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Norwegian has announced a plan explaining how the airline intends to comply with the requirements set by the Norwegian government in order to gain access to a government loan of 2.7 billion Norwegian Kroner (~£210 million GBP).
The main sticking point is that it must convert leasing commitments of NOK 5.3 billion (~£420 million GBP) into shares in the “New Norwegian”.
As regards other key issues, the company mentioned the following in a message to the Norwegian stock exchange today:
- In total, debt must be converted for NOK 8.9 billion
- The existing shareholders will end up receiving 5.2% of the shares in Norwegian
- The lending companies will have 53.1% of the shares and the bond lenders will have 41.7% of the shares
- Changes to flight orders and leasing agreements must be cancelled / terminated
- In the current situation, Norwegian can survive for 6-9 months and spend between NOK 300-500 million per month
- The fleet must be reduced to 110-120 aircraft from the 168 in the fleet today
Norwegian does not expect the situation in the industry to return to normal again until 2022. However, there is still positive confidence in the peak season for 2021.
So until March 2021, the focus will only be on keeping just 7 aircraft in the air for domestic operations in Norway.
European flights will only start after March 2021. The same goes for their long haul business – routes out of London Gatwick to US destinations are not scheduled to begin again until March 2021.
Which markets will the “New Norwegian” concentrate on
The main markets in the “New Norwegian” will be the following:
- Domestic in Norway
- Nordic countries
- Flights from the Nordic countries to Europe
- Continued base at London Gatwick with routes to high density destinations in the US (eg New York, Los Angeles and others)
It is a little surprising that they intend to continue with their London Gatwick base, but they must consider it to be financially attractive in the long run (and that the airline will still be in a position to resume those flights next year).
You can read Norwegian’s presentation here .