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OSLO, Jan 21 — Norway backed Norwegian Air’s survival plan today as Industry Minister Iselin Nyboe said that the government had no intention of being a shareholder but would stump up cash if private investors did too.
The heavily indebted budget carrier, which has been forced to ground all but six of its 138 aircraft due to the coronavirus crisis, asked the government for help last week.
Norwegian was granted bankruptcy protection by courts in Ireland and Norway last year as it seeks to shed much of its debt. It plans to end its long-haul service.
“The government’s support significantly increases our chances of raising new capital and getting us through the reconstruction process,” Norwegian Chief Executive Jacob Schram said in a statement.
Norwegian’s share price, which has plunged 98 per cent in the last 12 months, were up 14 per cent by 0820 GMT today.
The government’s participation, in the form of a hybrid loan, will be dependent on private investors taking part in a planned share issue, Nyboe said.
“The plan appears more robust than the one we rejected last October and we are therefore inclined to contribute,” she said.
“The government does not have an ambition to become a shareholder in Norwegian,” she added.
If its reconstruction succeeds, Norwegian has said it will initially cut its fleet to about 50 aircraft.
The fleet could grow to 70 aircraft in 2022, depending on demand and potential travel restrictions, it has said.
“We still have a lot of work ahead of us, but a participation from the government underscores that we are heading in the right direction,” Schram said.
The plan depends on the company raising at least 4.5 billion Norwegian crowns (RM2.1 billion), primarily from institutional and strategic investors, and on the courts approving its restructuring, the government said.
It also depends on approval from Norway’s parliament. Several opposition parties have urged the government to help Norwegian weather the crisis. — Reuters