Next step for struggling Norwegian Air Shuttle: nationalization?
The government of Norway considers taking a stake of Norwegian Air as a measure to temporarily nationalize the air carrier while it is still unable to claw its way out of a financial pit of despair.
In a meeting with officials of Norway’s government, Jacob Schram, the Chief Executive of Norwegian Air, reportedly revealed that the airline would need additional financial support to survive the winter season. The meeting occurred on September 28, 2020.
The government stated that there was an option to bail out the struggling air carrier rather than revive Scandinavian Airlines (SAS), which is already partly owned by Denmark and Sweden. The government officials considered that taking a majority of Norwegian Air stake would result in the temporary airline's nationalization. The long-term nationalization of the carrier would be hardly possible as there are law-related issues with other European airlines such as Lufthansa (LHAB) (LHA) .
The airline has already given multiple hints that it would need more financial support from the government. Earlier in September 2020, Schram warned that the state loan guarantee was not sufficient enough to get through COVID-19 crisis. The airline claimed that it would need a new rescue package despite the already-secured €285 million (NOK3 billion) state aid guarantee.
At the time, the carrier’s management was given the green light to raise €949 million (NOK 10 billion) by converting existing debts into shares, and further €28 million (NOK 300 million) to €38 million (NOK 400 million) by issuing a new public equity offering.
The management of the airline tried to receive financial injection once more on August 18, 2020, when it asked the Swedish National Debt Office for a state credit guarantee. However, the Swedish authority rejected the request.
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