Norwegian Air Shuttle ASA (Norwegian Air), which has been struggling since the coronavirus pandemic forced to close its operations, secured £770 Million (10 billion kroner) from shareholders, bondholders, and aircraft lessors. With this new development, the carrier would be able to unlock government aid after winning support for a debt-for-equity swap.
Shareholders’ Approval of the Rescue Plan
On Monday morning, May 4, 2020, following a series of prolonged talk, the shareholders of Norwegian Air approved a rescue package worth £770 Million at an emergency meeting in Oslo with voting 95% in favor, including a 400 million kroner share issue. The chief executive officer (CEO) of the airline, Jacob Schram said that the plan would ensure majority ownership to the airline’s creditors – bondholders and lessors, which left shareholders with 5.2% of the company.
Besides that, agreement on the debt-for-equity swap would help the airline to unlock 3 billion kroner (£230m) of state aids, which could be a deal for a way out of the ailing airline during the pandemic crisis. The airline had already received 300m kroner grant from the government as part of efforts made by Norway’s government to make the airline solvent again by paying off its debt.
Over the years, Norwegian Air had transformed itself from a small local carrier into a pioneer of low-cost long-haul flights and expanded its operations in many regions. Ahead of the grounded of its operations, the airline used to carry almost 6 million UK passengers each year from Gatwick, Edinburgh, and Manchester airports to 30 destinations worldwide.
Optimistic Future for the Airline
The airline officials claimed on Sunday that most of its shareholders had supported a rescue plan after it was rejected in a vote on Friday. Norwegian Air further said that it had secured written consent from the largest holders of the NAS07 bond after changing some of the terms and hold another bondholder vote on 18 May, where the airline would have to formally secure 67% support.
Citing that the lessors, who own Norwegian’s aircraft, had also signed up to the plan, the airline said minutes before the shareholder meeting began, “With the significant contributions from lessors and bondholders, the company expects to convert more than 10 billion kroner in debt to equity.”
Meanwhile, a week ago, the airline projected to put all of its 160 fleet grounded until 2021 as it was running out of cash due to the pandemic prompted closure of its business. Following the restrictions, the airline currently is using only seven fleets, which are meant for transporting essential cargo and it has temporarily cut off its staff more than 80% due to its service on halt.
Norwegian Air, as one of the biggest airlines at London’s Gatwick airport, grounded 95% of its fleet in mid-March and had warned earlier that it could run out of cash by May-mid unless it found a rescue plan.
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