Finnair Proposes €600 Million Rights Issue to Strengthen Financial Position

Finnair (AY, Helsinki Vantaa) has unveiled plans for a rights issue, aiming to raise up to €600 million euros (USD 636 million) to enhance its financial standing. The strategic move, subject to approval at an extraordinary general meeting of shareholders scheduled for October 27, is supported by the carrier’s major shareholders, including the Finnish government, which owns approximately 55.8% of the company.

The rights issue, fully underwritten on a standby basis, is intended to be completed by the end of the year. Finnair outlined key objectives for the fundraising, including reducing financing costs, supporting sustainable growth, and ensuring capacity for future investments. The gross proceeds from the rights issue will fortify Finnair’s balance sheet, aligning with the company’s financial targets. These targets include achieving a 6% comparable operating profit margin by the end of 2025, maintaining a healthy debt-to-earnings ratio by the same period, and resuming shareholder distributions from 2025 based on 2024 earnings.

Part of the proceeds will also be allocated to repay a portion of an outstanding EUR 400 million (USD 424 million) capital loan. Coupled with the earlier redemption of a EUR 200 million (USD 212 million) hybrid bond on September 1, the rights issue is anticipated to significantly reduce Finnair’s financing costs.

Government support is evident as it plans to subscribe to its proportionate share of the new shares based on allocated subscription rights. Other major shareholders, including Varma Mutual Pension Insurance Company, Elo Mutual Pension Insurance Company, and Ilmarinen Mutual Pension Insurance Company, representing approximately 3.4% of the shares, have provided a binding commitment to endorse the proposal.

Finnair’s strategic move reflects its commitment to fortifying its financial foundation and pursuing sustainable growth in the ever-evolving aviation industry landscape.