By Gwladys Fouché and Victoria Klesty
OSLO (Reuters) – Norwegian Air (NORR.OL) has asked an Irish court to oversee a restructuring of its massive debt as it seeks to avoid collapse amid the coronavirus pandemic, the airline said on Wednesday at low price.
The Norwegian government last week rejected the airline’s call for a further infusion of public funds, and the company said the next day it risked having to shut down operations in early 2021 unless it had access to more money.
“The main goal here is to get out of this process pretty quickly with a company that is ‘investable’, where we can again be attractive to investors,” CFO Geir Karlsen told Reuters.
The company opted for an Irish process since its aeronautical assets are held in Ireland.
Around 100 Norwegian Air employees wearing company uniforms had already protested outside parliament in Oslo to demand more state support.
After growing rapidly to become Europe’s third-largest low-cost airline and the largest foreign carrier serving New York and other major U.S. cities, Norwegian’s debt and liabilities stood at $ 66.8 billion. of crowns (7.4 billion dollars) at the end of September.
It has significantly reduced its operations, now serving only domestic routes with six of its 140 aircraft.
The airline said it will operate its flights as planned and its bonds and shares will trade normally.
Karlsen declined to say how many planes Norwegian might have at the end of the bankruptcy protection process, called the “review” in Ireland, which lasts up to five months. An Irish court will hear the claim on December 7.
“The creditors are a mix of leasing companies and banks that finance the aircraft that Norwegian owns,” Karlsen said.
The company hopes to resume long-haul flights in the long term.
“We have said in the past that we could halve the size of the long-haul fleet, which remains our starting point,” CEO Jacob Schram told a press conference.
Before the pandemic, Norwegian helped transform transatlantic travel, expanding the business model of low-cost European airlines to longer-haul destinations.
Having lost money every year from 2017 to 2019 and raised new shares from shareholders three times due to a cash hemorrhage, Norwegian was considered vulnerable even before the virus outbreak.
The total amount owed includes interest-bearing net debt of NKr 48.5 billion, while Norwegian’s cash holdings were just $ 3.4 billion at the end of the third quarter.
The Norwegian government granted 3 billion kroner of loan guarantees to the company earlier this year, but reiterated on Wednesday that more direct financial assistance would mainly benefit Norway’s foreign creditors.
“We told Norwegian that we don’t have money for equity,” Prime Minister Erna Solberg told Parliament.
However, the government said later on Wednesday that the airline was still important for Norway travel and tourism.
“I hope that the company can find a viable solution through negotiations with creditors and owners and that this will allow it to survive,” said Minister of Industry Iselin Nyboe.
AerCap Holdings leasing company
Norwegian shares were suspended ahead of the announcement at 12:39 GMT. They were trading down 0.3% at the time.
(Written by Terje Solsvik and Gwladys Fouché; Additional reporting by Laurence Frost in Paris and Padraic Halpin in Dublin; Editing by Keith Weir and Mark Potter)