The Norwegian government is backing a new bailout package that will allow low-cost airline Norwegian Air Shuttle to escape bankruptcy, in an October shift in stance that pushed the carrier to the brink of collapse.
Oslo’s center-right coalition said Thursday morning it was “positive” about Norway’s plan to refocus on the Nordic region by ending low-cost long-haul flights, drastically reducing debt and raising new capital.
The government will provide a hybrid loan to Norwegian on the condition that the airline raises at least 4.5 billion Norwegian crowns ($ 530 million) from institutional and strategic investors and completes its restructuring which is expected to reduce its debt by more than two. .
“The plan looks more robust than the one we turned down in October. That is why we are now determined to contribute, ”said Iselin Nybo, Minister of Trade and Industry.
The government’s rejection of a second Norwegian rescue in the fall has made the carrier the biggest victim of the aviation industry crisis due to Covid-19, as it has been forced to seek the protection of creditors in Ireland and Norway.
Norway stressed that it did not want to become a shareholder in Norway, but just wanted to help the local aviation industry. Norwegian never owned the state but has significantly improved competition in Norway against SAS, the Scandinavian carrier.
Jacob Schram, chief executive of Norwegian, said government support showed the airline was going in the right direction.
“Norwegian has been facing a very difficult and demanding situation due to the pandemic, and government support greatly increases our chances of raising new capital and helping us through the reconstruction process we are currently in,” said he added.
Norway’s debt burden grew rapidly as it aggressively pushed long-haul flights to the United States and Asia, making it one of the most vulnerable airlines when the pandemic hit. broke last year.
He said last week he would cut more than 2,000 jobs – more than half at his London Gatwick base – by falling back on flights to the Nordic countries and from there to the rest of Europe.
Existing shareholders will be virtually wiped out for the second time in a year, owning just 5% of the new airline. Creditors would receive around a quarter of shares to reduce NKr48bn’s debt burden to around NKr20bn, while an Nkr4bn-NKr5bn capital raise would provide the remaining 70% of the shares.