Finnair has undertaken the biggest single aircraft financing transaction in its history. The airline revealed today that it has sold four Airbus A350 aircraft to a leasing firm, and will be leasing them back. The transaction has secured an additional $400 million of capital for Finnair.

Four more A350s sold

Finnair has notified the markets today that it has raised an additional $400 million in capital through refinancing of aircraft. The aircraft in question are four of its new A350-900s, of which it has 16 in its fleet. All are under six years old, having been delivered between 2015 and September last year.

It’s not the first time Finnair has undertaken a sale and leaseback transaction to add to its capital cushion. Back in August 2020, the airline sold the first of its A350s under sale and leaseback arrangements, and in December, another A350 was sold and rented back under a 12-year agreement. While sale and leaseback is firmly a part of Finnair’s strategy, this is the biggest such transaction to date, as the airline’s CFO Mika Stirkkinen commented,

“This is the biggest single aircraft financing transaction in the history of our company. It is a significant part of our refinancing plan, which we have executed diligently during the pandemic, and it helps us to further improve our capital structure.”

According to ch-aviation.com, just four of the airline’s 16 A350s are owned by Finnair directly. The rest are on lease from various companies, including Avolon and GECAS. Today’s refinancing of an A350 is again under a 12-year contract. The airline has engaged with GE Capital Aviation Services (GECAS) for the transaction, with Pacific Investment Management Company LLC (PIMCO) the named lessor.

Finnair says that the agreement will not impact the airline’s operating results for the current quarter. It will use the $400 million raised today to refinance existing debt and to retire its undrawn revolving credit facility of €175 million ($204 million). The airline remains committed to the additional three A350s on order from Airbus. One will arrive next year, and the other two in 2024 and 2025.

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Finnair’s recovery

Finnair has struggled more than many legacy airlines through the pandemic, due to its strong offering between the United States and the Far East. The airline’s strategic location in Helsinki made it possible for Finnair to connect passengers between east and west, and was a popular carrier choice in Asia. With travel to and from the East still difficult, Finnair has been flexing its financial muscles to ensure its survival through a very difficult period.

In its most recent market update, the airline reported an uptick in passenger traffic during August. More than 260,000 passengers flew with the airline last month, up 35% from the same month in 2020. Notably, this was 25% more passengers than it carried just a month before.

While Asia remains difficult, the United States is beginning to bounce back. Finnair is serving New York daily, and Miami and Los Angeles three times weekly. It recently announced it would move to serving Chicago year-round, a big change from its previously seasonal service to the Windy City.

As well as upping flights to the states, Finnair has been actively muscling into Sweden. Earlier this summer, the airline announced its intention to launch long-haul flights out of Stockholm to Bangkok, Miami, and Phuket. Subsequently, Finnair revealed it would expand services out of the Swedish capital to both New York and LA.

Overall, the future for Finnair is looking pretty good, with travel restrictions to the US set to ease in late November. All the airline needs now is for Asia to follow suit, and it will be flying high once again.