Norwegian Air targets April exit from Irish insolvency process

Norwegian Air Shuttle ASA aims to exit Irish insolvency proceedings in April as the carrier jettisons its low-cost long haul business to focus on flying in the Nordics.

The airline expects to raise as much as 5 billion kroner ($580 million) in capital, including up to 2.5 billion kroner from existing creditors through a hybrid debt instrument, according to an investor presentation Wednesday. Secured creditors that contribute to the equity raise will boost their holdings, the company said.

Norwegian will also “rightsize” its fleet through the Irish examinership process and issue fresh equity at the end of February or early March, it said. The write down of leased and financed aircraft assets is set to reduce equity by about 10 billion kroner before exiting the restructuring, with all large creditors expected to take losses and their debt converted into equity, according to the presentation.

At the end of the process, new investors, which could include the Norwegian government, will own 70% of the equity. Converted creditors will hold a 25% stake and current shareholders 5%, the company said.

Last week, the carrier was granted an extra five weeks of creditor protection by an Irish court, buying the embattled airline extra time to complete a restructuring aimed at staving off collapse. The discount airline, struggling to survive after the coronavirus crisis stunted international travel, qualified for the Irish procedure via its local divisions Arctic Aviation Assets and Norwegian Air International.

Norwegian, which said this month that it would exit long-haul operations, plans to operate a fleet of 53 aircraft in summer 2021, with the majority of its routes to and from Scandinavian airports, it said in the presentation. It plans to scale up the fleet to 68 aircraft in 2022.

The carrier will operate the aircraft on so-called power-by-the-hour terms until March 2022. These contracts allow it to only pay for aircraft when it flies them. The future use of the Boeing Co. 737 Max, which was cleared to return to European skies by the region’s aviation safety regulator on Wednesday, will be “clarified” in the restructuring.