THE LEVEL OF interest in the Finnair share issue has fuelled optimism that investors are regaining confidence in Europe's airline market.

The state-controlled Finnish carrier reveals that the issue was more than twice oversubscribed and says that it has raised the volume of shares on offer to the maximum of 12 million, each priced at FIM35 ($7.4).

Investors are gaining confidence that the European airline industry is now emerging from its downturn, says Simon Read at Kleinwort Benson, the UK securities house which is managing the offer.

He highlights Finnair's improving financial performance, which has been aided by recovery in the Finnish economy and the airline's efforts to cut costs.

Analysts expect the airline to consolidate on its swing back into the black in 1994, with pre-tax earnings of FIM360 million for the year to March 1995.

Finnair plans to use the cash to help fund the acquisition of used McDonnell Douglas (MDC) MD-80s to replace its aging fleet of MDC DC-9s which will have to be phased out over the next eight years under European noise regulations.

The issue of new shares will leave the Finnish Government with a reduced holding of around 58% in its national carrier.

Source: Flight International