Through a fully underwritten NOK3 billion rights issue, Norwegian Air Shuttle ASA (Norwegian) is looking to change the focus of the company from growth to profitability, thus capitalizing on the market position and scale it has achieved over recent years. The intention now is to reduce capital expenditure through a combination of aircraft divestment, including JV, and postponement of aircraft deliveries.
Operational improvements will include the implementation of an extensive cost reduction program, #Focus2019, which will contribute to estimated reduction of minimum NOK 2 billion in 2019, the optimization of the base structure and the route network, and the agreement with Rolls-Royce related to compensation for the operational disruptions on its long-haul operations which was entered into in December 2018. Norwegian will update the market in its Q4 2018 presentation. In combination with these improvement initiatives the rights issue should significantly improve the financial position of the Company during 2019.
According to the company’s CEO, Bjørn Kjos, “Norwegian has been through a period with significant growth. Focus going forward will increasingly be on cost savings and CAPEX reductions. We will now get in place a strengthened balance sheet that supports the further development of the company. With the strengthened balance sheet, the organization can now devote all its attention to further development of the company.”
According to its preliminary 2018 figures, Norwegian delivered revenues of approximately NOK 40.3 billion, EBITDA of approximately NOK -2.2 billion, EBITDA excl other losses/gains of NOK –1.2 billion, EBIT of approximately NOK -3.8 billion and EBT of approximately NOK -2.5 billion in 2018. At the end of Q4 2018, Norwegian had cash and cash equivalents of NOK 1.9 billion and equity position of NOK 1.7 billion. Due to the rights issue, the company will publish its Q4 2018 results on 7 February 2019. (US$1.00 = NOK 8.50 at time of publication.)
