Norwegian seeking immediate support

[Turbofan]

https://www.flightglobal.com/strategy/norwegian-seeks-urgent-government-support/137253.article

[Maverick]

Strategy

Norwegian seeks urgent government support

By Cirium13 March 2020

Norwegian is asking the government in Oslo for an immediate bailout as it struggles to cope with the coronavirus outbreak that is decimating travel demand.

“We’re in a very demanding situation at the moment,” states chief executive Jacob Schram. “We need exact measures to strengthen our liquidity in the short term immediately.”

Source: Norwegian

While the carrier welcomes a move to suspend some taxes levied on airlines such as passenger fees, “it is crucial for us that the government will work on solutions for a phase two. We are asking for these solutions to come quickly,” Schram says.

Norwegian is willing to take “all measures necessary” to reduce its losses, he continues, “no matter how painful they are.”

The Norwegian government has said that it could be open to providing the industry with financial help in other ways, press reports say, although no details have been announced.

Market turmoil means that Norwegian is unable to turn to investors to raise equity or issue debt in order to secure new liquidity, “which means that it is not possible to finance businesses in a normal fashion”.

The carrier highlights that it has undergone significant restructuring over the past year and has sold 24 aircraft. It also has a low share of fuel hedging, locking only 25% of its expected fuel consumption – which could see it benefit from a recent fuel price reduction.

In a note to clients issued yesterday, HSBC said that it expected Norwegian to face “cash flow challenges in the near term,” given the dramatic deterioration in market conditions and the US ban on travellers from Schengen-area European countries. “Suppliers will likely take a very cautious view towards Norwegian, exacerbating cash challenges. The likelihood of airlines being able to raise significant amounts of new equity in the present environment does not look high.”

[rudder]

Another failing business model.

[Guest]

China takes stake in Norwegian Air

Troubled budget carrier sees challenging months ahead despite securing government loan

Busra Nur Bilgic Cakmak   |20.05.2020

 

 

    

https://www.aa.com.tr/en/asia-pacific/china-takes-stake-in-norwegian-air-/1847944

ANKARA

China has acquired a stake in budget airline Norwegian Air after the cash-strapped carrier underwent a major restructuring, according to a notification to the Oslo Stock Exchange on Wednesday.

BOC Aviation, owned by the Chinese government via subsidiaries including Bank of China and China Investment Corporation, has emerged as one of the new owners of the Norwegian low-cost airline.

“Upon completion of the conversion [of lease obligations], BOC Aviation will hold 389,053,742 shares in NAS [Norwegian Air Shuttle ASA], representing 12.67% of the outstanding shares and votes in the Company,” read the notification.

AerCap, a top aircraft leasing company headquartered in Ireland, now owns 15.9% of Norwegian Air, while other smaller companies have made similar stock exchanges.

In a separate statement on Wednesday, Norwegian Air announced it secured 3 billion kroner ($290 million) from the government as part of its restructuring plan.

The company, hit hard by the travel slump due to the coronavirus pandemic, said it “converted NOK 12.7 billion of debt to equity and laid a solid foundation for the future.”

However, the airline said the coming months will still be “challenging” on account of its “limited revenues”.

“The months ahead will remain challenging and with a high degree of uncertainty for the industry. Norwegian will still need to collaborate closely with a number of creditors as the company currently has limited revenues,” CEO Jacob Schram said in the statement.

“In addition to securing that the company survives this crisis, our goal has been that Norwegian should have a strong position in the future airline industry, with a clear direction and strategy.”

Norwegian Air's staffing subsidiaries in Denmark and Sweden filed for bankruptcy last month, a move that affected more than 1,500 pilots and 3,000 cabin crew.

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[Jumpy]

Smart move. If (when?) Norwegian ceases operations BOC will have access to a large number of 787’s which may be difficult to acquire if the US/China trade war escalates. If Norwegian manages a recovery then their investment will payoff.

[Guest]

19 minutes ago, Jumpy said:

Smart move. If (when?) Norwegian ceases operations BOC will have access to a large number of 787’s which may be difficult to acquire if the US/China trade war escalates. If Norwegian manages a recovery then their investment will payoff.

Re the possible US trade war having a negative effect on the ability of China to buy 787's, somehow I don't think that will happen due to the negative effect on Boeing. The US has always been good at picking and choosing when it comes to $$$$$$$.

[Jumpy]

1 hour ago, Marshall said:

Re the possible US trade war having a negative effect on the ability of China to buy 787's, somehow I don't think that will happen due to the negative effect on Boeing. The US has always been good at picking and choosing when it comes to $$$$$$$.

It may come down to a retaliatory stance from China to not buy from the US while still giving them access to 787’s. They’re not playing the short game.

[boestar]

My bets are that if you look at chinas spending right now, it would be interesting to see what other international assets they are accumulating.