Having secured bankruptcy protection in both Norway and Ireland in 2020, low-cost carrier Norwegian Air (Norwegian) has taken a NEK12.8 billion (US$1.5 billion) charge and cancelled its current order of 88 narrow-body Airbus jets. Last year Norwegian cancelled its remaining orders for 97 aircraft with Boeing, while also seeking compensation from the planemaker for the grounding of 737 MAX jets and technical problems relating to the 787 Dreamliner.
The intention is for Norwegian to extricate itself from its current restructuring process with appreciable less debt and many fewer aircraft to avoid bankruptcy. From an original fleet of 140 aircraft the carrier is looking to negotiate terms with lessors to allow it to reduce its fleet size to 53; currently it is operating just ten aircraft, but hopes to increase that number as demand for air travel returns.
“We are doing everything we can to emerge as a more financially secure and competitive airline with an improved customer offering,” Chief Executive Jacob Schram said on Friday. “As soon as Europe begins to reopen, we will be ready to welcome more customers on board.”
Norwegian is running the risk of running out of cash by the end of March if it is unable to successfully restructure its debt and liabilities, while the termination of both the Boeing and Airbus purchase contracts necessitated a fourth-quarter 2020 charge of NEK4.8 billion. According to Reuters news agency, Norwegian’s total liabilities had fallen to 56.2 billion crowns by the end of December from NEK66.8 billion on Sept. 30, while its interest-bearing debt dropped NEK8.3 billion to NEK40.2 billion. It hopes to cut its debt to about NEK20 billion crowns and raise NEK4 billion to NEK5 billion from new shares and hybrid capital. Norway has already agreed to contribute NEK1.5 billion crowns. (US$1.00 = NEK 8.67 at time of publication.)
