In its Stock Exchange Release on May 20, 2020, Finnair announced that the Finnish Government had approved that the State of Finland guaranteed Finnair’s pension premium loan up to €540 million.
With the state guarantee and the following pension premium loan, Finnair aimed to further secure its cash position and business continuity after the exceptional situation caused by the COVID-19 pandemic. Further, a commercial bank guaranteed up to €60 million of the loan. The arrangement was compliant with the EU state aid regulations and was approved by the European Commission on May 18, 2020.
Finnair drew down the €600 million pension premium loan in three tranches in 2020 and based on the agreed schedule, the loan was planned to be repaid in two €300 million tranches in December 2022 and in June 2023. The EU Commission’s competition authority approved the extension of the €540 million guarantee related to the pension premium loan on June 20, 2022. To maintain its cash funds in the prevailing uncertain operating environment, the company has agreed with other parties to extend the guarantees and the loan. The loan maturity has now been extended until 2025 and the repayment schedule also amended so that the company will amortise the loan by €100 million every six months. However, the remaining two €100 million tranches will be paid in full on May 15, 2025. As opposed to the previous schedule, the loan will not be amortised in December 2022. (£1.00 = €1.16 at time of publication).