Due to the second wave of COVID-19 this autumn, air transport has not been able to recover from the Covid-19 crisis as was anticipated in the summer. This has had a particularly strong impact on the air transport situation in Finland. For example, Finnair continues to operate at only around 10% of its capacity, and the company’s operations are currently loss-making. The company has suffered and will continue to sustain substantial losses due to the pandemic and resulting travel restrictions.
With this in mind, the government has begun preparations a financing arrangement to support Finnair.
According to a press release by the Government Communications Department, the amount of State financing will not exceed 400 million euros, which is the amount remaining from the 700 million euros in appropriations approved by Parliament in the spring.
The financing would be granted as a hybrid bond to strengthen the company’s equity in its accounting. The final decision on the potential financing arrangement will be made by the government plenary session. The arrangement will not necessitate applying for new funds from the state budget.
The future financing arrangement will require approval from the European Commission’s competition authority in line with the EU state aid rules.
“The State is committed to its obligations as Finnair’s responsible anchor owner. Finland’s geographical location is challenging, and we cannot get by without well-functioning air transport connections. Air transport is of great importance to Finland for business and leisure, both at home and internationally. The extensive connections provided by Finnair are essential for the vitality of our counties and regions and play an integral role in our tourism and export sectors,” says Minister for European Affairs and Ownership Steering Tytti Tuppurainen.
Job cuts
Despite state funding, Finnair announced in late August its plan to cut up to 1,000 jobs, implement temporary layoffs and apply "other structural changes" due to the coronavirus crisis.
Last spring, the state supported Finnair by participating in the company’s share issue and by granting a 90% guarantee on the company’s earnings-related pension loan.
The government resolution on state ownership policy stipulates that all state-owned companies must base their operations on corporate social responsibility and that they must take into account the economic factors and the social and environmental impacts of their activities in their decision-making.
“As part of other ownership steering work, I require Finnair to reduce its emissions in line with its responsibility programme. We will be monitoring this matter closely through active dialogue according to the principles of good governance,” Minister Tuppurainen emphasizes.
