Finnair : Starting the coverage of the new 2030 bond with a Buy recommendation

Finnair just issued a new € 300m bond priced at MS +195bps, implying a yield of c.4.38%. This is tighter than IPTs of MS+220bps, and price talks of MS+200bps. Proceeds will be used for general corporate purposes, which we believe will target the financing of part of its capex needs linked to the renewal of its old short-haul fleet. With the bond being priced above our FV estimates of 4.25%, we are starting coverage of the new bond with a Buy recommendation.
Elsewhere, the company also held a CMD earlier this month, showing its FY 2026-2029 targets. EBIT margins are expected to reach at least 6% by FY 2026, while if favorable market conditions are experienced, the maximum target has been set at 8%. We believe that while it requires important efforts to improve profitability, the lower end of the guidance seems achievable in our view. That being said, amid the high capex needs to renew the fleet, we see limited deleveraging throughout our forecast period.