Norwegian presents rescue plan

Low-cost carrier Norwegian Air Shuttle released the details of its bailout plan on Monday. If approved, the plan will dilute the share of existing shareholders to 5.2% of the new capital.

The third-largest European low-cost airline has accumulated losses for the last three years, after an ambitious expansion plan which has considerably increased its debt. Its financial difficulties were further exacerbated by the coronavirus pandemic.

Currently, 95% of its fleet is grounded and only seven of its 168 aircraft are still in operation on Norwegian domestic routes subsidised by the Government. About 7,650 employees (80% of the staff) are on temporary unemployment.

Managing Director Jacob Schram says up to € 1.1 billion in debt could be converted into new shares. If the shareholders adopt it, “they will help save the company,” he said.

The plan must be approved by bondholders at meetings scheduled for April 30, by leasing companies on May 3, and by shareholders at an extraordinary general meeting on May 4.

Norwegian is also planning a new capital increase, the fourth in just over two years, which will allow it to raise up to 400 million NOK.

In the longer term, the company – if it survives the current crisis – says that it anticipates a recovery in 2021 and a return to normalcy in 2022 in a more compact format, focusing on the most profitable routes. The fleet will be reduced from 168 to between 110 and 120 aircraft.

Last Monday, the low-cost carrier announced the bankruptcy of four subsidiaries in Sweden and Denmark, a measure threatening some 4,700 jobs.