Finnair to raise £446 million via a share sale to shore up finances amidst COVID-19

  • Finnair to raise £446 million via a share sale to shore up finances amidst COVID-19.
  • The flagship carrier reports a 97.7% year over year decline in passenger numbers.
  • The largest airline of Finland receives £535.39 million in bank and state guarantees.

Finnair (HEL: FIA1S) said on Wednesday that it aims at raising £446 million via a share sale. The offer marks almost the same value as the airline’s market capitalisation. Targeted at its existing investors, Finnair expects the share sale to improve its liquidity amidst the ongoing Coronavirus pandemic that has brought the global airline industry to its knees.

Infecting a little under 7.4 million people worldwide and causing more than 415,000 deaths, COVID-19 has brought the global demand for air travel to a near halt. Consequently, several worldwide airlines have been pushed into grounding fleets, suspending flights, and laying off workers, as the airline industry takes an unparalleled financial hit.  

Shares of the company recorded an about 2% intraday loss on Wednesday. At £3.48 per share, Finnair is currently 35% down year to date in the stock market after recovering from a low of £2.68 per share in the second week of May. Learn more about the financial analysis of a company.

Finnair reports a 97.7% year over year decline in passenger numbers

Finnair’s new shares which will be listed on Nasdaq Helsinki have a two-week subscription period from 17th June to 1st July. In terms of passenger numbers, the flag carrier reported a 65% increase in May as compared to April. At 26,700, however, passenger numbers were still 97.7% down in May versus the year-ago figure.

Finnair also revealed on Wednesday that about 90% of its flights were still grounded resulting in a daily cash burn of roughly £1.78 million. The largest airline of Finland estimated 2 to 3 years before air traffic returns to pre-virus levels. Along with its German competitor, Lufthansa, Finnair resumed flights to/from Riga airport on 2nd June.

Finnair receives bank and state guarantees for a £535.39 million loan

The flagship carrier received bank and state guarantees for a £535.39 million loan in May. Its funding plan, Finnair remarked, includes withdrawing from its available credit facilities, and selling or leasebacking its jets.

Finnair’s offer is wholly underwritten and will result in an increase in its total shares from 128.1 million to 1.4 billion. As per the experts, shareholders will be prone to significant dilution if they do not participate in the share sale.  

The Finnish government that currently owns 55.9% of Finnair has pledged to completely subscribe to the share sale. At the time of writing, Finnair is valued at £446 million.

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