The embattled carrier Norwegian Air will push ahead with its rescue plan and unlock government aid after winning support from shareholders, bondholders and aircraft lessors for a 10bn kroner (£770m) debt-for-equity swap.
After a weekend of frantic talks, the airline’s shareholders gathered at an emergency meeting in Oslo on Monday morning and voted 95% in favour of all proposals, including a 400m kroner share issue.
The plan will hand majority ownership to the airline’s creditors – bondholders and lessors – and leave shareholders with 5.2% of the company but there was no alternative, Norwegian’s chief executive, Jacob Schram, said.
Agreement on the debt-for-equity swap will unlock 3bn kroner (£230m) in state aid to help steer the airline through the coronavirus crisis. Norway’s government made the package dependent on Norwegian making itself solvent again by wiping out its debt. It has already received 300m kroner from the government.
Also on Monday morning, the European Union’s competition watchdog approved French state aid worth €7bn (£6bn) for Air France. The Covid-19 pandemic has plunged the global aviation industry into its worst crisis, bringing air travel to a near-standstill.
Airlines across Europe have sought government help as coronavirus lockdowns have forced them to ground their fleets. As it approved the French state guarantee and shareholder loan to Air France, the European Commission noted the importance of the carrier, with more than 300 planes, to the French economy and its role in repatriating stranded citizens and transporting medical supplies.
Norwegian – one of the biggest airlines at London’s Gatwick airport – grounded 95% of its fleet in mid-March and had warned it could run out of cash by the middle of the month unless it pushed through its rescue plan.
Bondholders had already backed the plan on Sunday, after rejecting it in a vote on Friday. The airline said it had secured written consent from the largest holders of the NAS07 bond after it improved some of the terms. It will hold another bondholder vote on 18 May, where the airline will have to formally secure 67% support.
The lessors, who own Norwegian’s aircraft, had also signed up to the plan, the carrier said minutes before the shareholder meeting began. “With the significant contributions from lessors and bondholders, the company expects to convert more than 10bn kroner in debt to equity.”
In recent years Norwegian transformed itself from a small local carrier into a pioneer of low-cost long-haul flights, for example to the US. It carries almost 6 million UK passengers each year from Gatwick, Edinburgh and Manchester airports to 30 destinations worldwide.
Norwegian warned a week ago that virtually all of its 160 fleet would remain grounded until 2021, with just seven flying at the moment, mainly transporting essential cargo on state-subsidised domestic flights in Norway. It has temporarily laid off more than 80% of its workforce.
