State converts Finnair’s hybrid loan to capital loan
In March 2021, the State signed an agreement with Finnair Plc on a hybrid loan with a limit of EUR 400 million to support the company due to the COVID-19 pandemic. In its meeting on 19 April 2022, the Ministerial Committee on Economic Policy decided in favour of converting the hybrid loan instrument to a capital loan in the form of an equity instrument. The capital loan will strengthen the equity of Finnair Plc, Finnair Group’s parent company. Granting the capital loan will require approval by the plenary session of the Government and a decision on state aid by the European Commission. The arrangement will not require applying for new funds from the State budget.
During 2020 and 2021, Finnair’s business was hit hard by the COVID-19 pandemic. At the worst stages of the crisis, passenger numbers dropped to around ten per cent compared to the pre-pandemic period. Air traffic has now begun to recover, and passenger numbers are on the rise. However, Russia’s military actions in Ukraine and the resulting EU sanctions and Russian counter-sanctions have hindered Finnair’s ability to implement its Asia-oriented strategy. The use of Russian airspace has given Finnair a competitive advantage with the shortest routes on scheduled flights between Europe and Asia. Now, Finnair flights to Asia must avoid Russian airspace, which increases flight time and costs.
Finnair is a company of strategic interest to the State due to its significant positive multiplier effects on the air transport cluster and air transport connections, which in turn affect business life and citizens.
“Well-functioning flight connections are a lifeline for all of Finland. Both citizens and businesses depend on domestic and international connections,” says Minister for European Affairs and Ownership Steering Tytti Tuppurainen.
The State supported Finnair, a listed company, during the COVID-19 crisis by participating in the company’s share issue and by granting a 90 per cent guarantee on the company’s earnings-related pension loan.
Inquiries: Vesa Vuorenkoski, State Secretary, [email protected], +358 295 160 380 and Minna Pajumaa, Senior Ministerial Adviser, [email protected], +358 295 160 147
Requests for interviews with the Minister: Emilia Tervonen, Special Adviser, [email protected], +358 505 520 676