Finland’s government has provisionally agreed to provide a state guarantee of up to €600 million to assist flag-carrier Finnair, although the measure still needs parliamentary consent.
Its economic policy committee met to consider the guarantee on 19 March.
Finnair is state-controlled, with nearly 56% of the carrier owned by the government. The minister for ownership steering, Tytti Tuppurainen, says the government is a “responsible owner” and the situation is such that the state “must support” Finnair.
“The company maintains the route connections that are very important for Finland’s security of supply, freight and passenger traffic, and the company has a significant impact on our economy,” she adds.
“We want to make sure that Finnair’s operations are not interrupted.”
The government says Finnair is preparing for the possibility of having to borrow occupational pensions to secure additional funding if other sources of financing become unavailable, and is applying for a state guarantee in lieu of normal bank guarantees.
Finnair chief executive Topi Manner says the air transport industry is dealing with the “biggest crisis” in its history.
But he insists the airline is “among the strongest”, with strong cash and balance-sheet positions, and the financing plan is intended to stabilise the company in preparation for resuming normal services.
Finnair says it has already taken steps to implement a funding plan which includes a revolving credit facility of €175 million and sale-and-lease of unencumbered aircraft. The plan also involves a €600 million statutory pension premium loan, the subject of the government guarantee.
“With the state guarantee, Finnair aims to further solidify its cash position and business continuity even if the coronavirus situation prevails longer than currently anticipated,” the airline says.