Norwegian Air Shuttle is still unable to claw its way out of a financial pit of despair. The airline claims it will need a new rescue package despite the already-secured €285 million (NOK3 billion) state aid guarantee.
Norwegian Air Shuttle has entered into negotiations with the authorities of Norway on additional financial support. However, it remains unclear whether the parties would reach an agreement, the airline still found the government’s exact position to be unclear, Geir Karlsen, the CFO of the Norwegian Shuttle, revealed to E24 News.
“During the dialogue with the authorities when the pandemic broke out, we gave them a specific overview of what we needed”, Karlsen wrote in a statement. “Now that we have entered into a dialogue with the authorities, we will produce a proposal for them.”
In 2020, the airline was forced to ground 140 aircraft and suffered a 71% decrease of passenger demand compared to the 2019. Over the six months from January to June 2020, it carried just 5.3 million passengers – a fraction of its previous loads. Norwegian Air Shuttle blamed the ever-changing travel advice from governments across Europe for “high” uncertainty in the market and the immediate impact to the travel demand.
Earlier in May, 2020, Norwegian Air Shuttle investors approved the airline’s rescue plan of €285 million (NOK3 billion) state aid package. Moreover, 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.
Previously, the airline’s management has already hinted that the airline might need additional financial support from the government as on August 18, 2020, the airline asked the Swedish National Debt Office for a state credit guarantee, but the authority rejected the request.
“We see that many of our main competitors receive considerable liquidity support from their governments as aviation represents the backbone of infrastructure”, Jacob Schram, the CEO of Norwegian Air Shuttle, was cited as saying the company’s first half year financial report of 2020.
However, given the current market conditions it is not enough to get through this prolonged crisis. The air carrier did not reveal what was the preferred amount of support that is being negotiated with the state.