Norwegian Air Aims To Secure More Cash This Year As Losses Balloon
Norwegian Air is aiming to secure funding this year for the next 18 months or more to see it through the COVID-19 pandemic, the budget airline said on Friday August 28 after reporting first-half losses of $610 million.
The company will put five more aircraft back in the air in September, raising the total to 25, while leaving 110 to 115 planes grounded through the upcoming winter season, which is a difficult time for the industry even in normal circumstances.
Norwegian's share price fell by 11% in early trade on August 28 to a record low of 1.10 crowns and is down by 97% so far this year.
Creditors and lessors took control of Norwegian in May with a financial rescue that allowed it to access state-guaranteed loans of three billion crowns, with the aim of keeping the airline in business until demand for air travel resumes.
"Given the current market conditions it is not enough to get through this prolonged crisis," Norwegian Air CEO Jacob Schram said in a statement.
The airline said that additional funding could come from the sale of aircraft, from additional debt deferrals or from owners or the government, but it declined to quantify any amounts.
"It needs to be completed throughout the autumn," Schram told Reuters on the sidelines of a news conference. "The solution must be in place this year."
The company is not currently strapped for cash, its chief financial officer Geir Karlsen said, adding that it needs money "during the next six to seven months".
"The target for us should be to not just put out fires, but one where we can see all the way into 2022," Karlsen said.
The airline, which has racked up debts as it tries to make the long-haul budget travel model pay off, said that talks with the government are still ongoing, however.
It posted a net loss of 5.4 billion Norwegian crowns ($610 million) in the first six months of 2020, up from a loss of 1.4 billion crowns in the same period a year earlier.
All of its long-haul routes remain suspended and the company has not yet decided when to relaunch them.
Norwegian's overall debt and liabilities declined to 71.7 billion crowns by the end of June from 87.7 billion crowns a year ago.
The company's monthly cash burn is in the upper half of the 300 million to 500 million crown range that the company has forecast, Karlsen said.
Aiming To Gradually Rebuild Operations From Q2 2021
Norwegian aims to gradually rebuild operations from the second quarter of next year, albeit on a smaller scale than before the crisis, and hopes to reach full capacity in 2022.
"Hopefully we'll see a much better summer in 2021 compared to this year," Schram said.