Norwegian Air Shuttle investors approved the airline’s rescue plan. The move will allow the airline to unlock the second NOK1.2 billion (over $115 million) installment of the NOK 3 billion (around $290 million) state aid package ‒ which is seen as the “only solution” to survive the COVID-19 crisis by the low-cost long-haul carrier.
During an extraordinary general meeting on May 4, 2020, Norwegian Air Shuttle investors agreed to an airline rescue package, consisting of various measures to help the carrier keep its head above the water.
Among them, the airline’s management was given the green light to raise NOK 10 billion ($964 million) by converting existing debts into shares, and further NOK 300 million ($28 million) to NOK 400 million ($38 million) by issuing a new public equity offering.
“It is an incredible relief that we are feeling,” general manager Jacob Schram said by referring to “one of the most frightening financial thrillers,” as quoted by Ouest France.
Previously, in a plea to investors the airline indicated that a failure to get the rescue plan approved would likely result in bankruptcy. “Norwegian will not survive the Covid-19 crisis without state aid, However, in order to receive this, we have to raise new equity,” the airline’s statement read. “A public equity offering is our only solution.”
Norwegian’s state aid conditions
On March 19, 2020, the Norwegian government proposed a NOK 6 billion state aid package for the country’s aviation companies, of which half, NOK 3 billion, could be given to Norwegian Air Shuttle. However, to receive the air, the carrier has to meet certain conditions.
The aid for the LCC would be paid in three installments: NOK 300 million, NOK 1.2 billion and NOK 1.5 billion. The first trench is to help the airline reduce its interest and repayments to creditors, while the second ‒ to help improve solvency to a “satisfactory level”.
On March 24, 2020, the airline announced it had met the conditions to receive the first installment, as it found financial institutions to contribute the required 10% of the first tranche