Boeing seeks reversal of Norwegian lawsuit as creditors mass

Although the High Court of Ireland has granted Norwegian (DY, Oslo Gardermoen) and its five Irish subsidiaries, which own many of its assets, interim protection from creditors, Boeing (BOE, Chicago O’Hare) is seeking the dismissal of Norwegian’s lawsuit over the grounded MAX aircraft, while some creditors have taken legal action against the troubled airline, the Irish Times reported. Boeing wants to halt the USD1 billion lawsuit against it, filed during the summer, in which the airline claimed the manufacturer was at fault for contract violations worth more than that amount. The ch-aviation fleets advanced module shows that Norwegian currently has three B737-8s, Norwegian Air Sweden (LE, Stockholm Arlanda) thirteen while Norwegian Air International (D8, Dublin Int’l) has two more of them. The group has said it would have cancelled an order for a further 92 of the aircraft, but Boeing still has them on its order book. Boeing told the Circuit Court of Cook County, Illinois, where Norwegian filed its suit, that it was seeking to have part or all of the action dismissed. The case is due to be heard on December 15, which is eight days after Norwegian’s Irish case is due back before the High Court in Dublin. An independent expert report written by Ken Fennell, partner at the Dublin office of Deloitte, suggests that Norwegian has a chance of survival if it succeeds in cutting its fleet and future aircraft orders and attracts new finance. If the Irish court confirms the airline’s protection from creditors on December 7, KPMG partner Kieran Wallace – who Justice Michael Quinn appointed as interim examiner – will have up to 100 days to present a full rescue plan. The five Irish-registered subsidiaries given protection are Norwegian Air International, Arctic Aviation Assets, Drammensfjorden Leasing, Lysakerfjorden Leasing, and Torskefjorden Leasing. Nevertheless, it has since emerged that some creditors took, or threatened to take, legal action against two of Norwegian’s subsidiaries before court protection was granted. Earlier this month, the High Court of Justice in London ordered Norwegian and Drammensfjorden Leasing to pay USD6.3 million to US-based lessor Aviation Capital Group and one of its subsidiaries, documents seen by the Irish Times show. According to Fennell, Drammensfjorden holds 20 of Norwegian’s B737-800s. Aviation Capital Group filed claims for alleged unpaid leases due on some of these aircraft. Another California-based lessor, Wings Capital Partners, has issued default notices and has demanded USD5.9 million related to a further two B737-800s held by Drammensfjorden, Fennell said in his report. Also, last month, Dublin-based Goshawk sent a demand for USD2.2 million in alleged unpaid leases for one B737-800 held by Lysakerfjorden Leasing. Drammensfjorden Leasing, Lysakerfjorden Leasing, and Torskefjorden Leasing are all subsidiaries of Arctic Aviation Assets. They own 72 of Norwegian’s combined fleet of 140 aircraft, according to Fennell’s report. The Irish-registered entities under the court’s protection owe creditors USD4.6 billion. According to the independent report, Norwegian has forecast that without further finance it will run out of cash by March 2021. Liquidating it now would wipe out its assets and leave a EUR6 billion (USD7.1 billion) deficit, preventing creditors from collecting all of the money owed to them. Norwegian Air International is an operating company, the report explained, allowing the group to operate in the European Union, as Norway is not an EU member state. In related news, BOC Aviation revealed on November 24 that it had sold 38,874,417 shares in Norwegian, cutting its stake from about 6% to 4.92%. It became the carrier’s second-biggest owner during restructuring in May, originally with a 12.67% shareholding. Other lessors that adopted partial ownership in Norwegian in May, such as AerCap, have also reduced their stakes.