In March 2021, Finnair and the State of Finland inked an agreement for a hybrid loan, totalling a maximum of €400 million, to provide vital support amidst the challenges posed by the COVID-19 pandemic. Fast forward to April 2022, the hybrid loan underwent a transformation into a capital loan, classified as an equity instrument and duly approved by the EU Commission’s competition authority, aligning with the European Union’s state aid regulations. Throughout 2022, Finnair drew down the entire €400 million.
Come November 2023, Finnair executed a rights offering, raising €570 million. Notably, the State of Finland subscribed to its pro rata share of the new shares, utilizing subscription rights allocated to it. The State offset the subscription price, amounting to €318.6 million, against the corresponding principal of the capital loan. Consequently, Finnair has now repaid the outstanding balance of the capital loan, totalling €81.4 million, to the State of Finland. Additionally, the airline settled related interest and other fees amounting to €48.9 million.
This repayment is significant, as it ensures Finnair is now free from loans classified as equity capital. Had the capital loan not been repaid, it would have incurred approximately €52 million in interest and other fees in 2024. The successful repayment, coupled with the earlier settlement of the hybrid bond, underscores Finnair’s strengthened financial position. (£1.00 = €1.15 at time of publication).
