Norwegian Air Shuttle (Norwegian) has increased its target of cash being raised prior to exiting bankruptcy protection. Courts in both Dublin and Oslo had recently agreed for the airline to convert debt to stock, but only on the condition that it raised a further NEK4.5 billion. However, that figure has been increased to NEK6 billion in fresh capital to shore up its resources prior to exiting bankruptcy protection, despite the precarious situation being faced by commercial airlines during the COVID-19 pandemic.
On Wednesday, Norwegian’s Chief Executive Jacob Schram said in a statement: “We want to take a conservative approach at a time when the pandemic and travel restrictions continue to create unpredictability in the travel sector,” adding that: “We must take this uncertainty into account in our forward planning strategy. At the same time, we have also taken into consideration feedback from investors, as well as dialogue with our board.”
Norwegian has decided to cancel all long-haul flights and dispose of much of its fleet of aircraft as it looks to concentrate on the European market, though it faces stiff competition from Wideroe, SAS, and new start-up Flyr which is due to commence operations in mid-2021. Norwegian has confirmed that certain investors have agreed to inject NEK2.86 billion via a share issue, while current creditors were expected to buy new perpetual bonds worth at least NEK1.8 billion. Separately, Norway’s government has said it is willing to invest NEK1.5 billion in hybrid capital. Norwegian’s debt will be cut to between NEK16 billion and NEK20 billion, NEK62 billion to NEK65 billion less than end-2019 levels. (US$1.00 = NEK 8.44 at time of publication.)
