Norwegian Air Fulfils Criteria For Initial NOK 300m In Guarantee From Government
Norwegian Air has announced that two Nordic banks have obtained credit committee approval to provide a guarantee for the required 10% for the first tranche of 300 million Norwegian krones (NOK). Norwegian said that it will secure the necessary headroom to pursue further guarantees from the Norwegian government.
On Thursday March 19, the Norwegian government proposed a guarantee of NOK 6 billion for the Norwegian airline industry, of which up to NOK 3 billion is directed to Norwegian. The guarantee will be up to 90% from the Norwegian government, provided that financial institutions contribute the remaining 10%. The guarantee scheme will consist of three tranches with a maximum two years maturity.
Since March 19, Norwegian has worked with banks and financial institutions, and said that it is pleased to announce that two Nordic banks have obtained credit committee approval to contribute the 10% required in guarantee for tranche one and to provide the NOK 300 million in financing backed by the guarantee from the Norwegian government. Norwegian Air is working with the banks and the Norwegian Export Credit Guarantee Agency (GIEK), which will administrate the guarantee scheme on the documentation in order to obtain the NOK 300 million in liquidity as soon as possible.
Norwegian Air is now working with GIEK and the Ministry of Trade, Industry and Fisheries to clarify the criteria and terms related to the remaining tranches under the scheme and to obtain further guarantees from financial institutions in order to back such remaining tranches. Norwegian said that it will update the market with its further plan of action and implications for its stakeholders as soon as the criteria and terms have been finalised.
Norwegian also said that the government guarantee scheme is crucial for the airline as the current state of the capital markets in combination with the challenging times for the airline industry limit the options available. Norwegian stated that the first NOK 300 million will create necessary headroom to pursue the remaining tranches of the guarantee scheme.
At present, most of Norwegian's fleet is grounded and it has reduced its operations to a minimum. Norwegian said that it is now primarily operating domestically in Norway and Sweden, and between the Nordic capitals, in order to deliver on its corporate responsibility of maintaining critical infrastructure so that people and necessary goods and medical supplies can be transported during the COVID-19 crisis. The limited schedule will remain in place until further notice. In addition, Norwegian has conducted repatriation flights together with the authorities in order to get citizens of Norway, Denmark and Sweden back home.
In order to reduce cost, Norwegian has temporarily laid off approximately 90% of its workforce, and it said that it will continue to implement additional cost measures going forward.
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