Norwegian Air seeks bankruptcy protection under Irish law
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.Reuters | Updated: 18-11-2020 22:31 IST | Created: 18-11-2020 22:31 IST
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. "The main purpose here is to come out of this process quite shortly with a company that is 'investable', where we can be attractive again for investors. That is the target," Norwegian Air Chief Financial Officer Geir Karlsen told Reuters.
The company had opted for an Irish process since its aircraft assets are held in Ireland, it said. Around 100 Norwegian Air staff wearing company uniform had earlier demonstrated in front of the parliament building in Oslo to demand more state support for the airline and 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 scaled back its schedules drastically and is now serving domestic routes only, with six of its 140 aircraft flying.
The airline said it could continue to operate its flights as planned and that its bonds and shares would trade as normal. Karlsen declined to say how many aircraft Norwegian could have by the end of the bankruptcy protection process, called "examinership" in Ireland, which lasts for up to five months. An Irish court will hear the application on Dec. 7.
TRANSATLANTIC FLYING Before the pandemic, Norwegian 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.
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. 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.
The Norwegian government granted loans guarantees to the company of 3 billion crowns earlier this year, 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, Elaine Hardcastle and Keith Weir)
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