Norwegian Air will run out of cash in mid-May if it doesn’t
meet conditions to receive an additional 2.7 billion Norwegian kroners ($260
million) in aid that has been put on the table by Norwegian government, the
discount carrier says.
Should Norwegian Air secure the funding, its management
anticipates entering into a “hibernation period” that would last until next
spring, followed by a summer 2021 ramp-up, the airline said in presentation to
bondholders. Full operations would not resume until 2022.
Norwegian has thus far received a 300 million kroner
state-backed loan ($29 million) as part of the rescue package. Receipt of the
2.7 billion kroners is conditioned upon the carrier’s existing creditors
agreeing to a three-month deferral of principal payments as well as a waiver of
interest payments. In addition, Norwegian must increase the portion of the
company’s assets that are held as equity from just under 5% to 8%.
To do that, Norwegian is asking lessors, bondholders and
shareholders to agree to a plan under which lessors would convert $500 million
of lease liabilities into equity. The move would mean Norwegian’s lessors would
own 53.1% of the company. Bondholders would own 41.7% of the airline and
stockholders would own just 5.2%.
If Norwegian is able to receive the government-backed loans,
the company said it expects the funding to provide sufficient liquidity to get
it through the end of the year.
Norwegian is currently flying just seven aircraft and fleet
capacity has been reduced by 95%. The carrier has furloughed 7,650 employees.
Norwegian was the largest discount transatlantic carrier
prior to the Covid-19 crisis and its low-cost business model forced larger
network carriers into offering transatlantic basic economy fares, and in some
cases, into launching their owns discount transatlantic brands.