Norwegian to exit Irish insolvency in 2Q21 – presentation

Norwegian (DY, Oslo Gardermoen) has outlined its new plan to outlive the collapse in air travel demand in a presentation to investors published on January 27. It aims to exit Irish insolvency proceedings in April on its journey to refashioning itself as a short-haul low-cost carrier. The airline’s restructuring process will be presented to the Irish examiner at the start of February, after which it will work with creditors and equity investors, the presentation outlined. An equity issue will then be prepared by the beginning of March, to close at the end of March. The airline confirmed that it expects to raise between NOK4-5 billion kroner (USD459-574 million) in new capital through a combination of three measures; a rights issue for current shareholders, a private placement, and NOK1.5 billion to NOK2.5 billion (USD172-287 million) from existing creditors through a hybrid debt instrument. “Unsecured creditors who contribute to the equity raise will achieve a debt continuation of 150%,” the presentation said. The restructuring will “rightsize” the carrier’s remaining fleet from 103 to 53 aircraft (50 operational plus three spares). It plans to scale up the fleet to 68 aircraft in 2022. Norwegian will, according to the presentation, “retain aircraft on power-by-the-hour terms until March 2022; if lack of demand, we do not fly.” The majority of the new-look network routes will be “Nordic-touching” with 15-20% of routes measured in available seat kilometres (ASKs) being domestic within Norway. The “write down of leased and financed aircraft assets [is] expected to cause a reduction in the equity of approximately NOK10 billion [USD1.15 billion] prior to exiting the restructuring,” the presentation specified, while all large creditors are expected to take losses with their debt converted into equity. By the end of the process, new investors – which may include the Norwegian government – would own 70% of the equity. Converted debt-holders will hold a 25% stake, current shareholders 5%, the company said. The future use of the B737 MAX, of which Norwegian has sixteen B737-8s parked and 92 to be delivered, will be “clarified” during the restructuring. On the same day that Norwegian published its presentation on its investor relations website, both the European Union Aviation Safety Agency (EASA) and the UK’s Civil Aviation Authority (CAA) lifted their MAX bans in their airspace.