Finnair (AY, Helsinki Vantaa) has announced plans for a rights issue of up to EUR600 million euros (USD636 million) to improve its financial position. The primary goals are to lower financing costs, support sustainable growth, and ensure capacity for future investments, the company said in a statement on October 6.
The carrier's main shareholders - Finland's government owns around 55.8% of the company - back the move, which is, however, conditional on an extraordinary general meeting of shareholders granting formal approval on October 27. The offering is fully underwritten on a standby basis and is expected to be completed by the end of this year.
Gross proceeds will strengthen Finnair's balance sheet and position it to achieve its financial targets, it said. These include a 6% comparable operating profit margin by the end of 2025, maintaining a healthy debt-to-earnings ratio by the end of 2025, and resuming shareholder distributions from 2025 based on 2024 earnings. Proceeds will also be used to repay part of an outstanding EUR400 million (USD424 million) capital loan. Coupled with the earlier redemption of a EUR200 million (USD212 million) hybrid bond on September 1, the offering is expected to significantly reduce the company's financing costs.
The government plans to subscribe to its proportionate portion of the new shares based on the subscription rights allocated to it. Other shareholders, including Varma Mutual Pension Insurance Company, Elo Mutual Pension Insurance Company, and Ilmarinen Mutual Pension Insurance Company, which collectively represent around 3.4% of the shares, have made a binding commitment to support the proposal.
