Finnair plans $632m rights issue as state sticks with stake

Finnair said on Friday it was planning a rights issue to raise up to E600m ($632m) to shore up its finances and pay back a loan from the state, which is keeping its controlling stake. Finland's national carrier has been hit hard by the pandemic and then by the closure of Russian airspace following Moscow's invasion of Ukraine which challenged its Asia-focussed strategy. Its shares fell as much as 25% in morning trade. Despite the financial struggles, Finland intends to keep its 55.8% holding and is not considering options similar to consolidation happening around Scandinavian rival SAS, Prime Minister's senior adviser Maija Strandberg said. "Finnair is a company of strategic interest... (because) sufficient international flight connections are indispensable for Finland," she told Reuters, adding Finnair also plays a role in national security of supply due to its northern location. Long-struggling rival SAS, which is under bankruptcy protection, on Tuesday announced U.S. investment firm Castlelake and Air France-KLM would become new major shareholders alongside the Danish state as part of a rescue plan. Strandberg said the share issue would allow Finnair to fully pay back the E400m emergency loan the Finnish state granted to it in April 2022, after the Russian airspace closure slashed most of its Asian flights.<br/>