Finnair (AY, Helsinki Vantaa) has extended the repayments of a mostly state-guaranteed EUR600 million (USD637 million) loan it secured in May 2020, pledging to complete the payments in May 2025 instead of 2023. It had been due to repay half of the sum this month.
The Finnish government guaranteed 90% (EUR560 million (USD595 million)) of the pension premium loan for the state-owned flag carrier, while the remainder was provided on commercial terms from an unnamed private bank. Finnair said in a stock exchange filing that the arrangement, which the European Commission approved in May 2020, had allowed it "to further secure its cash position and business continuity" during the Covid-19 crisis.
Finnair drew down the loan in three tranches in 2020 and based on an agreed schedule planned to repay it in two EUR300 million (USD318.5 million) tranches in December 2022 and June 2023.
Now, however, the loan maturity has been extended until 2025 and the company will pay back EUR100 million (USD106 million) every six months, with the final two of these tranches to be paid in full on May 15, 2025. The airline said that the EU’s competition authority had already approved the loan restructure.
"To maintain its cash funds in the prevailing uncertain operating environment, the company has agreed with the other parties to extend the guarantees and the loan," Finnair said.
Although demand for air travel is resuming in Europe, Finnair has grappled this year with the closure of Russian airspace that was crucial to the success of its key routes to Asia. It has been working to cut costs and last month revealed that it was seeking to shed 450 cabin crew jobs and outsource the positions instead.
