Norwegian Air gets government backing for survival plan

"The government's support significantly increases our chances of raising new capital and getting us through the reconstruction process," Norwegian Chief Executive Jacob Schram said in a statement. The government's participation, in the form of a hybrid loan, will be dependent on private investors taking part in a planned share issue, Nyboe said.

Norway backed Norwegian Air's survival plan on Thursday as Industry Minister Iselin Nyboe said that the government had no intention of being a shareholder but would stump up cash if private investors did too. The heavily indebted budget carrier, which has been forced to ground all but six of its 138 aircraft due to the coronavirus crisis, asked the government last week for help.

Norwegian was granted bankruptcy protection by courts in Ireland and Norway last year as it seeks to shed much of its debt, and aims to close down its long-haul service. "The government's support significantly increases our chances of raising new capital and getting us through the reconstruction process," Norwegian Chief Executive Jacob Schram said in a statement.

The government's participation, in the form of a hybrid loan, will be dependent on private investors taking part in a planned share issue, Nyboe said. "The plan appears more robust than the one we rejected last October and we are therefore inclined to contribute," she said.

"The government does not have an ambition to become a shareholder in Norwegian," she added. If its reconstruction succeeds, Norwegian has said it will initially cut its fleet to about 50 aircraft.

The size of the fleet could gradually grow to 70 aircraft in 2022, depending on demand and potential travel restrictions, Norwegian has said. "We still have a lot of work ahead of us, but a participation from the government underscores that we are heading in the right direction," Schram said.

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