An Irish court granted bankruptcy protection to struggling Norwegian Air’s Irish subsidiaries on Monday. The decision also temporarily protects the airline’s Oslo-based parent company from creditor claims, giving it some badly needed breathing room in the battle to save it from permanent grounding.
Business news service E24 reported Monday evening that the bankruptcy protection means creditors can’t demand payment or declare the airline bankrupt themselves. Large aircraft leasing companies that have unwillingly become large shareholders in Norwegian made it clear they wouldn’t oppose a bankruptcy protection order, in the hopes Norwegian can restructure its operations, slim down its fleet and deal with its heavy debt.
The bankruptcy order applies to Norwegian’s two Irish subsidiaries Arctic Aviation Asset (AAA), which owns and leases aircraft for Norwegian Air, and airline Norwegian Air International (NAI), along with three of their subsidiaries. Parent company Norwegian Air Shuttle (NAS) is covered as a related party.
Now Norwegian hopes and believes that a British court will also grant similar bankruptcy protection for its subsidiaries there. The deeply trouble airline has presented yet another crisis plan aimed at satisfying the courts while it also considers bankruptcy protection in Norway.
More capital-raising efforts
The airline’s executives now hope to raise another NOK 4 billion in fresh share- or hybrid capital that converts more debt to capital and further dilutes current shareholders’ stakes. It’s a last-ditch measure put forth after Norway’s conservative government refused to grant more emergency state aid to the airline beyond the loan guarantees and purchased routes already provided that have kept at least some Norwegian flights operating within Norway. Both the opposition Labour Party and Progress Party supported the government’s refusal to bail out Norwegian Air, not least since it was already in trouble before the Corona crisis halted most travel and hit all airlines hard.
Newspaper Dagens Næringsliv (DN) reported that the news from Dublin was expected in the market and sent NAS shares up 3.11 percent on the Oslo Stock Exchange Monday. Norwegian officials have contended that the airline’s liquidity remains adequate at present. Many holders of tickets on cancelled flights, however, complain they still have not received refunds owed.
Grounded fleet shrinks
The vast majority of Norwegian’s fleet remains grounded with lots of its modern aircraft now up for sale or lease. State broadcaster NRK has reported that at least three of its 11 Boeing 787 long-haul aircraft have left their long-term parking places at Stavanger’s Sola Airport, flying off to new operators.
Embattled CEO Jacob Schram has earlier expressed hopes that the bankruptcy protection will save the airline that was struggling with huge debt when the Corona crisis hit and grounded flights all over the world. Norwegian Air is now going through nothing less than a financial overhaul, with thousands of jobs at stake, around 3,000 of them in Norway.
“This is a complex process and lots can happen,” Schram said at one of several press conferences this fall. “But we have good faith we’ll get through this.”