Finnair CEO not charged over real estate deal

Finnair's Chief Executive Officer Mika Vehvilainen speaks about the third quarter financial results during a news conference in Vantaa October 28, 2010.

HELSINKI (Reuters) - Finnish flag carrier Finnair's chief executive will not be charged over a real estate deal, the deputy prosecutor general said on Monday, making it likely he will keep his job and press on with restructuring the loss-making airline.

Finnish minister Heidi Hautala, in charge of state-controlled firms, had said Mika Vehvilainen may have to step down if he was charged. The government owns more than 50 percent of Finnair shares.

Police had investigated Vehvilainen for suspected bribe-taking after he sold his apartment to pension fund Ilmarinen, which rented it back to Finnair while Vehvilainen remained living in the property.

The prosecutor said Ilmarinen had paid a reasonable price for the apartment.

Finnair's board on Monday said it fully backed Vehvilainen.

He said he could now focus on restructuring the airline which recently handed over a third of its short-haul routes to Flybe (FLYB.L) to cut costs and focus on more profitable Asian routes.

"I have learned the hard way that it is not enough to follow legislation, but one must also consider ethical viewpoints and how things may look," Vehvilainen said in a statement.

The prosecutor also decided not to press charges against two Ilmarinen managers and a former Finnair board chairman.

Finnair (FIA1S.HE) and Vehvilainen had come under criticism over the real estate deal as well as a lack of disclosure over executive compensation.

Hautala earlier this year sacked most of Finnair's board members citing a lack of openness over past management compensation.

Shares in the company rose nearly 4 percent to 2.11 euros by 0730 GMT after the prosecutor's announcement. (Reporting By Jussi Rosendahl; Editing by Erica Billingham)