Finnair and the LSG Group Begin Negotiations about New Forms of Cooperation as LSG Does Not Use Its Purchase Option of LSG Sky Chefs Finland Oy

Regulatory News:

Finnair Plc (HEX:FIA1S) Stock Exchange Release 1.11.2016 at 9.30 (EET)

LSG Sky Chefs Finland has been Finnair’s strategic partner in producing catering services at the Helsinki Airport since 2012.

Finnair and the LSG Group will begin negotiations about new forms of cooperation as the LSG Group does not exercise its purchase option of LSG Sky Chefs Finland Oy, a catering company based at the Helsinki Airport. Both companies formed a partnership in 2012, but now the cooperation in its current form will stop latest by 1.8.2017. The purpose of these negotiations is to agree about forms of cooperation after the partnership period. Finnair will now continue planning how catering-services at the Helsinki airport will be organized in the future with high quality and cost efficiency.

In accordance with the agreement made in 2012, the responsibility and control for the operative activities of LSG Sky Chefs Finland Oy (formerly Finnair Catering Oy) were transferred to LSG. The LSG Group had an option to purchase all shares of LSG Sky Chefs Finland until the end-October 2016. The LSG Group has now decided that they will not exercise its purchase option of LSG Sky Chefs Finland Oy.

"Inflight catering and inflight sales products are an important part of the journey. Further development of the customer experience is at the core of our strategy,” says Piia Karhu, Senior Vice President for Customer Experience at Finnair. Catering services therefore continue to be an important area and we see plenty of opportunities for further development. In this, the Helsinki-Vantaa based catering unit has a key role. Despite the change our cooperation will continue in many catering areas”.

"Finnair and the LSG Group will reshape our partnership in Helsinki. Finnair is an important customer to us in many areas – globally and in Helsinki. Some aspects of our partnership will be extended on a worldwide scale,” says Frank Theis, SVP Sales, Product & Marketing at the LSG Group. "At the same time, we will stay and grow in Finland and at Helsinki-Vantaa Airport while continuing to diligently serve all of our other customers.”

According to current estimates, the change does not have significant impact on Finnair’s operating result or financial standing.

LSG Sky Chefs Finland Oy is Finnair’s 100-percent owned subsidiary but fully under LSG’s control, operating at the Helsinki Airport area. It prepares and supplies meals and other services for inflight sales products primarily for Finnair and also for other airlines operating at Helsinki Airport. It currently employs 480 persons.

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Finnair is a network airline specialising in passenger and cargo traffic between Asia and Europe. Helsinki’s geographical location gives Finnair a competitive advantage, since the fastest connections between many European destinations and Asian megacities fly over Finland. Finnair’s vision is to offer its passengers a unique Nordic experience, and its mission is to offer the smoothest, fastest connections in the northern hemisphere via Helsinki and the best network to the world from its home markets. Finnair is the only Nordic carrier with a 4-star Skytrax ranking and a member of the oneworld alliance. In 2015, Finnair’s revenues amounted to EUR 2,255 million and it had a personnel of 4,800 at the year-end. Finnair Plc’s shares are quoted on Nasdaq Helsinki.

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