Finnair’s €600M Rights Issue

Finnair’s €600M Rights Issue

The same week that SAS announced that they would raise $1B+ to exit bankruptcy (and wipe clean existing shareholders), Finnair decided to strengthen its balance sheet and issue new shares worth €600M.

The airline is majority-owned by the Finnish government, which controls roughly 56% of the outstanding shares. The government will convert the respective amount of capital loans to shares, as will several insurance companies.

The interest rate that Finnair must pay on these capital loans (€400M) being converted to equity would soon be 9%, which is very expensive.

Finnair’s Announcement:

Finnair is planning a rights issue of up to EUR 600 million to strengthen its financial position

The rights issue is aimed at reducing Finnair’s financing costs, support strategy execution to drive sustainable profitable growth, and ensure ability for future investments. Through the rights issue Finnair also seeks to reinstate the company’s ability for shareholder distributions. The rights issue is supported by Finnair’s main shareholders, including the State of Finland.


Finnair Plc (the “Company”) has today published its notice to convene an Extraordinary General Meeting (“EGM”) for the purpose of authorising the Board of Directors to resolve on a share issue (the “Offering”) with pre-emptive subscription rights for the Company’s existing shareholders to raise gross proceeds of up to EUR 600 million.

The Offering will be conditional on the shareholders of the Company granting the authorisation sought at the EGM to be held on 27 October 2023. The Offering is expected to be completed during the fourth quarter of 2023, subject to market conditions.

Background to the Offering

The gross proceeds from the Offering will be used to strengthen Finnair’s balance sheet and financial position in order to position the Company to better manage its outstanding financial liabilities, to support the execution of its strategy to drive sustainable profitable growth, and ensure ability for future investments. The Offering is designed to position the Company to meet its key financial targets of a comparable operating profit margin of 6 per cent by the end of 2025, 1–2x net debt to comparable EBITDA by the end of 2025, and to reinstate the Company’s ability for shareholder distributions from 2025 onwards (based on 2024 earnings). The Company will use the net proceeds from the Offering to pay the portion of the EUR 400 million capital loan (the “Capital Loan”) that remains outstanding after the Offering and the accrued interest thereon. This, together with the earlier redemption on 1 September 2023 of the Company’s capital securities in the aggregate nominal amount of EUR 200 million (hybrid bond), is expected to provide a sustainable balance sheet and significantly reduce the Company’s financing costs.(1)

The Offering is supported by Finnair’s main shareholders, with the remainder fully underwritten on a standby basis

The State of Finland, Finnair’s largest shareholder (representing approximately 55.8 per cent of the shares in the Company, including treasury shares), has informed the Company that it supports the proposal made to the EGM and intends to subscribe for its pro rata share of the new shares on the basis of subscription rights allocated to it. In the Offering, the State of Finland expects to pay the subscription price of the shares by offsetting the aggregate subscription price against a corresponding amount of the principal of the Capital Loan.

The Company’s other shareholders Varma Mutual Pension Insurance Company, Elo Mutual Pension Insurance Company and Ilmarinen Mutual Pension Insurance Company, representing approximately 3.4 per cent of the shares in the Company, including treasury shares, have irrevocably undertaken to vote in favour of the proposal at the EGM and to subscribe for their respective pro rata share of the Offering, subject to customary terms and conditions.

The remainder of the Offering (40.7 per cent) is fully underwritten on a standby basis, subject to customary terms and conditions. Deutsche Bank Aktiengesellschaft and Nordea Bank Abp would act as the Joint Global Coordinators, lead managers and underwriters of the Offering.

Sanna Suvanto-Harsaae, Finnair’s Chair of the Board says:

“Building a sustainable balance sheet is a core part of our strategy to drive sustainable growth by connecting Europe, North America and Asia via our Helsinki hub.

After successfully responding to the external shocks of COVID-19 and the closure of Russian airspace, we have shifted our strategy, restored the company’s profitability and repaid our hybrid bond. The rights offering is the logical next step and will result in a return to a more normal, sustainable capital structure. It will support the continued execution of our strategy and enables us to continue to enhance shareholder value, also through shareholder returns.”

Topi Manner, Finnair’s CEO says:

“After successfully redirecting our network, optimising our fleet and implementing many key strategic initiatives, Finnair’s operations are more profitable today than in 2019. Building a strong balance sheet through the rights offering will further reduce our cost of capital and strengthen our resilience. Very importantly, it will also enable future investments and increase flexibility on actions required to fulfil our long-term carbon neutrality target.

I am proud of the way the Finnair team has performed throughout the difficult recent years. It has been a privilege to work in this extraordinary team. I am fully committed to this capital raise project and feel confident in leaving a strong Finnair in excellent and capable hands, with a bright future ahead after completion of the rights offering”.


It was evident during the pandemic that Finnair would never “pay” back these capital loans that the government and insurance companies granted, but that something would be sorted down the road, and here we are.

Finnair was not only hit with the pandemic, but its Asian strategy went down the toilet after Russia started its “special” operation, aka war against Russia, and you could say goodbye to the Siberian overfly rights.

Finnair has partially pivoted to flying to North America instead and renting excess capacity to other airlines (British Airways, Qatar, Lufthansa/Eurowings, and Qantas), but something needs to happen in the medium/long run (or the airline will end up in the same trajectory as SAS).

Leave a Reply

Your email address will not be published. Required fields are marked *