Norwegian Air unveils emergency plan in survival bid
Struggling carrier Norwegian Air on Thursday unveiled an emergency plan to ride out the Covid-19 pandemic as it proposed a fleet reduction, debt-to-equity swap and rights issue.
The low-cost airline, which last month applied for bankruptcy protection in an Irish court, wants to raise up to 4bn Norwegian crowns (£337m) from the sale of new shares or hybrid instruments, it said. The proposals will be put forward at an extraordinary general meeting on December 17.
"The company asks for the continued support of its shareholders to prepare for future capital increases in parallel with the restructuring of its balance sheet," Norwegian said in a statement.
Norwegian has been battered by the collapse in passenger travel caused by travel restrictions as governments attempt to stem the spread of the virus. It is currently saddled with debts and liabilities of NOR 66.8bn.
Its problems were exacerbated last month when Norway’s right wing government refused a bailout. Norwegian said almost immediately it could have to stop operations early next year unless it received more cash.
Under the new proposals, the company will only pay lessors for the use of the aircraft when they are actually in use, by the hour, until 2022.
Only six of its 140 aircraft are currently flying, with the rest grounded due to the pandemic, including Norwegian’s fleet of Boeing 787 Dreamliners used on transatlantic routes.
Norwegian said it wanted to convert aircraft financing liabilities, money owed to suppliers and bond obligations into shares to restructure its balance sheet. There were no further details on the size of the debt-to-equity swap or reduction in fleet size.
It will also seek bankruptcy protection at a hearing in the Irish High Court next Monday. Most of its planes are registered to subsidiaries based in Ireland.
The company performed a smaller debt restructuring and refinancing in May, securing Norwegian state loan guarantees worth NOR 3bn and converting parts of its debt from leasing corporations.