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Finnair to raise $632 million to shore up finances
Global Banking & Finance Review®
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STOCKHOLM (Reuters) -Finnish airline Finnair said on Friday it planned to raise up to 600 million euros ($632 million) in a rights issue to shore up its finances and allow it to resume dividend payments from 2025.
STOCKHOLM (Reuters) -Finnish airline Finnair said on Friday it planned to raise up to 600 million euros ($632 million) in a rights issue to shore up its finances and allow it to resume dividend payments from 2025.
The Nordic country’s national carrier has been launching new routes after its previous Asia-heavy strategy was challenged by the Russian airspace closure after Moscow’s invasion of Ukraine.
It its second quarter Finnair swung back to profit helped by recovering demand, but it has said markets remain uncertain because of inflation and high interest rates.
“The rights issue is aimed at reducing Finnair’s financing costs, support strategy execution to drive sustainable profitable growth, and ensure ability for future investments,” the company said in a statement.
“Through the rights issue Finnair also seeks to reinstate the company’s ability for shareholder distributions.”
The airline said the Finnish state and its other main owners supported the rights issue, which it aims to complete in the fourth quarter.
Long-struggling Scandinavian rival SAS, which is under bankruptcy protection, on Tuesday announced U.S. investment firm Castlelake and Air France-KLM would become new major shareholders in the airline alongside the Danish state as part of a rescue plan.
($1 = 0.9489 euros)
(Reporting by Anna Ringstrom; Editing by Terje Solsvik and Jamie Freed)
A rights issue is a way for companies to raise capital by offering existing shareholders the right to purchase additional shares at a discounted price, usually to raise funds for business operations or to pay down debt.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI) or Producer Price Index (PPI).
A dividend is a payment made by a corporation to its shareholders, usually in the form of cash or additional shares. It represents a portion of the company's earnings distributed to investors.
High interest rates refer to the cost of borrowing money being elevated, which can affect consumer spending and business investment. They are often set by central banks to control inflation.
Financing costs are the expenses incurred by a company when it raises capital, including interest payments on debt, fees for issuing bonds, and costs associated with equity financing.
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