In conjunction with Finnair’s efforts to emerge from the COVID-19 crisis, the company is proceeding with its refinancing plan and has finalized a sale-and-leaseback arrangement for four of its Airbus A350 aircraft. In the arrangement, Finnair sold these aircraft – delivered between June 2017 and February 2019 – and has leased them back for its own operation. The operating lease period is, on average, 12 years and the counterparties are GE Capital Aviation Services (GECAS) and Pacific Investment Management Company (PIMCO) as the lessors; GECAS is the lease servicer.
The arrangement will not have a significant impact on Finnair’s operating result for the third quarter of 2021; however, the immediate positive cash effect for Finnair is in excess of US$400 million. Finnair will use the cash to refinance existing debt and retire its undrawn revolving credit facility of €175 million.
“This is the biggest single aircraft financing transaction in the history of our company”, says Finnair’s CFO Mika Stirkkinen. “It is a significant part of our refinancing plan, which we have executed diligently during the pandemic, and it helps us to further improve our capital structure.”
Finnair has ordered a total of 19 new A350-900 XWB aircraft from Airbus, of which 16 have been delivered. The remaining three A350 aircraft are expected to be delivered in the second quarter of 2022, the fourth quarter of 2024 and the first quarter of 2025.