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Norwegian Air Shuttle bondholders/stockholders agree to deal

Posted by (Southeast US) on

Norwegian Air Shuttle's survival is the story that keeps on giving. Over the weekend bondholders and today shareholders agreed to the company's debt-for-equity swap that leaves shareholders with only about 5% ownership of the company. That should give Norwegian access to new government loan guarantees and paves the way for another share offering. The share offering, if successful, is supposed to open the door to additional government loan guarantees that may keep the company flying (in very limited capacity — 7 planes) until the end of the year (per the Reuters article), when additional cash would likely be needed. It helps that Norwegian is only paying bills it seems critical to operations.

https://www.reuters.com/article/us-health-coronavirus-norwegianair/norwegian-air-gets-1-billion-rescue-after-financial-cliffhanger-idUSKBN22G0F5

Norway's government is examining the details of the plan...

https://www.reuters.com/article/health-coronavirus-norwegianair-transpor/norway-government-to-examine-details-of-norwegian-airs-plan-idUSO9N28601W

(Edited to clarify how Norwegian meets requirements for government loan guarantees)

Posted by
11174 posts

IF the airline survives, it looks like they will not be providing the cheap trans Atlantic flights that many here had found attractive.

Posted by
3843 posts

From what I've read, Norway's government is not providing Norwegian Air loan guarantees with the intention of preserving the point-to-point long-haul discount model; it's more to preserve flights that touch Norway (which may include a limited number of transatlantic routes that have a high likelihood of being profitable).

Posted by
2829 posts

Matter of fact is that no low-cost airline has 'cracked' the code to not only survive but thrive on Transatlantic routes, be them to North or South America. There are also no established low-cost carrier on Transpacific routes from either continent (although Oceania => South America is very thin market anyway).

I think Norwegian will survive as an operator of narrow-body flights to/from Scandinavia.

Else, I think they will close their bases in London Gatwick. Berlin and Spain.

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