OSLO: Norwegian Air has asked an Irish court to oversee a restructuring of its massive debt as it seeks to stave off collapse amid the coronavirus pandemic, the budget airline said on Wednesday.
Norway’s government last week rejected the airline’s plea for another injection of state funds, and the company said the following day it was at risk of having to halt operations in early 2021 unless it got access to more cash.
Around 100 Norwegian Air staff wearing company uniform had demonstrated in front of the parliament building earlier on Wednesday to demand more state support for the airline and the rest of the industry.
Growing rapidly to become Europe’s third-largest low-cost airline and the biggest foreign carrier serving New York and other major U.S. cities, Norwegian’s debt and liabilities stood at 66.8 billion crowns ($7.4 billion) at the end of September.
“Norwegian has chosen an Irish process since its aircraft assets are held in Ireland,” the company said in a statement.
“Based on Norwegian’s current cash position and the projections going forward, the company believes it has sufficient liquidity to go through the above-mentioned process.”
Norwegian Air has scaled back its schedules drastically and is now serving domestic routes only, with six of its 140 aircraft flying.
TRANSATLANTIC FLYING
Before the pandemic, Norwegian Air helped transform transatlantic travel, expanding the European budget airline business model to longer-haul destinations, making basic flights cheaper for those prepared to go without frills.
Included in the overall amount owed was net interest-bearing debt of 48.5 billion crowns, while Norwegian’s cash holdings stood at just 3.4 billion at the end of the third quarter.
Having lost money each year from 2017 to 2019, and raised new equity from shareholders on three occasions as the company haemorrhaged cash, Norwegian was seen as vulnerable even before the virus outbreak.
Norway granted loans guarantees to the company of 3 billion crowns, but later rejected a second request for funds.
Norwegian’s shares were suspended ahead of the announcement, at 1239 GMT. They were trading down 0.3% at the time.
(Writing by Terje Solsvik and Gwladys Fouche; Additional reporting by Laurence Frost in Paris; Editing by Jan Harvey and Elaine Hardcastle)
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