losses on hedges of forecasted cash flows
qualifying for hedge accounting are recognised in the hedging reserve in OCI, while the change in the fair value of
such hedges not qualifying for hedge accounting is recognised in Fair value changes in derivatives and changes in
exchange rates of fleet overhauls in the income statement. The change in fair value recognised in the hedging reserve
in equity is transferred to the income statement when the hedged transaction is realised. Forward points are included
in the hedging instrument and in the hedge relationship. Potential sources of ineffectiveness include changes in the
timing of the hedged item, significant changes in the credit risk of parties to the hedging relationship and changes
in the total amount of the hedged item, for instance if the underlying cash flow forecast is not accurate enough, that
can result in overhedging. However, as Finnair usually hedges less than 100% of its exposure, the risk of overhedging
is insignificant. Realised profit or loss on derivatives hedging JPY-denominated operating cash flows is presented in
revenue, realised profit or loss on derivatives hedging a group of similar USD costs is proportionally recognised in
corresponding expense lines, while profit or loss on derivatives hedging cash flows denominated in other currencies is
presented in Other expenses.
The hedge ratio is defined as the relationship between the quantity of the hedging instrument and the quantity of
the hedged item in terms of their relative weighting. With currency hedging, the hedge ratio is typically 1:1. For forward
and option contracts, an economic relationship exists between the hedged item and the hedging instrument as there
is an expectation that the value of the hedging instrument and the value of the hedged item would move in opposite
directions because of the common underlying exposure.
Changes in the fair value of interest rate derivatives not qualifying for hedge accounting are recognised in financial
income and expenses in the income statement. Changes in the fair value as well as realised gain or loss on forward
contracts used to hedge foreign currency denominated balance sheet items of Finnair Group are recognised in
financial expenses. Changes in the fair value and the realised result of hedges of assets held for sale are recognised in
Items affecting comparability.
Cost of hedging
At Finnair, the time value of an option is excluded from the designation of a financial instrument and accounted for as
a cost of hedging. Upon initial recognition, Finnair defers any paid premium in the cost of hedging reserve within other
comprehensive income. The fair value changes of the time value are recognised in the cost of hedging reserve within
other comprehensive income. The premium will be transferred to the consolidated income statement in the same
period that the underlying transaction affects the consolidated income statement for transaction-related hedges. As of
31 December 2021, Finnair has deferred premiums only on transaction-related hedges.
Impact of COVID-19 to hedge accounting and derivatives
Due to the COVID-19 pandemic impacts on Finnair’s underlying business during 2020 and 2021, the hedging operations
regarding foreign exchange currencies and jet fuel price risk were impacted. Much lower demand as a result of the
COVID-19 pandemic during the year 2020 meant that the amount of underlying risk was significantly reduced from
forecasted amounts forcing Finnair to discontinue hedge accounting on the majority of its hedges in foreign exchange
and jet fuel that were under hedge accounting. The last discontinued hedging relationships matured during the last
quarter of 2021 and the realized gains or losses are shown in financial income and expenses. In the last quarter of 2021
Finnair restarted its hedging program in foreign exchange as well as jet fuel according to the revised risk management
policy. More information about the revised risk management policy can be found in note 3.5.
Critical accounting estimates and sources of uncertainty
Finnair accounts for its cash flow hedges of forecasted foreign currency denominated purchases and sales and future
jet fuel purchases in accordance with the IFRS 9. Under the hedge accounting principles, a forecast transaction can be
designated as a hedged item only if that transaction is considered as highly probable. The evaluation of probability
is based on the management forecasts about the future level of Finnair’s operations and cash flows. Such forecasts
require the use of management judgement and assumptions, which inherently contain some degree of uncertainty
that is further increased due to the COVID-19-pandemic. Should the expected circumstances or outcome change in
the future, the management would need to reassess whether a hedged forecast transaction is still highly likely to occur.
This could be the case if, for example, the expected recovery and thus the expected jet fuel consumption levels would
not realize as expected. Should the forecast transaction no longer be highly probable, it would no longer qualify as
an eligible hedged item and hedge accounting would need to be discontinued. Should it no longer be expected to
occur at all, the balance of the cash flow hedge reserve included in other comprehensive income would need to be
reclassified to profit or loss.
= Accounting principles
= Critical accounting estimates
Finnair – Financial Information 2021 76
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
2021 2020
EUR mill.
Nominal
value
Positive
fair
values
Negative
fair
values
Fair net
value
Nominal
value
Positive
fair
values
Negative
fair
values
Fair net
value
Currency derivatives
Jet fuel currency hedging
Operational cash flow hedging
(forward contracts) . . -. . . . -. -.
Operational cash flow hedging,
bought options . . . . . .
Operational cash flow hedging,
soldoptions . . . . -. -.
Fair value hedging of aircraft
acquisitions . . . . -. -.
Hedge accounting items total . . -. . . . -. -.
Operational cash flow hedging
(forward contracts) . . -. .
Operational cash flow hedging,
bought options . . .
Operational cash flow hedging,
soldoptions . . -. -.
Balance sheet hedging
(forwardcontracts) . . -. . . . -. -.
Items outside hedge accounting total . . -. . . . -. .
Currency derivatives total . . -. . ,. . -. -.
Commodity derivatives
Jet fuel forward contracts, tonnes , . -. . , . -. -.
Hedge accounting items total . -. . . -. -.
Jet fuel forward contracts, tonnes , . -. -.
Items outside hedge accounting total . -. -.
Commodity derivatives total . -. . . -. -.
Cross currency interest rate swaps . . . . -. -.
Items outside hedge accounting total . . . . . -. -.
Interest rate derivatives total . . . . . -. -.
Derivatives total * . -. . . -. -.
* Positive (negative) fair value of hedging instruments as of 31.12.2021 is presented in the statement of financial position in the item
derivative financial instruments within current assets (derivative financial instruments within current liabilities). Uncertainty and
discontinued hedging relationships due to the COVID-19 pandemic have impacted the amount of hedging Finnair has done during
the last two years. During the last quarter of 2021 Finnair restarted its hedging program under the revised risk management policy.
Hedged items in hedge relationships
Carrying amount of
the hedged item
Accumulated
amount of fair value
hedge adjustments
included in the
carrying amount of
the hedged item
Line item
in the
statement
of financial
position in
which the
hedged item
is included
Changes in
fair value of
the hedged
item used for
calculating
hedge inef-
fectiveness,
previous 12
months
Changes in
fair value of
the hedging
instrument
used for
calculating
hedge inef-
fectiveness,
previous 12
months31 December 2021 Assets Liabilities Assets Liabilities
Cash flow hedges
Jet fuel price risk
- Forecasted jet fuel
purchases -. .
Foreign exchange risk
- Forecasted sales
and purchases -. .
Fair value hedges
Foreign exchange risk
- Aircraft acquisitions -. -.
Non-current
assets -. .
Ratings of derivative counterparties
EUR mill. 2021 2020
Better than A . -.
A . -.
BBB -.
Total . -.
Derivatives realised through profit and loss
EUR mill. 2021 2020
Jet fuel hedging Fuel costs . -.
Hedging of lease payments Financial expenses .
Operational cash flow hedging Fuel costs -. .
Operational cash flow hedging
Aircraft materials and overhaul
-. .
Operational cash flow hedging Traffic charges -. .
Operational cash flow hedging Revenue . -.
Expenses of hedge accounting items total . -.
Discontinued Jet fuel hedging Financial expenses -. -.
Balance sheet hedging Financial expenses . -.
Discontinued foreign currency hedging Financial expenses . -.
Cross-currency interest rate swaps Financial expenses . .
Expenses of items outside hedge accounting total
-. -.
Finnair – Financial Information 2021 77
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
3.9 Equity-related information
Shareholders’ equity
The nominal value of shares had been recognised in the share capital before an amendment to the Articles of
Association registered on 22 March 2007. Share issue profit and gains on sale of own shares had been recognised in
other restricted funds before the change in the Limited Liability Company Act in 2006.
The subscription proceeds from the 2007 share issue less transaction costs after taxes as well as share-based
payments according to IFRS 2 have been recognised in the unrestricted equity funds.
The rights issue proceeds from 2020 less the transaction costs has been recognized in the unrestricted equity funds
Hedging reserve and other OCI items include changes in the fair value of derivative instruments used in cash-flow
hedging, in addition to actuarial gains and losses related to defined benefit pension plans, cost of hedging and
translation differences.
The acquisition cost of repurchased owned shares less transaction costs after taxes is charged to equity until the
shares are cancelled or reissued. The consideration received for sale or issue of own shares is included in equity.
The dividend proposed by the Board of Directors is not deducted from distributable equity until approved at the
Annual General Meeting.
The hybrid bond is recognised in equity. It is unsecured and subordinated to all senior debt. The hybrid bond does not
confer shareholders’ rights, nor does it dilute the holdings of shareholders. Finnair is not required to redeem the hybrid
bond at any time and they are not redeemable on demand of the holders of the hybrid bond. Interest expenses are
debited from retained earnings on cash basis net of tax. In the calculation of earnings per share, interest expenses for
the hybrid bond are included in the earnings for the financial year.
The financial year 2021 remained highly challenging for the global aviation industry and was the second
annual reporting period severely impacted by the Covid-19 pandemic. The continued losses resulting from the
COVID-19 pandemic also had an impact on the consolidated balance sheet where the Group’s equity declined
to 475.5 million euro (896.6). Despite the challenging times during the COVID-19 pandemic Finnair is determined
to continue on its long-term strategic path despite the adjustments made related to the COVID-19 pandemic,
and aims to ensure that the Company remains a competitive airline company in the future. The company’s
management believes that air traffic will, upon expiration of the COVID-19 pandemic related travel restrictions,
still be a growth business, in which Finnair targets sustainable, profitable growth, supported by a strategy based
on a competitive geographical advantage and strong ownership structure.
Number of shares 2021 2020
Number of outstanding shares in the beginning of the financial year ,,, ,,
Share issue ,,,
Purchase of own shares -,,
Shares granted from the share-bonus scheme 2018–2020 ,
Shares granted from the share-bonus scheme 2017–2019 ,
Shares granted from FlyShare employee share savings plans , ,
Number of outstanding shares at the end of the financial year
,,, ,,,
Own shares held by the parent company ,, ,
Total number of shares at the end of the financial year
,,, ,,,
Finnair Plc’s share capital, paid in its entirety and registered in the trade register, was at 75,442,904.30 euros at
the end of 2020 and 2021. The shares have no nominal value. During the year 2021, Finnair transferred a total
of 512,624 shares to FlyShare participants and a total of 36,903 shares to participants in Finnair’s share-based
incentive scheme 2018-2020.
Group’s hedging reserve and other OCI items
EUR mill. 2021
Amounts
reclassified
to profit or
loss
Unrealised
gains and
losses
recognised
in OCI
Discontinued
hedges
reclassified
to financial
expenses
Change in
accounting
principles 2020
Line item
affected in
profit or loss
because of
the reclassi-
fication
Jet fuel price
hedging . -. . -. -. Fuel costs
Operating cash flow
hedging . . . -. -.
Revenue and
cost lines*
Hedging of interest
related to future
lease payments -. . -.
Lease
payments for
aircraft
The actuarial
gains and losses of
defined benefit plan . . -.
Cost of hedging
reserve . . -.
Tax effect -. -. .
Total . -. . -. . -.
*Forward and option contracts hedging forecasted sales and purchases denominated in foreign currencies are hedges of
a group of similar hedged items, and the amounts reclassified from OCI to P&L are proportionally allocated to different cost
lines based on the realised cost amounts. Amounts reclassified to revenue and different cost lines are specified in the table
“Derivatives realised through profit or loss” in section 3.8.
Maturity dates of fair values recognised in the hedging reserve
EUR mill. 2022 2023 2024 2025 2026 Later Total
Jet fuel price hedging . . .
Operating cash flow hedging . .
Hedging of interest related to future
lease payments -. -. -. -. -. -. -.
The actuarial gains and losses of
defined benefit plan . .
Cost of hedging reserve . .
Tax effect -. . . . . . -.
Total . -. -. -. -. -. .
= Accounting principles
Finnair – Financial Information 2021 78
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Hybrid bond
Shareholders’ equity (after equity belonging to the owners) includes a 200 million euro hybrid bond that was
issued during the third quarter of 2020. The hybrid bond coupon is fixed at 10.25 per cent per year for the first
three years, and thereafter fixed, at 15.25 per cent per year. Finnair can postpone interest payment if it does not
distribute dividends or any other equity to its shareholders. The bond has no maturity date, but the company has
the right to redeem it in three years and on every interest payment date thereafter. The overall hybrid bond net
position recognised in equity is 198 million euro, due to issuing expenses. The hybrid bonds are unsecured and in
a weaker preference position than promissory notes. A holder of hybrid bond notes has no shareholder rights.
Earnings per share
The basic earnings per share figure is calculated by dividing the result for the financial year attributable to the
parent company’s shareholders by the weighted average number of shares outstanding during the financial
year. The result for the financial year is adjusted for the after-tax amounts of hybrid bond interests regardless
of payment date, as well as transaction costs of the new hybrid bond issued and premium paid, when a hybrid
bond is redeemed. When calculating the earnings per share adjusted for dilution, the weighted average of
the number of shares takes into account the diluting effect resulting the conversion into shares all potentionally
diluting shares. Finnair has not granted any options.
EUR mill. 2021 2020
Result for the financial year, EUR mill. -. -.
Hybrid bond interest, EUR mill. -. -.
Premium paid related to redemption of the hybrid bond issued in 2020 . -.
Transaction costs of the hybrid bond issued in 2020 . -.
Tax effect . .
Adjusted result for the financial year -. -.
Weighted average number of shares, mill. Pcs ,. ,.
Basic earnings per share, EUR -. -.
Diluted earnings per share, EUR -. -.
Effect of own shares, EUR . .
Dividend
The Board of Directors proposes to the Annual General Meeting that no dividend is paid for 2021. In accordance
with the proposal of the Board of Directors, the Annual General Meeting on 17 March 2021 resolved that no
dividend be paid based on the balance sheet adopted for the year 2020.
Finnair Plc’s distributable equity
EUR mill. 2021
Retained earnings at the end of financial year -.
Unrestricted equity .
Result for the financial year -.
Distributable equity total .
4 Consolidation
Notes under the Consolidation section include a description of the general consolidation principles and
methods of consolidation. The aim of the section is to provide an overall picture of the group’s structure and
principles applied in preparing consolidated financial statements and classifying ownership interests. In addition,
notes include information about subsidiaries, associated companies and joint ventures held, acquired or sold by
the group.
4.1 General consolidation principles
Consolidation
Consolidation, the consolidation method and classification of ownership interests depend on whether Group
has power to control or jointly control the entity or if it has significant influence or other interests in the entity.
When Group has the power to control the entity, it is consolidated as a subsidiary in the group according to
principles described in the note 4.2 Subsidiaries. When Group has joint control or significant influence over an
entity but does not have the power to control, an entity is accounted for by using the equity method according to
principles set in note 4.4 Investments in associates and joint ventures. If Group does not have power to control nor
significant influence in the entity, its ownership interests are classified as financial assets available for sale and
accounted for according to principles described in the note 3.2 Financial assets.
4.2 Subsidiaries
Consolidation principles of subsidiaries
Finnair Plc’s consolidated financial statements include the parent company Finnair Plc and all of its subsidiaries.
Subsidiaries are defined as companies in which Finnair has control. Control exists when Finnair has rights to variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
Usually Finnair has power over the entity when it owns more than 50% of the votes or where Finnair otherwise has
the power to govern the financial and operating policies. The acquired subsidiaries are included in the consolidated
financial statements from the day the Group has control, and disposed subsidiaries until the control ceases.
Acquired and established companies are accounted for using the acquisition method of accounting. Accordingly,
the acquired company’s identifiable assets, liabilities and contingent liabilities are measured at fair value on the date
of acquisition. The excess between purchase price and fair value of the Group’s share of the identifiable net assets is
recognised as goodwill.
All inter-company transactions, balances and unrealised gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated unless there is evidence of impairment related to the transferred
asset. The accounting principles of subsidiaries have been changed to correspond Group’s accounting policies.
Non-controlling interest and transactions with non-controlling interest
Non-controlling interests are presented within the equity in the Consolidated Balance Sheet, separated from equity
attributable to owners of the parent. For each acquisition the non-controlling interest can be recognised either at fair
value or at the non-controlling interest’s proportionate share of the acquirer’s net assets. The carrying amount of non-
controlling interests is the amount of the interests at initial recognition added with the non-controlling interests’ share of
subsequent changes in equity.
= Content of the section
= Accounting principles
Finnair – Financial Information 2021 79
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
= Accounting principles
Subsidiaries
Name of the company
Group
ownership % Name of the company
Group
ownership %
Finnair Cargo Oy, Finland . Balticport Oü, Estonia .
Finnair Aircraft Finance Oy, Finland . Amadeus Finland Oy, Finland .
Finnair Technical Services Oy,
Finland .
Oy Aurinkomatkat - Suntours Ltd Ab,
Suomi .
Finnair Engine Services Oy, Finland . Aurinko Oü, Estonia .
Finnair Kitchen Oy, Finland . Matkayhtymä Oy, Finland .
Kiinteistö Oy Lentokonehuolto,
Finland . FTS Financial Services Oy, Finland .
Northport Oy, Finland . Finnair Business Services Oü, Estonia .
4.3 Acquisitions and disposals
During 2021, Finnair sold its 49.5% share of Suomen Ilmailuopisto Oy to the city of Pori and to the Government of
Finland. The transaction had no material effect on Finnair’s profitability. There were no business acquisitions or
disposals during 2020.
4.4 Investments in associates and joint ventures
Associates are companies in which the Group generally holds 20–50 per cent of the voting rights or in which
the Group has significant influence but in which it does not exercise control. Companies where the Group has joint
control with another entity are considered as joint ventures. The Group’s interests in associated companies and
jointly controlled entities are accounted for using the equity method. The investment in associates and joint ventures
include goodwill recognized at the time of acquisition. The Group recognises its share of the post-acquisition results
in associates and joint ventures in the income statement. When the Group’s share of losses in an associate or a joint
venture equals or exceeds its interest in the associate or joint venture, the Group does not recognise further losses,
unless it has incurred obligations on behalf of the associate or joint venture.
Results from the transactions between the Group and its associates are recognised only to the extent of unrelated
investor’s interests in the associates. The Group determines at each reporting date whether there is any objective
evidence that the investment in the associates is impaired. In case of such indications, Group calculates the amount of
impairment as the difference between the recoverable amount of the associate and its carrying value. The impairment
is recognised in share of results in associates and joint ventures.
Accounting policies of associates or joint ventures have been changed where necessary to correspond with the
accounting policies adopted by the Group. If financial statements for the period are not available, the share of
the profit of certain associated or joint venture companies is included in the consolidated accounts based on the
preliminary financial statements or latest available information.
The Group’s share of the result, asset items and liabilities of associates and joint ventures is presented below.
EUR mill. 2021 2020
At the beginning of the financial year . .
Disposals -.
At the end of the financial year . .
During 2021, Finnair sold its 49.5% share of Suomen Ilmailuopisto Oy. There were no changes in 2020. More
information on transactions with associated companies and joint ventures can be found in the note 4.5 Related
party transactions.
Information on the Group’s associates and joint ventures 31 Dec 2021
EUR mill. Domicile Assets Liabilities Revenue Profit/Loss Holding %
Nordic Regional Airlines AB Sweden . . . . .
Information on the Group’s associates and joint ventures 31 Dec 2020
EUR mill. Domicile Assets Liabilities Revenue Profit/Loss Holding %
Nordic Regional Airlines AB Sweden . . . -. .
Suomen Ilmailuopisto Oy* Finland . . . . .
* The presented figures have been adjusted according to the final and audited financial statements of 2020.
The result of associated companies and joint ventures for 2021 was 2.1 (-1.6) million euros, of which Finnair’s share
was 0.0 (0.0) million euros.
Nordic Regional Airlines AB
Nordic Regional Airlines AB (Norra) operates mainly purchased traffic for Finnair. The owners (Finnair 40% and
Danish Air Transport 60%) have joint control over the entity. In the balance sheet of Finnair, Norra has been
classified as a joint venture.
4.5 Related party transactions
Related parties of the Finnair group includes its subsidiaries, management, associated companies and joint
ventures and Finnair pension fund. Subsidiaries are listed in the note 4.2 and associates and joint ventures in
note 4.4. Related party transactions include such operations that are not eliminated in the group’s consolidated
financial statement.
The State of Finland which has control over Finnair owns 55.9% (55.9%) of Finnair’s shares. During financial
year 2020 the State of Finland participated in the rights issue in proportion to its holding by 286.1 million euro and
guaranteed Finnair’s pension premium loan up to 540 million euro. The European Commission concluded that
these transactions, in combination, constituted state aid within the meaning of Article 107(1) of the Treaty on the
Functioning of the European Union. The conditions relating to the state aid approval are described in the note 3.3.
All the transactions with other government owned companies and other related parties are on arm’s length basis,
and are on similar terms than transactions carried out with independent parties.
Finnair – Financial Information 2021 80
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
5 Other notes
Other notes include all such notes that do not specifically relate to any previous subject matters.
5.1 Income taxes
The tax expense for the period includes current and deferred tax and adjustments to previous years’ taxation. Tax
is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive
income or other equity items.
Deferred taxes are calculated for temporary differences between accounting and taxation using the valid tax
rates for future years at the closing date. Deferred tax asset is recognised to the extent that realisation of the related
tax benefit through future profits is probable. Temporary differences arise mainly from sales of tangible assets and
depreciation, right-of-use assets, lease liabilities and tax losses. Deferred tax is recognised for foreign subsidiaries’
undistributed earnings only when related tax effects are probable.
Deferred tax assets and liabilities are netted when they are levied by the same taxing authority and Finnair has a
legally enforceable right to set off the balances.
Deferred taxes
Recognition of deferred tax asset is based on management estimates and require the use of management judgement
in order to assess whether there will be sufficient taxable profits flowing to the company in the future. The expectations
used in the calculation are based on the latest management forecasts at the reporting date and use assumptions that
are consistent with those used elsewhere in the financial statements. Due to the current uncertainty embedded in the
economic environment and the difficulty in forecasting the ultimate duration and impact of the COVID-19 pandemic,
the management has considered alternative forecast scenarios that have been sensitised to reflect plausible
variations relating to the expected pace of the recovery of the Finnair business. The scenarios have been discussed in
more detail early in the beginning of the notes section under Board’s assessment of Finnair as a going concern. Finnair
expects to be able to use the tax losses in advance of 10 years expiry date under all of the forecast scenarios.
Income taxes
EUR mill. 2021 2020
Taxes for the financial year
Current tax
Adjustments recognised for current tax of prior periods -.
Deferred taxes . .
Total . .
In 2020, Finnair Aircraft Finance Oy recognized an adjustment for prior year deferred taxes, which caused
additional payable taxes of 3.4 million euro relating to the financial year 2019.
= Content of the section
= Accounting principles
= Critical accounting estimates
The following transactions have taken place with associated companies, joint ventures and Finnair pension fund:
EUR mill. 2021 2020
Sales of goods and services
Associates and joint ventures . .
Pension fund . .
Employee benefits
Pension fund -. -.
CEO and Executive Board . .
The Board of Directors . .
Purchases of goods and services
Associates and joint ventures . .
Pension fund . .
Financial income and expenses
Associates and joint ventures . .
Pension fund . -.
Receivables
Non-current receivables from associates and joint ventures . .
Non-current receivables from pension fund . .
Current receivables from associates and joint ventures . .
Liabilities
Non-current liabilities to associates and joint ventures . .
Current liabilities to associates and joint ventures . .
Employee benefits and non-current receivables from pension fund are related to defined benefit pension
plans in Finnair pension fund. These are described more detailed in the note 1.3.8.2. Management remuneration
is presented in note 1.3.8. Management has not been granted any loans and there have not been any other
transactions with management.
More information on associated companies and joint ventures can be found in the note 4.4.
Finnair pension fund
The Finnair pension fund in Finland is a stand-alone legal entity which mainly provides additional pension
coverage to Finnair’s personnel in the form of defined benefit plan, and manages related pension assets. The
assets include Finnair’s shares representing 0.1% (0.1%) of the company’s outstanding shares. Real estate and
premises owned by the pension fund have been mainly leased to Finnair. In 2021 and 2020 Finnair did not pay
any contributions to the fund. Pension asset was 78.9 million euros (31.0) at the end of the financial year.
Finnair – Financial Information 2021 81
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
The reconciliation of income taxes to theoretical tax cost calculated at Finnish tax rate
EUR mill. 2021 2020
Result before taxes -. -.
Taxes calculated using the Finnish tax rate 20% . .
Different tax rates of foreign subsidiaries . .
Tax-exempt income . .
Non-deductible expenses -. -.
Adjustments recognised for taxes of prior periods . .
Income taxes total . .
Effective tax rate -. % -.%
Deferred tax assets and liabilities
The Group has evaluated the nature and classification of deferred tax assets. Based on the evaluation,
deferred tax assets and liabilities levied by the same taxing authority met the requirements for offset eligibility in
accordance with IAS 12 standard. The deferred tax assets and liabilities are shown net on the balance sheet.
Changes in deferred taxes during 2021:
EUR mill. 2020
Recognised
in the income
statement
Recognised in
shareholders’
equity 2021
Deferred tax assets and liabilitities
Confirmed losses . . . .
Defined benefit pension plans -. -. -. -.
Property, plant and equipment -. . -.
Leases . . .
Valuation of derivatives at fair value . -. -.
Other temporary differences . . .
Total . . -. .
Finnair’s taxable result continued to be highly negative in year 2021 as a result of the impact of the COVID-19
pandemic on its operations and financial performance and the Group has recognized a deferred tax asset of
191.9 million euro. The amount of confirmed tax losses after the 2020 taxable result totals to 706 million euros,
which will expire in 2030. The estimated amount of confirmed tax losses for the 2021 taxable result totals to
approximately 376 million euros, which will expire in 2031. Finnair expects that these can be used against its
future taxable results. The assessment is based on Finnair’s latest management forecasts that consider different
plausible scenarios relating to the expected pace of the recovery. Finnair would be able to use the tax losses in
advance of the 10 years expiry date under all of the forecast scenarios. This is based on both the expected future
profits and allowed tax planning methods available to Finnair. In 2020, Finnair recognized a deferred tax asset
balance of 84.8 million euro.
Distributing retained earnings of foreign subsidiaries as dividends would cause a tax effect of 0.3 million
euros(0.2).
Changes in deferred taxes during 2020:
EUR mill. 2019
Recognised
in the income
statement
Recognised in
shareholders’
equity 2020
Deferred tax assets and liabilitities
Confirmed losses . . . .
Defined benefit pension plans . -. . -.
Property, plant and equipment -. . -.
Leases . -. .
Valuation of derivatives at fair value . . .
Other temporary differences . . .
Total -. . . .
5.2 Disputes and litigation
Finnair reports only cases of which the interest is material and that are not insured. As of 31 December 2021 there
were no such disputes pending.
5.3 Events after the closing date
The increased uncertainty related to the COVID-19 pandemic is still evolving and will have a significant impact on
Finnair’s operating environment also after the review period. In addition, the price of fuel is subject to higher than
average uncertainty at the time of the publication of the financial statements, which is further increased by the
intensified geopolitical situation in Eastern Europe. The escalation and prolongation of the geopolitical situation
in Eastern Europe could have a strongly negative effect not only on the price of fuel, but also on the usage of
airspace, routings and costs of Finnair’s flights to Asia.
Finnair announced on 17 March 2021 that the company and the State of Finland had signed an agreement on
a hybrid loan of maximum 400 million euros to support Finnair. The company also stated that of this credit limit,
approximately 350 million euros can be used by Finnair based on the state aid decision made by the European
Commission on 12 March 2021 and that the remaining approximately 50-million-euro share will be brought to
approval by the Commission at a later stage. Finnair announced on 17 February 2022, that the Commission has
approved the remaining 50-million-euro share. The company is able to access the funds, if its cash or equity
position would drop below the limits to be defined in the facility’s terms and conditions.
Finnair – Financial Information 2021 82
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
6 Parent company financial statements
Finnair Plc income statement
EUR mill. Note 2021 2020
Revenue . . .
Other operating income . . .
Operating income . .
Materials and services . . .
Staff expenses . . .
Depreciation and reduction in value . . .
Other operating expenses . . .
Operating expenses ,. ,.
Operating profit/loss -. -.
Financial income and expenses . -. -.
Profit/loss before appropriations and taxes -. -.
Appropriations . . .
Income taxes . . .
Profit/loss for the financial year -. -.
Finnair Plc balance sheet
EUR mill. Note 2021 2020
ASSETS
Non-current assets
Intangible assets . . .
Tangible assets . . .
Investments
Holdings in group undertakings . .
Participating interests . .
Other shares and similar rights of ownership . .
Loan and other receivables . . .
Total investments . . .
Deferred tax assets . . .
Total non-current assets . ,.
Current assets
Current receivables . . .
Marketable securities . . .
Cash and bank equivalents . . .
Total current assets ,. ,.
TOTAL ASSETS ,. ,.
EQUITY AND LIABILITIES
Equity
Share capital . .
Share premium account . .
Other reserves
Unrestricted equity funds . .
Legal reserve . .
Hedging reserve . -.
Retained earnings -. .
Profit/loss for the financial year -. -.
Total equity . . .
Accumulated appropriations . . .
Provisions . . .
Liabilities
Non-current liabilities . . ,.
Current liabilities . ,. .
Total liabilities ,. ,.
EQUITY AND LIABILITIES TOTAL ,. ,.
Finnair – Financial Information 2021 83
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Finnair Plc cash flow statement
EUR mill. 2021 2020
Cash flow from operating activities
Result before appropriations -. -.
Depreciation . .
Other non-cash transactions . -.
Financial income and expenses . .
Changes in working capital . -.
Interest and other financial expenses paid -. -.
Received interest and other financial income . .
Income taxes paid -.
Cash flow from operating activities -. -,.
Cash flow from investing activities
Investments in intangible and tangible assets -. -.
Proceeds from sales of tangible assets .
Change in loan and other receivables . .
Investments in subsidiaries -.
Proceeds from sales of associates and joint ventures .
Received dividends . .
Cash flow from investing activities . .
Cash flow from financing activities
Purchase of own shares -.
Proceeds from loans . .
Loan repayments and changes . -.
Proceed from share issues .
Proceeds from hybrid bond .
Hybrid bond repayments -.
Received and given group contributions . .
Cash flow from financing activities . ,.
Change in cash flows . -.
Change in liquid funds
Liquid funds, at beginning . .
Change in cash flows . -.
Liquid funds, at end ,. .
Notes to Finnair Plc financial statements
6.1 Accounting principles
General
Finnair Plc is the parent company of the Finnair Group, domiciled in Helsinki, Finland. Financial statements have
been prepared in accordance with accounting principles required by Finnish law.
Foreign currency items
Transactions denominated in foreign currencies are translated into functional currency by using the exchange
rates prevailing on the date of the transaction. Receivables and liabilities on the balance sheet are valued using
the exchange rate on the balance sheet date. Advances paid and received are valued in the balance sheet
using the exchange rate at the date of payment. Exchange rate differences on trade receivables and payables
are treated as the adjustments to turnover and other operating expenses. Exchange rate differences on other
receivables and liabilities are entered under financial income and expenses.
Derivative contracts
According to its risk management policy, Finnair uses foreign exchange, interest rate and commodity derivatives
to reduce the exchange rate, interest rate and commodity risks which arise from the Finnair’s balance sheet
items, currency denominated purchase agreements, anticipated currency denominated purchases and
sales as well as future jet fuel purchases. The balance sheet exposure is hedged only at group level, except for
Finnair Aircraft Finance that has hedged its own exposures. The combined entity-level exposure for all Group
companies differs from the Group-level exposure by the amount of intercompany items. Therefore, the balance
sheet position and contracts hedging it are presented only in note 3.5. of the Group financial statements. Similarly,
the foreign currency cash flow exposure is only hedged at the Group level to take advantage of the netting
effect, and is presented in note 3.5 of the Group financial statements. Derivative contracts are valued using the
rates on the balance sheet date according to Accounting Act 5:2 a §.
The derivatives are initially recognized at original acquisition cost (fair value) in the balance sheet and
subsequently valued at fair value in each financial statement and interim report. The fair values of the derivatives
are based on the value at which the instrument could be exchanged between knowledgeable, willing and
independent parties, with no compulsion to sell or buy in the sales situation. The fair values of derivatives are
determined as follows.
The fair values of all derivatives are calculated using the exchange rates, interest rates, volatilities and
commodity price quotations on the closing date. The fair values of currency forward contracts are calculated as
the present value of future cash flows. The fair values of currency options are calculated using the Black-Scholes
option pricing model. The fair values of interest rate and currency swap contracts are calculated as the present
value of future cash flows. The fair values of interest rate options are calculated using generally accepted option
valuation models. The fair values of commodity forward contracts are calculated as the present value of future
cash flows. The fair values of commodity options are calculated using generally accepted option valuation
models.
Gains and losses arising from changes in the fair value are presented in the financial statements according
to the original classification of the derivative. Gains and losses on derivatives qualifying for hedge accounting
are recognized in accordance with the underlying asset being hedged. At inception, derivative contracts are
designated as future cash flows hedges, hedges of binding purchase contracts (cash flow hedges or fair value
hedges) or as derivatives not meeting the hedge accounting criteria or to which hedge accounting is not applied
(economic hedges). Hedging of the fair value of net investments of foreign units or embedded derivatives have
not been used.
At the inception of hedge accounting, Finnair documents the economic relationship and the hedge ratio
between the hedged item and the hedging instrument, as well as the company’s risk management objectives
and the strategy for the inception of hedging. At the inception of hedging, and at least at the time of each
financial statement, Finnair documents and assesses the effectiveness of hedge relationships by examining the
Finnair – Financial Information 2021 84
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
past and prospective capacity of the hedging instrument to offset changes in the fair value of the hedged item
or changes in cash flows. The values of derivatives in a hedging relationship are presented in the balance sheet
items current assets and current liabilities.
Finnair implements the IFRS hedge accounting principles in the hedging of future cash flows (cash flow
hedging). The principles are applied to the foreign currency risk of foreign currency denominated purchases and
sales, the price risk of jet fuel purchases and the price risk of electricity.
The change in the fair value of the effective portion of derivative instruments that fulfil the terms of cash flow
hedging are directly recognised in the fair value reserve of other comprehensive income, to the extent that the
requirements for the application of hedge accounting have been fulfilled. The gains and losses, recognised in fair
value reserve, are transferred to the income statement in the period in which the hedged item is recognised in
the income statement. When an instrument acquired for the hedging of cash flow matures or is sold, or when the
criteria for hedge accounting are no longer fulfilled, the gain or loss accrued from hedging instruments remains
in equity until the forecast transaction takes place. However, if the forecasted hedged transaction is no longer
expected to occur, the gain or loss accrued in equity is immediately recognised in the income statement.
Financial assets and liabilities
Financial assets have been classified into the following categories: amortised cost and fair value through
profit and loss. The classification is made at the time of the original acquisition based on the objective of the
business model and the contractual cash flows of the investment. All purchases and sales of financial assets
are recognised on the trade date. Liabilities are recognised at acquisition cost. Financial assets at fair value
through profit and loss as well as assets and liabilities maturing within 12 months are included in current assets
and liabilities. Investments in debt securities are measured at amortised cost, but only when the objective of
the business model is to hold the asset to collect the contractual cash flows and the asset’s contractual cash
flows represent only payments of principal and interest. Financial assets recognised at amortised cost are
valued using the effective interest method. Financial assets valued at amortised cost include trade receivables,
deferred charges and security deposits for aircraft operating lease agreements. Due to the nature of short-term
receivables and other receivables, their book value is expected to be equal to the fair value. Derecognition
of financial assets takes place when Finnair has lost its contractual right to receive cash flows or when it has
substantially transferred the risks and rewards outside the company.
Finnair recognises impairment provisions based on lifetime expected credit losses from trade receivables
in accordance with IFRS 9. Finnair has chosen to apply a simplified credit loss matrix for trade receivables as
trade receivables do not have a significant financing component. The expected credit loss model is forward-
looking, and expected default rates are based on historical realised credit losses. The lifetime expected credit
loss allowance is calculated using the gross carrying amount of outstanding trade receivables in each aging
bucket and an expected default rate. The changes in expected credit losses are recognised in other expenses
in the consolidated income statement. The impairment model does not apply to financial investments, such as
bonds and money market funds, included in other financial assets as those are measured at fair value through
profit and loss under IFRS 9, which already takes into account expected credit losses. With respect to the assets
measured at amortised cost, Finnair is actively following such instruments and will recognise impairment through
profit and loss if there is evidence of deterioration in credit quality.
Fixed assets and depreciation
• Buildings, 10–50 years from the time of acquisition to a residual value of 10%.
• Other tangible assets, over 3–15 years
Research and development costs
Except for major software development costs, research and development costs are expensed as they occur.
Research and development of aircraft, systems and operations is conducted primarily by the manufacturers.
Leasing
Lease payments for aircraft are significant. Annual lease payments are treated as rental expenses. Lease
payments due in future years under aircraft lease contracts are presented as off-balance sheet items.
Appropriations
The difference between total and planned depreciation is shown as accumulated appropriations in the balance
sheet and the change during the financial year in the income statement. Appropriations contain also given and
received group contributions.
Income taxes
Income taxes in the income statement include taxes calculated for the financial year based on Finnish tax
provisions, adjustments to taxes in previous financial years and the change in deferred taxes.
Pension schemes
The mandatory pension cover of the company’s domestic employees has primarily been arranged through a
Finnish pension insurance company and other additional pension cover through the Finnair pension fund or a
Finnish pension insurance company. Since 1992, the pension fund has no longer accepted employees other than
pilots for additional pension coverage. The Finnair pension fund’s pension obligation is fully covered with respect
to additional coverage. Pension fund liabilities are presented in the notes to the financial statements.
Provisions
Provisions in the balance sheet and entered as expenses in the income statement comprise those items which the
company is committed to covering through agreements or otherwise in the foreseeable future and which have
no corresponding revenue and whose monetary value can be reasonably assessed.
The company is obliged to return leased aircraft at the required redelivery condition. To fulfil these
maintenance obligations the company has recognised provisions based on flight hours flown during the
maintenance period.
6.2 Revenue by business area
EUR mill. 2021 2020
Revenue by division
. .
Passenger revenue . .
Ancillary services . .
Cargo revenue . .
Distribution of turnover by market areas based on flight routes, % of turnover
Finland % %
Europe % %
Other countries % %
Total % %
6.3 Other operating income
EUR mill. 2021 2020
Aircraft lease income . .
Other rental income . .
Other income . .
Total . .
Finnair – Financial Information 2021 85
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
6.4 Materials and services
EUR mill. 2021 2020
Materials and supplies
Ground handling and catering expenses . .
Fuel costs . .
Aircraft materials and overhaul . .
IT expenses . .
Other items . .
Total . .
6.5 Staff costs
EUR mill. 2021 2020
Wages and salaries . .
Pension expenses . .
Other social expenses . -.
Total . .
Salary and bonus expenses of Chief Executive Officer
and Members of the Board of Directors
Chief Executive Officer and his deputy . .
Board of Directors . .
Personnel on average , ,
6.6 Planned depreciation and amortisation
EUR mill. 2021 2020
On other long-term expenditure . .
On buildings . .
On other equipment . .
Total . .
6.7 Other operating expenses
EUR mill. 2021 2020
Lease payments for aircraft . .
Other rents for aircraft capacity . .
Office and other rents . .
Traffic charges . .
Sales and marketing expenses . .
Other expenses . .
Total . .
Audit fees in other expenses
EUR mill. 2021 2020
Authorised Public Accountants KPMG KPMG
Auditor's fees . .
Tax advising .
Other fees . .
Total . .
6.8 Financial income and expenses
EUR mill. 2021 2020
Dividend income
From other companies . .
Total . .
Interest income
From group companies . .
From other companies
Net gains on debt instruments held mandatorily at FVPL -. .
Other interest income . .
Total . .
Gains on disposal of shares .
Interest expenses
To other companies -. -.
Total -. -.
Other financial income
Financial income from discontinued hedges . .
Total . .
Other financial expenses
Financial expenses for discontinued hedges -. -.
Other -. -.
Total -. -.
Exchange gains and losses . -.
Financial income and expenses total -. -.
Finnair – Financial Information 2021 86
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
6.9 Appropriations
EUR mill. 2021 2020
Change in depreciation difference . .
Received group contribution . .
Total . .
6.10 Income taxes
EUR mill. 2021 2020
Income tax for the financial year . .
Change in deferred taxes . .
Total . .
6.11 Intangible assets
EUR mill. 2021 2020
Other long-term expenditure
Acquisition cost 1 January . .
Additions . .
Disposals -. -.
Reclassification -.
Acquisition cost 31 December . .
Accumulated depreciation 1 January -. -.
Disposals . .
Depreciation and reduction in value -. -.
Accumulated depreciation 31 December -. -.
Book value 31 December . .
Intangible assets Total 31 December . .
6.12 Tangible assets
Tangible assets 2021
EUR mill. Land Buildings
Other
equipment
Advances
paid Total
Acquisition cost 1 January . . . . .
Additions . . .
Reclassification . .
Disposals . -. -. -. -.
Acquisition cost 31 December . . . . .
Accumulated depreciation 1 January -. -. -.
Disposals . . .
Depreciation and reduction in value -. -. -.
Accumulated depreciation 31 December -. -. -.
Book value 31 December . . . . .
The share of machines and equipment
in the book value of tangible assets 31
December . %
Tangible assets 2020
EUR mill. Land Buildings
Other
equipment
Advances
paid Total
Acquisition cost 1 January . . . . .
Additions . . .
Disposals -. -. -.
Acquisition cost 31 December . . . . .
Accumulated depreciation 1 January -. -. -.
Disposals . .
Depreciation and reduction in value -. -. -.
Accumulated depreciation 31 December -. -. -.
Book value 31 December . . . . .
The share of machines and equipment
in the book value of tangible assets 31
December .%
Finnair – Financial Information 2021 87
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
6.13 Investments
EUR mill. 2021 2020
Group companies
Acquisition cost 1 January . .
Additions . .
Book value 31 December . .
Associates and joint ventures
Acquisition cost 1 January . .
Disposals -.
Book value 31 December . .
Shares in other companies
Acquisition cost 1 January . .
Book value 31 December . .
Associates and joint ventures
Share of
parent
company %
Nordic Regional Airlines AB, Sweden .
Group companies
Share of
parent
company %
Share of
parent
company %
Finnair Cargo Oy, Finland . Kiinteistö Oy Lentokonehuolto, Finland .
Finnair Aircraft Finance Oy, Finland . Amadeus Finland Oy, Finland .
Northport Oy, Finland .
Oy Aurinkomatkat - Suntours Ltd Ab,
Finland .
Finnair Technical Services Oy, Finland . FTS Financial Services Oy, Finland .
Finnair Engine Services Oy, Finland . Finnair Business Services OÜ, Estonia .
Finnair Kitchen Oy, Finland .
On 1 July 2021, Finnair Plc sold its 49.5% share of Suomen Ilmailuopisto Oy to the city of Pori and to the Government
of Finland. On 16 December 2021 Finnair Plc increased its investments to Oy Aurinkomatkat - Suntours Ltd Ab,
Finland by 9,000,000 euro and to Finnair Kitchen Oy, Finland by 4,000,000 euro.
6.14 Non-current loan and other receivables
EUR mill. 2021 2020
From group companies .
From other companies . .
Total . .
6.15 Deferred tax assets
EUR mill. 2021 2020
Deferred tax assets 1 January . .
From result for the financial year . .
From temporary differences . .
From valuation of derivates at fair value -. .
Offset against deferred tax liabilities -.
Deferred tax assets 31 December . .
6.16 Current receivables
EUR mill. 2021 2020
Short-term receivables from group companies
Trade receivables . .
Group contribution receivable . .
Accrued income and prepaid expenses . .
Other receivables . .
Total . .
Short-term receivables from associates and joint ventures
Trade receivables . .
Prepaid expenses . .
Total . .
Short-term receivables from others
Trade receivables . .
Prepaid expenses . .
Derivative financial instruments . .
Other receivables . .
Total . .
Short-term receivables total . .
Accrued income and prepaid expenses
2021 2020
Sales accruals . .
Employee related deferred charges and receivables . .
Other prepaid expenses . .
Accrued income and prepaid expenses total . .
Finnair – Financial Information 2021 88
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
6.17 Investments
EUR mill. 2021 2020
Short-term investments at fair value . .
6.18 Cash and bank equivalents
EUR mill. 2021 2020
Funds in group bank accounts and deposits maturing in three months . .
6.19 Shareholder’s equity
EUR mill.
Share
capital
Share
premium
account
Legal
reserve
Hedging
reserve
Un-
restricted
equity
funds
Retained
earnings
Equity
total
Equity 1.1.2021 . . . -. . -. .
Change in fair value of
equity instruments . .
Share-based payments . .
Purchase of own shares -. -.
Result for the financial year -. -.
Equity 31.12.2021 . . . . . -. .
EUR mill.
Share
capital
Share
premium
account
Legal
reserve
Hedging
reserve
Un-
restricted
equity
funds
Retained
earnings
Equity
total
Equity 1.1.2020 . . . . . . .
Change in fair value of
equity instruments -. -.
Share issue . .
Share-based payments . .
Result for the financial year -. -.
Equity 31.12.2020 . . . -. . -. .
Distributable equity
EUR mill. 2021 2020
Hedging reserve -.
Unrestricted equity funds . .
Retained earnings -. .
Profit/loss for the financial year -. -.
Total . .
Share and dividends information is available in Financial statements in group note 3.9.
6.20 Accumulated appropriations
EUR mill. 2021 2020
Accumulated depreciation difference 1 January . .
Change in depreciation difference -. -.
Accumulated depreciation difference 31 December . .
Accumulated appropriations total . .
6.21 Provisions
EUR mill. 2021 2020
Provisions 1 January . .
Provision for the period . .
Provision used -. -.
Exhange rate differences . -.
Provisions 31 December . .
Of which long-term . .
Of which short-term . .
Total . .
Long-term aircraft maintenance provisions are expected to be used by 2033.
6.22 Non-current liabilities
EUR mill. 2021 2020
Loans from financial institutions . .
Bonds . .
Hybrid loan . .
Other liabilities . .
Total . ,.
Maturity of interest-bearing liabilies
1–5 years . .
after 5 years . .
Total . ,.
Finnair Plcissued on 19.05.2021 a senior unsecured bond of EUR 400 million. The 4-year Bond matures on 19 May
2025, it carries a fixed annual interest of 4.250 per cent.
Finnair – Financial Information 2021 89
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
6.23 Current liabilities
EUR mill. 2021 2020
Current liabilities to group companies
Trade payables . .
Accruals and deferred income . .
Group bank account liabilities . .
Total . .
Current liabilities to associates and joint ventures
Trade payables . .
Accruals and deferred income . .
Total . .
Current liabilities to others
Loans from financial institutions .
Trade payables . .
Accruals and deferred income . .
Other liabilities . .
Total . .
Current liabilities total ,. .
Accruals and deferred income
Unflown air transport revenues . .
Jet fuels and traffic charges . .
Holiday payment liability . .
Loyalty program Finnair Plus . .
Derivative financial instruments . .
Other items . .
Total . .
6.24 Collateral, contingent liabilities and other commitments
EUR mill. 2021 2020
Guarantees and contingent liabilities
On behalf of group companies . .
Total . .
Aircraft lease payments
Within one year . .
After one year and not later than 5 years ,. ,.
Later than 5 years . .
Total ,. ,.
Parent company has leased the aircraft fleet from the fully owned subsidiary.
Other lease payments
Within one year . .
After one year and not later than 5 years . .
Later than 5 years . .
Total . .
Pension obligations
Total obligation of pension fund . .
Non-mandatory benefit covered -. -.
Total . .
Finnair – Financial Information 2021 90
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
6.25 Derivatives
2021 2020
EUR mill.
Nominal
value
Positive
fair
values
Negative
fair
values
Fair net
value
Nominal
value
Positive
fair
values
Negative
fair
values
Fair net
value
Currency derivatives
Operational cash flow hedging
(forward contracts) . . -. . . . -. -.
Operational cash flow hedging,
bought options . . . . . .
Operational cash flow hedging,
sold options . . . . -. -.
Hedge accounting items total . . -. . . . -. -.
Operational cash flow hedging
(forward contracts) . . -. .
Operational cash flow hedging,
bought options . . .
Operational cash flow hedging,
sold options . . -. .
Balance sheet hedging (forward
contracts) . . .
Items outside hedge accounting
total . . -. .
Currency derivatives total . . -. . . . -. -.
Commodity derivatives
Jet fuel forward contracts, tonnes , . -. . , . -. -.
Bought options, jet fuel, tonnes
Sold options, jet fuel, tonnes
Hedge accounting items total . -. . . -. -.
Jet fuel forward contracts, tonnes , . -. -.
Items outside hedge accounting
total . -. -.
Commodity derivatives total . . -. . -. -.
Derivatives total* . -. . . -. -.
* Positive (negative) fair value of hedging instruments on 31 Dec 2021 is presented in the statement of financial position in the item
derivative assets within current assets (derivative liabilities within current liabilities).
6.26 Financial assets and liabilities measured at fair value
Fair value hierarchy of financial assets and liabilities valued at fair value
Fair values at the end of the reporting period
EUR mill. 31 Dec 2021 Level 1 Level 2
Financial assets at fair value
Securities held for trading . . .
Derivatives
Currency derivatives . .
- of which in cash flow hedge accounting . .
Commodity derivatives . .
- of which in cash flow hedge accounting . .
Total . . .
Financial liabilities at fair value
Derivatives
Currency derivatives .
- of which in cash flow hedge accounting .
Commodity derivatives .
- of which in cash flow hedge accounting .
Total .
6.27 Fuel price risk in flight operations
Timing of the notional and hedged price
Maturity
31 December 2021
Hedged price
$/tonne
Notional
amount (tonnes) Under 1year 1 to 2 years
Jet fuel consumption priced with NWE index
. , , ,
Foreign exchange risk
Maturity
Timing of the notional
EUR mill.
31 December 2021
Average
exchange rate
of hedging
instruments
against the euro
Notional
amount (gross)
Less than
1year 1 to 2 years
USD
. . .
JPY
. . .
Cross-currency interest rate swaps are included in the nominal amount calculation.
Finnair – Financial Information 2021 91
Review of the year 2021
The Report of the
Board of Directors
Financial Statements
Board of Directors’
Proposal on the Dividend
Auditor’s Report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Board of directors’proposal on the dividend
Finnair Plc’s distributable equity on 31 December 2021 amounts to 73,709,760.76 euros, of which the net result for
the financial year 2021 is -307,023,080.56 euros.
The Board of Directors proposes to the Annual General Meeting that no dividend be paid based on the balance
sheet to be adopted for the financial year, which ended on 31 December 2021, and the result be retained in the
equity.
Signing of the Report of the Board of Directors and the Financial Statements
Helsinki, 16 February 2022
The Board of Directors of Finnair Plc
Jouko Karvinen Tiina Alahuhta-Kasko Colm Barrington
Montie Brewer Jukka Erlund Hannele Jakosuo-Jansson
Henrik Kjellberg Maija Strandberg
Topi Manner
President and CEO of Finnair Plc
Finnair – Financial Information 2021 92
Review of the year 2021
The Report of the
Board of Directors
Auditor’s Report
Board of Directors’
Proposal on the Dividend
Financial Statements
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Auditor’s report (This document is an English translation of the Finnish auditor’s report. Only the Finnish version of the report is legally binding.)
To the Annual General Meeting of Finnair Plc
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Finnair Plc (business identity code 0108023-3) for the year ended
31 December, 2021. The financial statements comprise the consolidated balance sheet, income statement,
statement of comprehensive income, statement of changes in equity, statement of cash flows and notes,
including a summary of significant accounting policies, as well as the parent company’s balance sheet, income
statement, statement of cash flows and notes.
In our opinion
— the consolidated financial statements give a true and fair view of the group’s financial position, financial
performance and cash flows in accordance with International Financial Reporting Standards (IFRS) as adopted
by the EU
— the financial statements give a true and fair view of the parent company’s financial performance and
financial position in accordance with the laws and regulations governing the preparation of financial statements
in Finland and comply with statutory requirements.
Our opinion is consistent with the additional report submitted to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good
auditing practice are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements
section of our report.
We are independent of the parent company and of the group companies in accordance with the ethical
requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
In our best knowledge and understanding, the non-audit services that we have provided to the parent
company and group companies are in compliance with laws and regulations applicable in Finland regarding
these services, and we have not provided any prohibited non-audit services referred to in Article 5(1) of regulation
(EU) 537/2014. The non-audit services that we have provided have been disclosed in note 1.3.3 to the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Materiality
The scope of our audit was influenced by our application of materiality. The materiality is determined based on
our professional judgement and is used to determine the nature, timing and extent of our audit procedures and
to evaluate the effect of identified misstatements on the financial statements as a whole. The level of materiality
we set is based on our assessment of the magnitude of misstatements that, individually or in aggregate, could
reasonably be expected to have influence on the economic decisions of the users of the financial statements.
We have also taken into account misstatements and/or possible misstatements that in our opinion are material
for qualitative reasons for the users of the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters. The significant risks of material misstatement referred to in the EU Regulation No 537/2014 point
(c) of Article 10(2) are included in the description of key audit matters below.
We have also addressed the risk of management override of internal controls. This includes consideration of
whether there was evidence of management bias that represented a risk of material misstatement due to fraud.
The key audit matter How the matter was addressed in the audit
Financial position and funding arrangements
(Refer to Accounting principles for consolidated financial statements and Notes 3.3 and 3.5)
Resulting from the prolonged COVID-19 pandemic the
Group has incurred a net loss of € 464 million decreasing
the equity to € 476 million. Liquid funds amounted to
€1,150 million and the interest-bearing liabilities were
€2,809 million.
Finnair continued adjusting its operations and executing
its extensive financing programme.
As disclosed in the accounting principles to the financial
statements due to the current uncertainty embedded
in the economic environment and the difficulty in
forecasting the ultimate duration and impact of the
COVID-19 pandemic, the Board of Directors have
reviewed three different scenarios prepared by the
management. According to the assessment of the Board
of Directors Finnair will be able to meet its obligations
under all three scenarios as they fall due at least 12
months after the date of the issuance of the financial
statements.
With the involvement of KPMG valuation and IFRS
specialists, we assessed the terms of the financing
agreements and the impacts on classification and
recognition in relation to accounting principles and
accounting standards applied in the consolidated
financial statements.
We obtained an understanding of the financial
forecasting process. We analysed, among others,
cash flow forecasts based on different scenarios, the
reliability of the data underlying the forecasts and
whether effective implementation of management
plans is reasonable.
We challenged the appropriateness of key assumptions
used in the cash flow forecasts that require significant
management judgement.
We evaluated the sensitivity calculations prepared by
the management to test the headroom for the Group to
be able to conduct its adjusted business operations.
In addition, we assessed the appropriateness of the
disclosures provided on the financing arrangements
and financial position.
Finnair – Financial Information 2021 93
Review of the year 2021
The Report of the
Board of Directors
Board of Directors’
Proposal on the Dividend
Auditor’s ReportFinancial Statements
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
The key audit matter How the matter was addressed in the audit
Fleet valuation
(Refer to Accounting principles for consolidated financial statements and Note 2)
The Group has own aircraft and right of use aircraft
with total carrying value of € 1,972 million representing
49 % of total consolidated assets. The aircraft-related
depreciation charge was € 279 million. As a result of the
COVID-19 pandemic, part of the aircraft fleet has been
grounded and several aircraft refinancing transactions
were executed as part of investment optimization.
The evaluation of the expected useful life of the
components of the aircraft, the expected residual
value, impairment of existing aircraft and assessment
of whether onerous contract exists related to the future
committed aircraft purchases requires a significant
degree of management judgement.
The valuation of the fleet is considered as a key
audit matter due to the significance to the Group’s
consolidated statement of financial position, due to
management judgement and inherent uncertainty
increased by pandemic involved in forecasting future
cash flows.
We assessed the reasonableness of assumptions
made for useful lives, components and residual values
regarding owned and leased aircraft and reconciled
these assumptions against carrying values of aircraft
components and associated depreciation recorded in
the income statement.
Our audit procedures, with the involvement of KPMG
valuation specialists, included testing the integrity of
the calculations and the technical model. We have
challenged the assumptions used in impairment testing
and their reasonableness by reconciling against
external industry market data, scenarios approved by
the Board of Directors and our own views.
Furthermore, we considered the potential impact of
uncertainties related to COVID-19 on the assumptions
within management’s cash flow estimates. We
performed our own sensitivity analyses over the key
assumptions used.
We assessed the appropriateness of the related
disclosures.
Deferred passenger revenue
(Refer to Accounting principles for consolidated financial statements and Note 1.2.4)
The deferred passenger revenue amounted to € 291
million. Passenger ticket sale is presented as deferred
income in the consolidated statement of financial
position from the point of sale until the flight is flown
and the sale is recognized as revenue. Recognition of
unused tickets as revenue is based on the expected
breakage amount of tickets remaining unused. The
points earned in the customer loyalty program are
measured at fair value and recognised as a decrease of
revenue and debt at the time when the points-earning
event is recognised as revenue or when the points
expire. COVID-19 pandemic has increased the level of
uncertainty about the expected customer behaviour.
Large volumes of transactions flow through various
computer systems from the date of sale until revenue
is recognized in the consolidated statement of profit or
loss. The recording process is complex, which gives rise
to inherent risk of error, in determining the amount and
timing of the revenue recognition.
Timing and accuracy in the recording of passenger
revenue is therefore determined as a key audit matter in
our audit of the consolidated financial statements.
We obtained an understanding of revenue recognition
process. We used data analytics tools for identifying
revenue flows and risks in revenue recognition of ticket
sales and focused our audit on key risks identified.
Further, we used data analyses in testing deferred
revenue of unflown tickets.
We evaluated the design and tested the operating
effectiveness of key controls over revenue recognition.
We tested the mathematical accuracy and input data
of the calculation used to recognize revenues from the
breakage model.
We also analysed the assumptions used in the revenue
recognition of the customer loyalty program.
We tested a sample of passenger revenue recognized
as well as a sample of unused tickets in the deferred
revenue.
The key audit matter How the matter was addressed in the audit
Aircraft maintenance provision
(Refer to Accounting principles for consolidated financial statements and Note 1.3.6)
The Group operates aircrafts which are owned or
held under lease agreement. The Group is obliged to
return leased aircraft and their engines according to
the redelivery condition set in the lease agreement.
To fulfil these maintenance obligations, the Group
has recognised airframe heavy maintenance, engine
performance maintenance, engine life limited part and
other material maintenance provisions amounting to €
196 million.
The measurement of aircraft maintenance provisions
requires management judgement especially related
to timing of maintenance events and valuation of
maintenance costs occurring in the future. The future
maintenance costs and their timing are dependent on,
for example, how future traffic plans realise, the market
price development of maintenance costs and the actual
condition of the aircraft at the time of the maintenance
event.
We identified aircraft maintenance provision as a
key audit matter due to the inherently complex model
and management judgement incorporated in the
assumptions used in the calculation.
We obtained an understanding of the process by which
the lease agreements are analysed and recorded in the
maintenance model and by which the variable factors
within the provision are estimated.
We evaluated the appropriateness of the maintenance
provision model and challenged the key assumptions
used such as expected timing and cost of maintenance
checks.
We obtained and inspected a sample of asset lease
agreements to evaluate the completeness of the
restoration and return liabilities for obligations at the
redelivery at the end of the lease.
We tested the input data and mathematical accuracy
of the calculations as well as recalculated the
maintenance provision by using data analysis tools.
In addition, we performed retrospective analysis on the
accuracy of the provision.
Defined benefit pension plans
(Refer to Accounting principles for consolidated financial statements and Note 1.3.8.2)
The liability recognised in the balance sheet in respect
of defined benefit pension plans is the present value of
the defined benefit obligation at the end of the reporting
period less the fair value of plan assets. The net defined
benefit pension asset amounted to € 81 million.
The defined benefit obligation is calculated by
independent actuaries using the projected unit credit
method and based on actuarial assumptions. The
present value of the defined benefit obligations is
determined by discounting the estimated future cash
flows using interest rates of high-quality bonds with
consistent maturities.
The plan assets are valued at fair value involving use of
judgment in particular relating to unlisted investments.
We considered valuation of the defined benefit
obligation and plan assets as a key audit matter in the
audit of the Group due to materiality of the related
balances and judgments involved in these estimates.
With the assistance of KPMG pension specialist,
we assessed the appropriateness of the actuarial
assumptions used in calculating the defined benefit
pension obligation.
We assessed the appropriateness of the valuation
methods, estimates and judgements used by
management to value the assets.
We tested the valuation of the plan assets related to
defined employee benefit plans by testing a sample of
listed equity holdings against prevailing market prices at
closing date.
Related to unlisted investments we have created
independent expectation based on the nature of the
investment, historical purchase price and publicly
available information on similar investments and
compared that to the management valuation.
In addition, we assessed the appropriateness of the
related disclosures.
Finnair – Financial Information 2021 94
Review of the year 2021
The Report of the
Board of Directors
Board of Directors’
Proposal on the Dividend
Auditor’s ReportFinancial Statements
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Responsibilities of the Board of Directors and the Managing Director for the Financial Statements
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial
statements that give a true and fair view in accordance with International Financial Reporting Standards
(IFRS) as adopted by the EU, and of financial statements that give a true and fair view in accordance with the
laws and regulations governing the preparation of financial statements in Finland and comply with statutory
requirements. The Board of Directors and the Managing Director are also responsible for such internal control
as they determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the Managing Director are responsible for
assessing the parent company’s and the group’s ability to continue as a going concern, disclosing, as applicable,
matters relating to going concern and using the going concern basis of accounting. The financial statements
are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent
company or the group or cease operations, or there is no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of the financial
statements.
As part of an audit in accordance with good auditing practice, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
— Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
— Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
parent company’s or the group’s internal control.
— Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
— Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going
concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the parent company’s or the group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the parent company or the group to cease to continue as
a going concern.
— Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events so that the financial
statements give a true and fair view.
— Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the group to express an opinion on the consolidated financial statements. We are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Other Reporting Requirements
Information on our audit engagement
We were first appointed as auditors by the Annual General Meeting on May 29, 2020, and our appointment
represents a total period of uninterrupted engagement of two years.
Other Information
The Board of Directors and the Managing Director are responsible for the other information. The other
information comprises the report of the Board of Directors and the information included in the Annual Report,
but does not include the financial statements and our auditor’s report thereon. We have obtained the report of
the Board of Directors prior to the date of this auditor’s report, and the Annual Report is expected to be made
available to us after that date. Our opinion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
With respect to the report of the Board of Directors, our responsibility also includes considering whether the
report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
In our opinion, the information in the report of the Board of Directors is consistent with the information in
the financial statements and the report of the Board of Directors has been prepared in accordance with the
applicable laws and regulations.
If, based on the work we have performed on the other information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Other opinions
We support that the financial statements and the consolidated financial statements should be adopted. The
proposal by the Board of Directors regarding the treatment of distributable funds is in compliance with the
Limited Liability Companies Act. We support that the Members of the Board of Directors of the parent company
and the Managing Director should be discharged from liability for the financial period audited by us.
Helsinki, 16 February 2022
KPMG OY AB
KIRSI JANTUNEN
Authorized Public Accountant, KHT
Finnair – Financial Information 2021 95
Review of the year 2021
The Report of the
Board of Directors
Board of Directors’
Proposal on the Dividend
Auditor’s ReportFinancial Statements
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
1. Operating result
2. Fleet and other fixed assets and leasing
arrangements
3. Capital structure and financing costs
4. Consolidation
5. Other notes
6. Parent company financial statements
Board of directors’ proposal on the dividend
Auditor’s report
Independent Auditor’s Reasonable Assurance Report
on Finnair Plc’s ESEF Financial Statements
To the Board of Directors of Finnair Plc
We have undertaken a reasonable assurance engagement on the iXBRL marking up of the consolidated
financial statements for the year ended 31 December, 2021, included in the Finnair Plc’s digital files
[213800SB6EOB8SSK9W63-2021-12-31-en.zip] prepared in accordance with the requirements of Article 4 of EU
Delegated Regulation 2018/815 (ESEF RTS).
The Responsibility of the Board of Directors and Managing Director
The Board of Directors and Managing Director are responsible for preparing the report of the Board of Directors
and financial statements (ESEF financial statements) that comply with the requirements of ESEF RTS. This
responsibility includes:
— preparation of ESEF financial statements in XHTML format in accordance with Article 3 of the ESEF RTS
— marking up the consolidated financial statements included in the ESEF financial statements with iXBRL tags in
accordance with Article 4 of the ESEF RTS; and
— ensuring consistency between ESEF financial statements and audited financial statements.
The Board of Directors and the Managing Director are also responsible for such internal control as they deem
necessary to prepare the ESEF financial statements in accordance with the requirements of the ESEF RTS.
Auditor’s Independence and Quality Control
We are independent of the company in accordance with the ethical requirements applicable in Finland, which
apply to the engagement we have performed, and we have fulfilled our other ethical obligations in accordance
with these requirements.
The auditor applies International Standard on Quality Control 1 and accordingly maintains a comprehensive
system of quality control including documented policies and procedures regarding compliance with ethical
requirements, professional standards and applicable legal and regulatory requirements.
Auditor’s Responsibility
In accordance with the Engagement Letter our responsibility is to express an opinion on whether the marking up
of the consolidated financial statements included in the ESEF financial statements comply in all material respects
with the Article 4 of the ESEF RTS. We conducted our reasonable assurance engagement in accordance with
International Standard on Assurance Engagements 3000.
The engagement involves procedures to obtain evidence whether;
— the consolidated financial statements included in the ESEF financial statements are, in all material respects,
marked up with iXBRL tags in accordance with Article 4 of the ESEF RTS, and;
— the ESEF financial statements and the audited financial statements are consistent with each other.
The nature, timing and the extent of procedures selected depend on practitioner’s judgement. This includes the
assessment of the risks of material departures from the requirements set out in the ESEF RTS, whether due to
fraud or error.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Opinion
In our opinion, the consolidated financial statements included in the ESEF financial statements of Finnair Plc
identified as [213800SB6EOB8SSK9W63-2021-12-31-en.zip] for the year ended 31 December, 2021 are marked up,
in all material respects, in compliance with the ESEF Regulatory Technical Standard.
Our audit opinion relating to the consolidated financial statements of Finnair Plc for the year ended 31
December, 2021 is set out in our Auditor’s Report dated 16 February, 2022. In this report, we do not express an audit
opinion, review conclusion or any other assurance conclusion on the consolidated financial statements.
Helsinki 16 February, 2022
KPMG OY AB
Kirsi Jantunen
Authorised Public Accountant, KHT
Finnair – Financial Information 2021 96
Review of the year 2021
The Report of the
Board of Directors
Board of Directors’
Proposal on the Dividend
Auditor’s ReportFinancial Statements
Contact information
House of Travel and Transportation
Finnair Oyj
Tietotie 9 A (Helsinki Airport)
01053 FINNAIR
Tel. +358 600 0 81881
(1,25 €/answered call + local charge)
company.finnair.com
investors.finnair.com
www.facebook.com/finnair
www.facebook.com/finnairsuomi
www.twitter.com/Finnair
www.twitter.com/FinnairSuomi
https://blog.finnair.com/en/
https://blog.finnair.com/
www.instagram.com/feelfinnair/
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