By Dominic Chopping
Shares in Finnair slumped in early trade after the airline set out plans to raise up to 600 million euros ($633 million) to shore up its balance sheet.
The rights issue, which has the backing of the Finnish state and its other main shareholders, is aimed at cutting financing costs and providing cash to support the company’s strategy, which it hopes will allow it to reinstate dividend payments from 2025.
At 0941 GMT shares traded 24% lower at EUR0.40.
The airline has been forced to change its traditional strategy based on connecting Europe and Asia after Russia’s invasion of Ukraine led to the closure of Russian airspace, significantly extending flight times to its Asian destinations and weakening profitability.
It has been implementing a new strategy consisting of cost cuts, network changes and fleet reduction which, combined with a rebound in demand, helped it swing to a second-quarter net profit this year, although it warned of risks from inflation and rising interest rates.
“After successfully redirecting our network, optimizing our fleet and implementing many key strategic initiatives, Finnair’s operations are more profitable today than in 2019,” Chief Executive Topi Manner said. “Building a strong balance sheet through the rights offering will further reduce our cost of capital and strengthen our resilience.”
The news comes after rival airline SAS said Tuesday that it will receive a $1.18 billion rescue package from investors including Air France-KLM and Castlelake that will see them join the Danish state as major shareholders. SAS expects to delist from Scandinavian stock markets next year.
Write to Dominic Chopping at [email protected]
Read the full article here
