Norwegian Air faces anxious wait to find out if it has a future today
Norwegian Air faces an anxious wait to find out whether its bondholders have approved a critical rescue package, with the low-cost airline’s future in doubt if it is rejected.
Yesterday shareholders voted on the package, with the deadline for acceptance moved to 9pm at literally the last minute as the airline updated its final offer one minute before the initial deadline of 2pm.
In order to access government loans worth up to 2.7bn crowns (£210m), Norwegian has proposed a debt-to-equity swap which would hand majority ownership to the firm’s lessors.
Unless the deal is accepted, the transatlantic carrier has warned it will run out of cash by mid-May.
The airline has already received initial government cash injection of 300m crowns.
If approved, bondholders would be left with 41.7 per cent of the company, and shareholders just 5.1 per cent.
A Norwegian spokesperson said that there was nothing to communicate on the outcome of the vote as yet.
Speaking ahead of the vote, some bondholders told Reuters that they would vote for the plan.
In its 27-year history, Norwegian has grown to become one of Europe’s biggest low-cost carriers, and has captured a considerable share of the lucrative transatlantic market with its budget model.
However, its rapid expansion saw it accrue a debt pile of around $8bn, which has left many analysts speculating that it would be one of the first airlines to go out of business due to the coronavirus crisis.
The pandemic has seen air traffic almost completely dry up due to wide-ranging bans on travel across the world.
Currently, Norwegian has grounded 95 per cent of its fleet and has only seven planes in operation on domestic routes.
According to its proposal, these minimal operations will continue until April 2021, before a gradual increase in services.