The Board of Directors of Finnair Plc (“Finnair” or the “Company”) has today resolved on a fully underwritten rights offering of approximately EUR 500 million (the “Offering”). In the Offering, the Company will offer for subscription, based on pre-emptive rights for existing shareholders, a maximum of 1,279,265,150 new shares (the “Offer Shares”) based on the authorisation granted by the Annual General Meeting of the Company held on 29 May 2020. The Company plans to use the proceeds from the Offering to strengthen its equity and liquidity position in the exceptional situation caused by the COVID-19 pandemic as well as to support the execution of Finnair’s strategy. The Offering is aimed at ensuring Finnair’s viability in the post-crisis environment as well as helping to reach its goal of sustainable, profitable growth. The Board of Directors of Finnair announces the terms and conditions of the Offering today.

The Offering in brief

• Finnair aims to raise gross proceeds of approximately EUR 500 million by offering up to 1,279,265,150 Offer Shares for subscription in the Offering with pre-emptive rights for existing shareholders in Finnair.
• Shareholders of Finnair will receive one (1) subscription right, in the form of a book-entry entitling them to subscribe for Offer Shares (the “Subscription Right”), for each share of the Company held on the record date 12 June 2020 (the “Record Date”).
• Each one (1) Subscription Right carries the right to subscribe for ten (10) Offer Shares at the subscription price.
• The subscription price is EUR 0.40 per Offer Share (the “Subscription Price”).
• The first trading date without Subscription Rights is 11 June 2020.
• The subscription period for the Offer Shares commences on 17 June 2020 at 9.30 a.m. Finnish time and ends on 1 July 2020 at 4.30 p.m. Finnish time.
• The Subscription Rights are freely transferable, and they are expected to be subject to trading on Nasdaq Helsinki Ltd (“Nasdaq Helsinki”) between 17 June 2020 and 25 June 2020.
• The European Commission has on 9 June 2020 issued a decision that the participation of the State of Finland in the Offering is compatible with the EU state aid rules under the Treaty on the Functioning of the European Union Article 107(3)(b). The European Commission has approved the participation of the State of Finland in the Offering based on, among others, the assumption that the State of Finland’s relative shareholding in Finnair would not increase (save for slight variations due to the technical organisation inherent to the Offering). Under the Commission's decision, the Company has agreed to certain conditions following the Offering, which include, among other things, limitations on management remuneration during the financial years 2020, 2021 and 2022 and a ban on acquisitions, restricting the Company from acquiring a stake of more than 10 per cent in competitors or other operators in the same line of business, including upstream or downstream operations for a period of three years from the Offering.
• The Offering is fully underwritten, subject to certain customary terms and conditions:
• The State of Finland, representing approximately 55.9 per cent of the outstanding shares in the Company, has irrevocably committed to subscribe in full for the Offer Shares on the basis of Subscription Rights allocated to it (the “Subscription Undertaking”). Citigroup Global Markets Limited (“Citi”) and Nordea Bank Abp (“Nordea”) have entered into an underwriting agreement with the Company (the “Underwriting Agreement”) pursuant to which they have severally agreed, subject to certain terms and conditions, to procure subscribers for any Offer Shares that may remain unsubscribed for in the Offering, or to subscribe for such Offer Shares themselves, excluding the Offer Shares that are covered by the Subscription Undertaking.
• Citi and Nordea act as the joint global coordinators, joint bookrunners and joint lead managers for the Offering (together, the "Joint Global Coordinators").

Background

Finnair has a clear strategy to reach its goal of sustainable, profitable growth. The foundation for the strategy lies in the high quality and safety of its operations, Helsinki’s favourable geographic position, growing focus markets, clear goals to increase revenue, a modern, fuel-efficient fleet and in maintaining a strong balance sheet.

However, the COVID-19 pandemic and measures undertaken by local and national authorities to prevent the further escalation of the pandemic represent a unique challenge. The negative shock caused by the pandemic to the global economy has resulted in a significant deterioration of macroeconomic conditions in the markets in which Finnair operates, with a sudden and material reduction in the demand for the Company’s services, reinforced by travel restrictions imposed by public authorities around the world.

Finnair is determined to continue on its long-term strategic path despite temporary adjustments related to the COVID-19 pandemic, and aims to ensure that the Company remains a competitive airline company in the future. The Company’s management believes that air traffic will, upon expiration of the COVID-19 related travel restrictions, still be a growth business, in which Finnair targets sustainable, profitable growth, supported by a strategy based on a geographical competitive advantage and strong ownership structure.

To achieve the goals of the Company despite the exceptional circumstances, Finnair considers it prudent to seek to strengthen its balance sheet in these conditions and to lay a foundation for the successful execution of Finnair’s long-term strategy, ensuring the Company's viability in a post-crisis environment. The Offering is undertaken as part of Finnair's recapitalization plan, which will be carried out in the course of 2020, comprising in addition to the Offering of (i) already agreed amendments under the Company's revolving credit facility, including obtaining gearing covenant relief, (ii) entry into a new EUR 600 million pension premium loan agreement with Ilmarinen Mutual Pension Insurance Company, (iii) potential refinancing or solicitation of changes to the terms of the Company’s outstanding hybrid notes and (iv) possible sale and leaseback arrangements of unencumbered aircraft. The State of Finland has guaranteed 90 per cent of the pension premium loan’s principal, and the Finnish Government approved the guarantee on 20 May 2020. Nordea has guaranteed 10 per cent of the pension premium loan’s principal.

Terms of the Offering (in brief)

Shareholders will receive one (1) Subscription Right for each share of the Company held on the Record Date, 12 June 2020. Each one (1) Subscription Right entitles to subscribe for ten (10) Offer Shares at the Subscription Price (the “Primary Subscription Right”). The Subscription Rights will be registered on the shareholders’ book-entry accounts on 15 June 2020 in the book-entry system maintained by Euroclear Finland Oy. No fractions of the Offer Shares will be allotted and a Subscription Right cannot be exercised partially. As a result of the Offering, the total number of the shares in the Company may increase from 128,136,115 shares to a maximum of 1,407,401,265 shares.

The Subscription Price is EUR 0.40 per Offer Share. The Subscription Price includes a customary discount compared to the theoretical ex‐rights price based on the closing price of the Company's shares on Nasdaq Helsinki on the trading day immediately preceding the decision on the Offering. The Subscription Price shall be recorded into the invested unrestricted equity reserve of the Company.

Both holders of Subscription Rights and investors who do not hold Subscription Rights may submit orders to subscribe for any Offer Shares that have not been subscribed for pursuant to the Primary Subscription Right. Allocation of the Offer Shares subscribed for without the Subscription Rights will be allocated first to those that subscribed for Offer Shares also pursuant to Subscription Rights; second to those that have subscribed for Offer Shares without Subscription Rights only; and third to subscribers procured by Citi and Nordea or, when such subscribers have not been procured, to Citi or Nordea in accordance with, and subject to, the terms and conditions of the Underwriting Agreement. For exact allocation principles, please see the attached terms and conditions.

The Record Date for determining which holders of existing shares in the Company are entitled to receive Subscription Rights is 12 June 2020. The shares are traded with the right to participate in the Offering up to and including 10 June 2020. The subscription period for the Offer Shares commences on 17 June 2020 at 9.30 a.m. Finnish time and ends on 1 July 2020 at 4.30 p.m. Finnish time. The Subscription Rights are freely transferable and expected to be subject to trading on Nasdaq Helsinki between 17 June 2020 and 25 June 2020. Subscription Rights that remain unexercised at the end of the subscription period on 1 July 2020 at 4.30 p.m. Finnish time will expire without compensation.

The Offer Shares subscribed on the basis of Subscription Rights will be recorded on investors’ book‐entry accounts as interim shares corresponding to the Offer Shares (the “Interim Shares”) after subscriptions having been made and paid for. The Interim Shares are freely transferable, and trading with the Interim Shares, as a separate class of securities, is expected to commence on Nasdaq Helsinki on 18 June 2020 and end on 8 July 2020.

Finnair will announce the final results of the Offering on or about 7 July 2020.

Participation of the majority shareholder in the Offering and the Underwriting

The Company’s largest shareholder, the State of Finland, has irrevocably committed to subscribe in full for Offer Shares on the basis of Subscription Rights allocated to it. The Subscription Undertaking represents in total approximately 55.9 per cent of the Offer Shares.

Citi and Nordea have entered into the Underwriting Agreement with the Company pursuant to which they have severally agreed, subject to certain terms and conditions, to procure subscribers for any Offer Shares that may remain unsubscribed for in the Offering, excluding the Offer Shares that are covered by the Subscription Undertaking, or to subscribe for such Offer Shares themselves.

Indicative timetable for the Offering

11 June 2020The first trading date without Subscription Rights12 June 2020Record Date of the Offering 15 June 2020Prospectus publication17 June 2020Subscription period for the Offering commences17 June 2020Trading in the Subscription Rights commences on Nasdaq Helsinki18 June 2020Trading in the Interim Shares commences on Nasdaq Helsinki25 June 2020Trading in the Subscription Rights expires on Nasdaq Helsinki1 July 2020The subscription period ends and unexercised Subscription Rights expire without compensation3 July 2020 (estimate)Announcement of the preliminary results of the Offering7 July 2020 (estimate)Announcement of the final results of the Offering 8 July 2020 (estimate)Trading in the Interim Shares ends on Nasdaq Helsinki8 July 2020 (estimate) The Offer Shares are registered in the Trade Register9 July 2020 (estimate)The Offer Shares subscribed for in the Offering will be recorded in the book-entry accounts of investors9 July 2020 (estimate)Trading in the Offer Shares on the official list of Nasdaq Helsinki commences

The Company has submitted a Finnish language prospectus for approval by the Finnish Financial Supervisory Authority (the “Finnish Prospectus”). The Finnish Prospectus is expected to be approved on or about 12 June 2020. The Finnish Prospectus and the documents incorporated therein by reference will be available on or about 15 June 2020 at the website of the Company at finnair.com/osakeanti and at the registered office of the Company at Tietotie 9, FI‐01530 Vantaa, Finland. In addition, the Finnish Prospectus will be available on or about 15 June 2020 on the website of Nordea at nordea.fi/osakkeet. The English language offering circular and the documents incorporated therein by reference will be available on or about 15 June 2020 at the website of the Company at finnair.com/rightsissue.

The full Terms and Conditions of the Offering are attached to this release as Appendix 1.

Citi and Nordea act as the joint global coordinators, joint bookrunners and joint lead managers for the Offering (together, the Joint Global Coordinators) and OP Corporate Bank plc, Skandinaviska Enskilda Banken AB (publ) Helsinki Branch and Swedbank AB (publ) (in cooperation with Kepler Cheuvreux S.A.)  act as the co-lead managers for the Offering (together with the Joint Global Coordinators, the “Managers”). Roschier, Attorneys Ltd. acts as the Company’s legal adviser andWhite & Case LLP acts as the Managers’ legal adviser in the Offering.