Norwegian will seek to convert more debt to equity and sell planes in an attempt to avoid falling into bankruptcy the airline announced on Thursday. The embattled carrier has called an extraordinary general meeting on December 17 where it will attempt to convince shareholders to back its restructuring plans after the Norwegian government rejected a second bailout request by the company last month.
Norwegian has applied for a form of bankruptcy protection in Ireland where a number of its subsidiaries are based. The process, known as ‘examinership’, prevents creditors from seizing assets while the airline attempts to reorganise itself into a financially viable company. An Irish court will decide whether to grant Norwegian examinership status on Monday.
“Our goal is to put in place a financially strong and competitive airline. This will lead to a new financial structure, an adapted fleet size and an improved offer to our customers,” commented Norwegian’s chief executive Jacob Schram.
Describing Norwegian’s current situation as “demanding”, Schram said the restructuring plans contained a “complex package of measures against lenders, other creditors and stakeholders, as well as existing and potentially new shareholders.” The airline simply said the package “could” lead to a solution.
If examinership is approved, Norwegian hopes to raise $455.4 million in new capital and exit the process by February 26, 2021.
Part of the plan is to offload an unspecified number of aircraft and only pay back aircraft lessors for the remaining aircraft by the hour for when aircraft are actually in use. The airline hopes to keep that arrangement in place until 2022. The majority of Norwegian’s fleet is currently grounded.
Last month, the Norwegian government rejected a request for a second bailout, saying state aid for the loss-making budget carrier would be bad for competition. Schram hit out at government ministers over the decision saying it was a “slap in the face” for everyone who worked at the airline.
Norwegian has grounded all but six aircraft and laid-off an additional 1,600 employees. Since the beginning of the COVID-19 crisis, the airline has laid-off around 94 per cent of its entire workforce.
