Norwegian axes long-haul routes in examinership plan
EMBATTLED Scandinavian airline Norwegian has confirmed it will terminate its long-haul business and focus on the Nordics as part of a plan to successfully exit its examinership in Ireland and a reconstruction process in Norway.
It said the blueprint will see its debt cut to 20 billion krone (€1.94bn) and that it will also raise fresh equity. The longhaul exit will result in the loss of more than 1,000 jobs based at London’s Gatwick.
Norwegian intends to use a fleet of 50 owned and leased Boeing 737 jets to operate its Nordic services.
Kieran Wallace of KPMG was formally appointed examiner by the High Court last month to Ireland-based Norwegian Air and a number of related entities.
The examinership process gives the airline protection from its creditors as the examiner tries to hammer out deals with them to leave the company viable.
Norwegian, which racked up debt over the past number of years to expand its fleet to offer low-cost long-haul flights, had been battling for survival before the pandemic.
Norwegian and its Irish units hold about 140 aircraft it leases, including 36 flagship Boeing 787 Dreamliners.
The airline said yesterday that it hopes to exit examinership in the first quarter.
“Core to the plan is that Norwegian will henceforth focus on its core Nordics business, operating a European shorthaul network with narrowbody aircraft,” it told investors.
“Under these circumstances, a long-haul operation is not viable for Norwegian and these operations will therefore not continue,” it added.
The airline hopes to raise between 4bn and 5bn krone in capital via a rights issue to current shareholders, a private placement and a hybrid instrument.
Lessors including Dublin-based AerCap had previously ended up being shareholders in Norwegian after a debt for equity swap.
“Norwegian´s impaired creditors are estimated to hold approximately 25pc of the shares in the company post reconstruction, as compensation for their participation in the debt reduction,” noted the airline yesterday.
Existing shareholders are expected to own 5pc after the restructuring,
“Based on conservative assumptions both in relations to the length of the Covid-19 pandemic and relating to revenues, costs and load factors the company expects positive Ebitda post reconstruction in 2021,” it added.