Norwegian Air Shuttle has warned that most of its fleet is expected to remain anchored for the next 12 months and that a full recovery will not take place before 2022, exposing the depth of the crisis that has ravaged the industry air transport.
In the context of a $ 1.2 billion debt-for-equity swap to ensure the survival of the low-cost airline, Norwegian said on Monday that its base scenario was that its fleet would remain fully anchored until ‘in April 2021, with the exception of the seven planes currently flying in Norway.
It would then begin to ramp up its short and long-term European operations to the United States and Asia during the rest of 2021 before activity returns to normal in January 2022.
Airline executives have warned that their industry is facing its worst crisis due to the pandemic that has ended flights. Norwegian, one of the world’s most indebted airlines, has been fighting for survival for two years, during which time it organized three emergency rights broadcasts and saw its share price drop by 97%.
Norwegian warned its current shareholders on Monday that it would be virtually wiped out by its debt swap for shares and a fourth rights offering.
The low-cost company added that it hoped to convert 60% of its bonds and 85% of a convertible bond, as well as $ 500 million from lessors into equity, which would leave current shareholders 5.2% of the capital social. before a separate issue of rights NKr400m ($ 40m).
The restructuring is part of Norwegian’s attempt to release 2.7 billion Norwegian kroner from government loan guarantees to save the airline. It has long been considered vulnerable due to its rapid expansion and fueled by debt on cheap long-haul flights between Europe and the United States.
Norwegian has warned that its liquidity will run out in the second quarter unless it receives the full rescue package from the center-right Norwegian government. Even with what he called a NKr3bn liquidity buffer, he estimated that his cash consumption would be NKr300m-500m per month starting in July, which means that a new bailout would be necessary.
Norwegian estimated that it would convert around 15% of its total debt – 8.9 billion Norwegian kroner – into equity and raise 400 million Norwegian kroner in fresh capital under its current plan. These measures would increase its capital ratio well above the 8% required by the Norwegian government.
He also asked to postpone any payment or interest payment to creditors and lessors until July 2021.