Breakout session II:

Crisis Management

Crisis ManagementNordic IR Conference

26.5.2004

Taneli Hassinen

An exceptional situationA situation where the company’s ability to take care of its business is compromised

Caused by...• Accident, illness, injuries, loss of life• Sabotage, catastrophe, strike or war• Company under official and/or media observation• Serious damage to property• Activities of partners

Resulting in...• Interruption or down-sizing of business• Staff not able to take care of their duties• Dramatic drop in demand

“911” + 2h 35 min15:45 00:00 First plane hits the WTC15:50 00:05 Finnair gets first piece of information16:04 00:18 Second plane hits the WTC16:07 00:22 Information to the staff through the intranet16:10 00:25 Increase in level of crisis management16:15 00:30 Contact with Finnair flight AY005 on the way to NYC16:30 00:45 First contacts from media 16:40 00:55 Decision to take AY005 back to Helsinki16:45 01:00 Plane hits Pentagon in Washington17:00 01:15 1. Finnair press release17:00 01:15 Activation of de-briefing group17:12 01:27 Security level upgraded 18:00 02:15 Re-routing of Bangkok flight 18:20 02:35 2. Finnair press release

New York => New York11.09. Terrorist attacks in New York12.09. First contact from analysts

First Meeting of the crisis management groupSeptember Focus: 1. Safety and security

2. Adaptation of capacity and costs3. Communication

19.09. First negotiations with labour unions24.09. First profit warning02.10. Liquidation of Swissair08.10. SAS SK686 crash in Milan17.10. Cost cutting programme of 115 mill. euro19.10. Second profit warning06.11. Bankruptcy of Sabena12.11. American Airlines AA587 crash in New York19.11. Agreement on savings with five of seven unions

SARS epidemic• Media “infected” first: loosing sense of proportion• Only few victims in relation to other disease, but

low predictability created fear among public• Secrecy of the Chinese authorities delayed

effective actions and created unreliability• Travel ban lowered demand in China• Resulting in capacity cuts• Importance of Asia in Finnair strategy became a

challenge to IR• Losses were tens of millions of euros

Development in Demand AEA and Finnair

AEA: Association of European Airlines

TOTAL - Traffic (RPK) growth YoY in %

-35,0 %

-15,0 %

5,0 %

25,0 %

45,0 %

65,0 %

35 39 43 47 51 3 7 11 15 19 23 27 31 35 39 43 47 51 3 7 11 15 19 23 27 31 35 39 43 47 51 3 7 11 15

Week

Gro

wth

in %

Total AEA

AY

Demand in Finnair Asian Traffic vs. AEA

AEA: Association of European Airlines

FEA - Traffic (RPK) growth YoY in %

-60,0 %

-40,0 %

-20,0 %

0,0 %

20,0 %

40,0 %

60,0 %

80,0 %

100,0 %

120,0 %

140,0 %

35 39 43 47 51 3 7 11 15 19 23 27 31 35 39 43 47 51 3 7 11 15 19 23 27 31 35 39 43 47 51 3 7 11 15

Week

Ch

an

ge

%

Total AEA

AY

Big questions

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

Key objectives• Immediate reaction according to the recovery plan• Presence in media also steers market sentiment

take care of media needs:

• Communicate actively and immediately• Openness towards media• Ensure that media has the right facts• Provide staff with correct information• Well-considered statements on economics• As the acute phase is over, communicate with

capital markets

Prepare yourself in advance

• Be prepared - plans prepared in advance help to act correctly and quickly

• Plans for operations• Plans for communication• Spokespersons and guidelines for them• Templates for releases• Long-term relations with media and capital

markets - background information

A CRISIS well-handled,

can turn into a

VICTORY