Low-cost carrier and Norway's largest airline, Norwegian Air, has today announced in a press statement that it has finalised recapitalisation and secured state aid in the form of a state loan guarantee of NOK3 billion ($290 million).
Speaking on the development, the carrier's CEO Jacob Schram said: “I want to thank everyone who has supported the company during this unprecedented crisis that has affected the entire the airline industry: The Government and Parliament, customers, employees, shareholders, leasing companies, creditors, bondholders, the travel industry, and other Norwegian supporters. Now that we can access the state loan guarantee, we can continue to transform the company."
In its final quarter report of 2018, Norwegian indicated a net loss of NOK 1,454 million and cited that figures were strongly affected by engine issues, fuel hedging losses and tough competition. This led to a shift of strategy to return to profitability. According to Schram, "The company was on the path to deliver a positive net profit in 2020, and this summer was set to be the strongest in the company’s history. Instead, the coronavirus outbreak and global travel restrictions has led to a substantial drop in demand."
Norwegian is just another example of the many airlines that have needed to take drastic action in this unprecedented time. Like others, Norwegian requires this loan for liquidity to survive through a period where the CEO says the "company currently has limited revenues."
A Norwegian Boeing 737-800. Photo by Ernest Leung | AeroNewsX
“In addition to ensuring that the company survives this crisis, our goal has been that Norwegian should have a strong position in the future airline industry, with a clear direction and strategy. This will ensure sustainable operations and a structure that will be to the benefit of both shareholders, customers and colleagues,” says Schram.
Like most other airlines and businesses in every sector, Norwegian is looking to learn through this pandemic and is seeking positives. It wishes to not only survive but to return to profitability and prove to be stronger in a competitive market. However, the CEO warns that "the next months will remain challenging."
For now, Norwegian has completed a debt restructuring with bondholders, lessors and shareholders agreeing to a NOK 12.7 billion debt conversion. To qualify for government support, Norwegian was required to reduce debt. This was a complicated process that now sees previous aircraft lessors becoming airline owners. AerCap and BOC Aviation, two of the world's largest aircraft leasing entities, with the latter having links to the Chinese government, are two of the new owners. Irish firm AerCap will have a 15.9% stake in the carrier, while BOC Aviation will control a 12.7% stake.
Norwegian Air's flights are operated by Norwegian Air Shuttle ASA, the parent company based in Fornebu, Norway, as well as its subsidiaries. These include Irish-based Norwegian Air International, UK-based Norwegian Air UK and Argentina-based Norwegian Air Argentina. Each of these hold an Air Operator's Certificate (AOC) in their respective locations but share the Group's brand.
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