The State contributes to the attainment of the savings

The State of Finland announces that it undertakes to sell three million of its shares in Finnair to the market at the price of EUR 4 apiece in the spring of 2019. The market-based hedging arrangement made with a bank is related to the pilots’ incentive plan based on the agreement on cost-savings reached earlier between the airline company and the pilots. The arrangement, now finalised, will contribute to the company’s competitiveness and shareholder value.

A pre-requisite for the realisation of the incentive plan is that the price of Finnair’s share at the end of the plan period exceeds EUR 4, and that the projected savings are achieved in full. A more detailed description of the incentive plan is provided in a bulletin released by Finnair today.

“As a responsible owner, the State seeks to contribute to Finnair’s future development by using the tools available to a majority shareholder. I’m pleased to note that Finnair and the pilots have reached agreement on savings. As long as the company’s cost level remains competitive, it will be able to continue hiring Finnish pilots. The savings agreement creates the necessary preconditions for improving competitiveness and so securing Finnair’s future success,” says Minister Sirpa Paatero responsible for ownership steering in state-owned companies.

Naturally, responsibility for these types of arrangements always falls to the Board of Directors. However, as a responsible owner, the State seeks to determine, on a case-by-case basis, the means available to a majority shareholder to support the company. This arrangement now being put in place is a prime example of how to bolster state-owned companies facing transition.

As the biggest shareholder in Finnair, the State is the first to benefit from the improvement in financial performance offered by the savings agreement and the resulting increase in share price and earnings potential. If and when the arrangement materialises, the State will receive EUR 4 per share in March 2019. As a result of the plan, the State will lose the benefit of any increase in share price if it is more than EUR 4 but less than EUR 8 at the time of sale. However, the State will continue to exercise the voting rights and receive the dividends provided by the shares during the term of this plan.

Currently the State owns 55.8 per cent of the shares in Finnair. If the criteria of the plan are met, the State’s stake in the company will fall by 4.2 per cent, equivalent to 2.3 per cent of the company’s entire share capital. The decision on the arrangement was made by the Government in September.

Additional information: Minister Sirpa Paatero; Valtteri Aaltonen, Adviser, tel. +358 50 462 6693, [email protected] and Eero Heliövaara, Director-General, Government Ownership Steering Department, tel. +358 295 160 150, [email protected]