FINNAIR on Friday revealed it is planning a rights issue worth up to 600 million euros in an attempt to consolidate its financial standing and restore its ability to distribute wealth to shareholders.
Helsingin Sanomat pointed out that the potential value of the issue is high relative to the 735-million-euro market cap the majority state-owned airline had at the close of trading on Thursday.
Scheduled to be completed by year-end, the rights issue will require the approval of an extraordinary general meeting that will take place in late October. Finnair on Friday, though, stated that the issue is supported by its main shareholders, including the state.
The airline said proceeds from the offering will be used to re-pay the outstanding portion of a 400-million-euro capital loan and accrued interest. The issue, it added, is also an attempt to reduce financing costs, support strategy execution to drive sustainable profitable growth and safeguard capacity for future investments.
“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,” envisioned Sanna Suvanto-Harsaae, the board chairperson at Finnair.
“Building a strong balance sheet through the rights offering will further reduce our cost of capital and strengthen our resilience,” added CEO Topi Manner.
Manner also emphasised that a stronger financial position will also enable the airline to make investments and create flexibility on actions required to fulfil its long-term emission reduction and carbon-neutrality targets.
“When it comes to our responsibility goals, the key in the longer term will be to invest in renewable fuels and new aviation technology that reduces the [fuel] consumption of aircraft. The ability to invest is therefore important for Finnair in the future,” he was quoted saying at a news conference by Helsingin Sanomat.
Finnair is not planning to grow its 79-aircraft fleet, however.
“Fleet optimisation has been completed following the closure of Russian airspace. Finnair can grow with the markets in the coming years with this fleet,” he said, adding that the airline is interested in “retaining the option” to increase its emphasis on Asian operations if the airspace re-opened after a peace has been achieved in Ukraine.
Shares in Finnair lost more than a quarter of their value on Friday, with the share price falling to 0.39 euros.
Aleksi Teivainen – HT