Norwegian Air to seek additional aid prior to bankruptcy exit
Following a debt restructuring approval from creditors on April 12, 2021, Norwegian Air has revealed intent to seek additional capital prior to its exit from bankruptcy protection in May 2021. The carrier will seek 6 billion crowns ($711 million) in capital, an increase from the initial 4.5 billion crowns.
Norwegian Air said the aided capital structure will include 1.8 billion crowns from creditors expected to acquire new perpetual bonds, a share issue that will inject 2.86 billion crowns from investors, and an investment of 1.5 billion crowns in the form of hybrid capital from the Norwegian government.
The additional aid will be aimed at strengthening the carrier‘s position at a time where the industry is grappling with the uncertainties and restrictions of the COVID-19 pandemic. The injected capital will be aligned with a conservative approach outlined in Norwegian‘s survival plan.
“We want to take a conservative approach at a time when the pandemic and travel restrictions continue to create unpredictability in the travel sector,” commented Norwegian Air CEO Jacob Schram.
The carrier‘s survival plan will bring an end to its long-haul transatlantic flights, leaving Norwegian to navigate a leaner fleet on European and Nordic routes.
“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,” Schram said.
This will come with fierce competition from neighbouring carriers SAS, Wideroe, and new start-ups, Flyr, set to launch its first maiden flight in Norway in the upcoming months and Norse Atlantic Airways which aims to operate long-haul routes, backed by seasoned industry veterans, including Norwegian Air founder and former CEO Bjoern Kjos.
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