UPDATED: Flyr, the upstart Norwegian airline that took off when the pandemic eased, has been grounded. Its board of directors announced Tuesday evening that they had unanimously decided to file for bankruptcy in the Oslo County Court on Wednesday, after the airline’s refinancing plan collapsed.
Shareholders have been as frustrated as passengers over the uncertainty that followed Monday’s announcement of Flyr’s “unsuccessful attempt to raise capital” and its “critical short-term liquidity situation.” The board clearly gave up efforts to revive the airline, declaring in a report to the Oslo Stock Exchange that “there is no longer a realistic opportunity to achieve a solution” to its liquidity crisis.
The airline simply ran out of money, less than two years after launching operations. Flyr has now confirmed that all departures and ticket sales have been cancelled or discontinued. All further questions were referred to the bankruptcy trustee that will be appointed by the court, where documents filed Wednesday showed Flyr with debt amounting to NOK 2.4 billion.
Flyr’s website was already being dismantled Tuesday evening, replaced with a new statement that also reported the airline’s board had “unfortunately” concluded that no alternatives for further operations could be found. The board thanked all those who had flown with Flyr over the past 18 months and apologized “to all those who’ll be affected that we now must go in for landing.” All ticket holders were urged to contact their credit card companies for refunds.
There was no immediate advice from Flyr to any passengers stranded in destinations far from home, but airlines SAS and Norwegian said they’d sell available seats at special fares on their own flights for those holding Flyr tickets. Travel insurance doesn’t cover disruptions caused by bankruptcies, and any claims for money lost on prepaid hotels would need to join other creditor claims to the bankruptcy trustee.
The airline’s share price had crashed on Monday, falling by 71 percent after management announced that they hadn’t managed to meet the terms of the refinancing plan they’d agreed to under pressure from investors last fall. The airline had already been operating with a vastly reduced flight schedule this winter, and crews have been furloughed, but several flights were due to take off this week to Gran Canaria, Alicante, Malaga and Milan. They’re among those now cancelled.
Flyr’s refinancing plan aimed to raise up to NOK 700 million in new capital, including NOK 250 million through a new stock issue and another aimed at raising up to NOK 100 million from existing shareholders. They would be followed by other stock issues that could raise another NOK 350 million by March 31.
Management was said by its new “chief corporate affairs officer” Lasse Sandaker-Nielsen (who formerly worked for Norwegian Air when it was deeply troubled) to have “solid faith” in the company. In a letter to the editor of newspaper Dagens Næringsliv (DN) published on November 26 last year, in which Sandaker-Nielsen complained about DN‘s coverage of Flyr’s financial problems, he noted how management officials had themselves invested “many millions” in the airline and had lower pay than Flyr’s largest competitors in the domestic and European markets.
“Let there be no doubt:” Sandaker-Nielsen wrote in DN just two months ago. “The management of Flyr has solid faith in the company and looks forward to build the airline of the future together with our colleagues, our guests (passengers/customers) and shareholders.”
The day before, however, Flyr’s former chief executive, Tonje Wikstrøm Frislid, had suddenly quit and was swiftly replaced by Flyr’s finance director Brede Huser. Major shareholders including Norwegian investor Jan Petter Sissener were confused: “I’m just a relatively large investor,” he told business news service E24 at the time. “This came like lightning out of a clear sky.” Sissener said, however, that he had “a good impression” of Huser, who also previously worked at Norwegian Air, arguably Flyr’s biggest rival.
Sissener went on to say that he simply expected the airline “to deliver in regards to the business plan that was presented to us, and perhaps even better.” He noted that Flyr had not yet attracted all the money it needed.
DN, meanwhile, reported a few days later that Frislid had lost the confidence of Flyr’s board, which is led by the heir to former airline Braathens SAFE, Erik G Braathen. He’s widely viewed as Flyr’s founder, and had been successful in the airline charter market after the family’s airline was taken over years ago by Scandinavian Airlines (SAS). His plans for Flyr became complicated when the Corona crisis hadn’t ended by the time the new airline was ready for take-off. Passengers, however, generally embraced the new airline and expressed satisfaction with its service and low fares. The airline itself boasted on its website that 1.6 million passengers “chose Flyr in 2022.”
Some analysts, however, believe Flyr’s founding investors didn’t think Norwegian Air would survive its own financial turbulence, bankruptcy and the Corona crisis. Norwegian did, however, and Flyr has thus faced plenty of competition, also from the financially troubled SAS. Questions had arisen in recent months over whether there was room in the Norwegian market for SAS, Norwegian and Flyr, plus short-haul carrier Widerøe.
Frislid’s career at Flyr, at any rate, ended abruptly after the board reacted to how an earlier plan to raise up to NOK 530 million had been rejected by major investors who later pushed through their own plan for the NOK 700 million that was eventually approved November 9. DN reported that the board criticized the process and, after Frislid was given an option to resign, Huser took over. He said he was “very motivated to show that this company has a right to life, so that Norwegian consumers and business can still have an alternative that secures a combination of good prices and a good product.”
Huser said Flyr was entering “a new phase” that he described as “critical to strengthening the company’s financial situation and that I view as a meaningful challenge.” Two months later, questions were swirling over whether the airline would go into bankruptcy reorganization, or even survive, and investors were angry again. They’re specifically blasting Flyr management’s communication to the market, or lack thereof. Some even told DN on Tuesday (external link to DN, in Norwegian) that they question whether management was intentionally misleading the market and trying to boost the share price.
Sandaker-Nielsen responded that “as a stocklisted company,” Flyr has always complied with its “obligations regarding reports to the Oslo Stock Exchange about relevant contracts and events.” He added, however, that “the company understands that our shareholders are disappointed that we haven’t managed to secure financing for the company.” He otherwise referred to a press release sent out Monday morning that “information on future flights will be shared as soon as possible” on the airline’s own website.
In Flyr’s report to the Oslo Stock Exchange, the company also noted that it was “now in a critical short-term liquidity situation.”
Espen Andersen, an assistant professor at the Norwegian Business School BI, specializes in strategy and told DN already last fall that the sudden change in command of Flyr’s management signaled “the beginning of the end” for the airline. Investors and passengers holding tickets were wondering the same thing this week, as they anxiously waited for more news from Flyr. Flights scheduled from February and onwards had also remained for sale on Tuesday to destinations including Gran Canaria, Alicante, Barcelona and Malaga, to Milan on Friday and Salzburg on Saturday. Flights were also still scheduled in February to Bergen, Berlin, Brussels, Geneva and Rome.
Braathen himself stated on Monday that the company had targeted “great demand” in the charter market and for leasing out aircraft and crews to others. That plan was also apparently jeopardized by the lack of an alternative financing plan. “Unfortunately Flyr has not succeeded with the alternative financing plan,” Braathen wrote before the bankruptcy notice was posted, “and now finds itself in a situation where the board must evaluate whether alternatives can be found for further operations.” They couldn’t.
After crashing on Monday, Flyr’s stock opened up 5 percent on Tuesday, but later fluctuated widely, rising 10 percent and then falling 5 percent, according to DN‘s stock market commentator. Company spokesman Sandaker-Nielsen wrote back in late November that he was certain Flyr would build the “airline of the future,” because “turbulence isn’t dangerous, it’s only a bit uncomfortable.” In this case, it’s led to large losses for all involved.