Lossmaking Norwegian Air (Norwegian) has asked its bondholders for an additional two years in which to pay back US$380 million of current debt as part of an attempt to shore up its precarious financial position. In return, as security, lucrative take-off and landing slots at London Gatwick Airport would be pledged.
As Europe’s third-largest low-cost carrier behind Ryanair and easyJet, Norwegian has struggled with a highly competitive and price-sensitive transatlantic market while it has also taken on a substantial and aggressive expansion program which has left it highly in dept with substantial operating losses. The carrier has already turned to shareholders this year to raise US$335 million, though it has confirmed this week that working capital has diminished in 2019, partly as a result of changes to industry rules regarding advanced ticket payments.
With 18 of the aircraft in its fleet, the grounding of Boeing’s 737 MAX has also compounded problems. If bondholders accept the revised terms, the bonds in question, which are due to mature in December 2019 and August 2020, will be extended to November 2021 and February 2022. A bondholders’ meeting will take place on September 16. “What we are doing now is to make sure that we have sufficient liquidity for the next twelve months,” interim Chief Executive Geir Karlsen told Reuters news agency, adding he expected to repay bondholders with cash on hand.