Norwegian Air to raise more money than planned to service debt
Norwegian Air aims to raise between 4.5 and six billion kroner in an upcoming capital raise in order to service its debts.
The company previously set out to raise between 4.5 and five billion kroner as part of the restructuring process, but has since increased the upper limit.
The money will be used to reduce Norwegian’s debt by between 62 and 65 billion kroner compared to the end of 2019.
The airline has also cancelled additional aircraft orders worth 85 billion kroner.
Total debt will be between 16 and 20 billion kroner after the debt has been reduced.
Norwegian CEO Jacob Schram said: “The capital raise has been revised to between 4.5 and six billion kroner, this is due to several factors. We want to take a conservative approach at a time when the pandemic and travel restrictions continue to create unpredictability in the travel sector.
“Therefore, we must take this uncertainty into account in our forward planning strategy. At the same time, we have also taken into consideration feedback from investors, as well as dialogue with our board.”
Financed largely by debt, Norwegian Air grew rapidly, serving routes across Europe and flying to North and South America, Southeast Asia and the Middle East before the Covid-19 pandemic plunged the airline into crisis.
Courts in Oslo and Dublin have recently given their approval for Norwegian to sharply cut its debt by converting it to stock, but the rulings were conditional on Norwegian raising at least 4.5 billion kroner in additional funds.
The survival plan brings an end to Norwegian’s long-haul business, leaving a slimmed-down carrier focusing on Nordic and European routes, but the ongoing spread of the virus continues to hamper the industry.