The government is preparing to support Finnair, the Finnish flag carrier, whose losses due to the coronavirus epidemic have reduced the company's capital.
The company has announced that they will begin preparing for a share issue as the losses caused by the COVID-19 situation have reduced the company’s equity. "As a responsible owner, the State supports Finnair’s plan," said the Government's Communications Department in a press release.
Due to the uncertainty of the market situation, the Ministerial Committee on Economic Policy has advocated that Parliament apply for a mandate of up to 700 million euros to participate in Finnair’s recapitalisation arrangements, including the planned share issue and any other arrangements.
According to the company’s plan, the total share issue would be estimated at 500 million euros. The State of Finland currently accounts for 55.8% of Finnair’s shares and votes.
“The effects of the COVID-19 crisis on air transport as a whole, and therefore also on Finnair, one of the strongest operators in the sector, have been earth-shattering. The State wishes to make sure in advance that it is prepared to support the solvency of the company adequately in different situations. Now more than ever, as a responsible, long-term owner, the State must make efforts to ensure that Finland also has a strong airline in the future,” says Minister Tytti Tuppurainen, who is responsible for ownership steering.
Strategic interest to the state
Government says Finnair is a company of strategic interest to the State, since international flight connections are essential for Finland and the company plays a major role in the Finnish economy. For example, from the point of view of tourism, flight connections are vital.
In recent years, the Finnish service and tourism industries have grown significantly as tourism has flourished in the country. Good connections are also central to the operating environment of the Finnish export industry, and domestic routes play a key role in ensuring regional accessibility.
The Ministerial Committee on Economic Policy has advocated that Parliament be given an extraordinary supplementary budget to cover the State’s participation in Finnair’s recapitalisation arrangements.
At the General Meeting in May 2020, Finnair’s Board of Directors is set to propose a share issue authorisation in order to implement the arrangement.