Finnair has continued its financial strategy implementation, successfully executing a rights issue, to raise an impressive 570 million euros in November 2023.
With a strengthened cash reserve, the airline has now purchased six previously leased Airbus A321 aircraft from lessor BOC Aviation.
A Flight to Financial Strength
November’s strategic financial maneuver not only bolstered Finnair’s balance sheet but also enhanced its cash reserves, setting the stage for further transformative developments.
Finnair wasted no time leveraging the fruits of its rights issue. With a strengthened financial position, the airline seized the opportunity to acquire six A321 aircraft from BOC Aviation, previously under lease.
The substantial investment, exceeding 200 million euros, is projected to yield a positive impact on both profit before taxes and cash flow, with an estimated annual benefit surpassing 20 million euros in the coming years.
Pension Premium Loan Repayment
December witnessed yet another significant financial move as Finnair repaid an additional tranche of 120 million euros towards its 600-million-euro pension premium loan.
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This unexpected repayment, coupled with the previously planned 100-million-euro installment, amounted to a total repayment of approximately 230 million euros, leaving a balance of 280 million euros to be settled by May 2025 at the latest.
The repercussions of this accelerated loan repayment are anticipated to manifest as a 3-million-euro boost to profit before taxes in 2024, attributable to reduced net interest costs.
Cash to Sales Ratio in Focus
In response to the autumn 2023 rights issue, the airline revisited its financial targets. Initially based on the assumption of a 30 per cent cash to sales ratio over time, the company’s recent strategic moves have brought this ratio tantalizingly close to the target, albeit slightly exceeding it.
This adjustment reflects Finnair’s commitment to dynamic financial management and positions it optimally for future endeavors.
Strategy Implementation and Future Outlook
These financial initiatives are not isolated actions; rather, they form an integral part of Finnair’s broader strategy implementation.
The airline is steadfast in its pursuit of meeting financial targets by the end of 2025. Beyond mere financial stability, these measures lay the groundwork for Finnair’s ambitious goal of reinstating shareholder distributions, commencing in spring 2025 based on the 2024 financial results.
Finnair’s strategic financial moves in late 2023 mark a pivotal chapter in the airline’s journey. With a rights issue empowering it with substantial capital, aircraft acquisitions, and accelerated loan repayments,
About Finnair
Finnair is a network airline, specialising in connecting passenger and cargo traffic between Asia, North America and Europe.
Finnair is one of the oldest operating airlines in the world, celebrating its centenary in 2023. Sustainability remains at the heart of the carrier’s operations – Finnair intends to reach carbon neutrality latest by the end of 2045.
Customers have chosen Finnair as the Best Airline in Northern Europe in the Skytrax Awards for 13 times in a row. Finnair is a member of the oneworld alliance. Finnair Plc’s shares are quoted on the Nasdaq Helsinki stock exchange.
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