Norwegian Air Shareholders Back Restructuring Plan
Norwegian Air's shareholders have endorsed the airline's financial rescue plan in a series of votes, one of several hurdles the heavily indebted company must clear to survive the COVID-19 pandemic.
Norwegian Air now faces difficult negotiations with creditors as it tries to reduce its debt and liabilities of 66.8 billion Norwegian crowns ($7.8 billion). It must also find investors and lenders willing to put up fresh cash.
The airline obtained creditor protection earlier this month from courts in Ireland and Norway, giving it some breathing space as it seeks to convert debt into equity. Norwegian's main aircraft-owning subsidiaries are Irish and its parent company, Norwegian Air ASA, is registered in Norway.
The company aims, with the help of the courts in both countries, to emerge by February 26 as a smaller but more efficient airline with fewer planes, less debt and more equity.
More than 80% of Norwegian's owners voted in favour of letting the board raise up to four billion crowns from a sale of shares or hybrid instruments.
If the sale fails, Norwegian has said that it could run out of cash by the end of March.
Norwegian's shares are down 98% so far in 2020.
The company, which helped transform transatlantic travel by expanding the European budget airline business model to longer-haul destinations, has been forced to ground all but six of its 138 aircraft amid the pandemic.
The airline now needs to give assurances in parallel court restructurings in Ireland and Norway that it can get access to sufficient capital, chief financial officer Geir Karlsen said.
"We have targeted that this will take place by the end of February, but it can be drawn out further," he told Reuters.
If everything goes to plan, Norwegian could potentially ramp up operations from April, chief executive Jacob Schram said.
The board is still debating whether to keep the company's long-haul routes or return to a Europe-only model. "We have discussed it on the board and...will continue to do so going forward, but there is definitely no decision," Schram said.
Major creditors include aircraft lessors Aercap and BOC Aviation, planemaker Airbus, and the United States Export-Import Bank, which helped finance purchases of Boeing jets.