Finnair has launched a €500 million rights issue a month after securing a €600 million state-backed loan.
The Finnish carrier’s Asia focussed long haul business model has left it exposed during the COVID-19 pandemic and last month it posted a €91.1 million Q1 loss, off the back of two profit warnings. Despite engaging in cost cutting measures including redundancies and sale and leaseback of aircraft it has been forced into a rights issue.
In a release to the Finnish stock exchange, Nasdaq Helsinki, Finnair today said the company plans to use the proceeds from the rights issue to strengthen its equity and liquidity position which has weakened due to the downturn in passenger traffic as part of the “exceptional situation” caused by the COVID 19 pandemic.
“The offering is aimed at ensuring Finnair’s viability in the post-crisis environment as well as helping to reach its goal of sustainable, profitable growth,” said the stock exchange release.
The European Commission gave its approval on June 9 to allow the Finnish state to take equity in Finnair without breaching state aid rules, although this ruling also required the airline to agree to conditions such as limits on executive pay.
In its statement Finnair said has a clear strategy to reach its goal of sustainable, profitable growth based on Helsinki’s favourable geographic position, growing focus markets, with goals to increase revenue, and a modern, fuel-efficient fleet.
“Finnair is determined to continue on its long-term strategic path despite temporary adjustments 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 related travel restrictions, still be a growth business, in which Finnair targets sustainable, profitable growth, supported by a strategy based on a geographical competitive advantage and strong ownership structure,” the stock exchange statement said.
Citi and Nordea act as the joint global coordinators, joint bookrunners and joint lead managers for the offering and OP Corporate Bank , Skandinaviska Enskilda Banken Helsinki Branch and Swedbank (in cooperation with Kepler Cheuvreux) act as the co-lead managers together with the joint global coordinators. Roschier, Attorneys is advising Finnair and White & Case is advising the banks.