Finnair and the State of Finland have signed an agreement on a hybrid loan of maximum €400 million to support Finnair. The decision was made by the Plenary Session of the Government on February 18, 2021. The arrangement has the approval of the EU Commission’s competition authority in line with the European Union’s state aid rules. The COVID-19 pandemic has led to travel restrictions which have caused severe losses to Finnair, which has been taken into account in the interest rate of the hybrid loan.
Of the credit limit, approximately €350 million 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 remaining approximately €50-million share will be brought to approval by the Commission at a later stage.
Finnair’s equity was €896.6 million at the end of year 2020 and cash reserves were €823.7 million.
“Through comprehensive and timely financing actions we have sought to secure a clear path for Finnair out of the pandemic. We are grateful for this important support by the State owner. The now approved hybrid loan is an important step in ensuring financial stability of Finnair even in a situation where the traffic recovery would start later than expected,” says Finnair CEO Topi Manner. “We continue to work to enhance our cost structure and secure our competitiveness, in order to be able to implement our strategy in the post pandemic, highly competitive market.”