Finland Plans to Reduce Its Stake in Finavia

The Finnish government will reduce its shareholding in Finavia, which operates 21 airports including the newly-renovated Helsinki International Aiport, from 100% to 50.1% as part of its divestment policy, after the government approved an in-principle decision on ownership steering policy.

The government also hinted that it was willing to explore cashing in on a number of corporate assets even at the expense of majority control. The government’s decision is said to be partly attributed to the success of Spain, which privatised some of the airport managing companies in 2015.

In fact, the Finnish Ministry of Transport and Communications has commissioned a study which said that the government could bring in around $863.23 million by selling part of its shares in Finavia.

It may be recalled that Finavia experienced significant losses, due to the significant drop in travel demand and the travel restrictions that Finland and other countries had to impose to limit the spread of COVID-19. These factors continue deteriorating the financial situation of Finavia, putting the company’s equity and liquidity position at risk. 377.66

State Aid

However, Finavia secured $377.66 million funding which included a capital injection of $268.68 million, a subordinated loan of $35.61 million, both under State Aid Temporary Framework and another $73.37 million, a measure to compensate the company for the damage directly suffered as a result of the COVID-19 outbreak.

The aid was okayed by European Commission in 2021 under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU).

With the majority of foreign visitors flying to Helsinki, Lapland or Tampere, tourism industry companies in other parts of the country have been reluctant to make investments in their offering. If Finavia was to have a minority owner, it could be in its interest to turn as many a regional airports as possible into a profitable operation – a possibility that could increase visitor volumes in, for example, Finnish Lakeland.

Jari Tanskanen, an economic journalist, said that the adjustments were inspired by experiences in Spain, where the government floated 49% of shares in the wholly state-owned airport operator AENA in 2015. Proceeds from the float were three times higher than expected.

Some of the Finavia Group’s key figures in 2023 include Passengers (18.3 million), revenue $388.45 million, operating margin stood at $100.35 million, investments were to the tune of $56.11 million and four airports have recorded the net zero emissions during last year.