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Norwegian Air unveils emergency rescue plan following bankruptcy filing

written by Hannah Dowling | December 8, 2020

A Boeing-787 in Norwegian livery (Norwegian Air Shuttle)

Norwegian Air Shuttle has officially launched its emergency rescue plan to save the struggling airline, which includes proposals to downsize its fleet and raise additional funds from investors.

Norwegian Air’s board has currently proposed the “reconstruction” of the airline’s balance sheet by reducing the size of its aircraft fleet, launching a new debt-for-equity swap, and a rights issue of up to $453 million in the form of new stock or hybrid instruments.

The debt-for-equity swap, which would be its second in 2020, would include aircraft financing liabilities, supplier liabilities, and bond obligations.

Further, as a part of the emergency rescue proposals, Norwegian claimed it would only pay its aircraft lessors when its airplanes were in use, as so-called “power by the hours” deal, in order to conserve cash.

The company did not provide any details on the potential scale of the debt-for-equity swap, how many planes it could end up flying under the plan, which planes are on the chopping block, or how many jobs are at risk.

The proposals will be put forward at an extraordinary general meeting on 17 December.

It comes following Norwegian Air’s move to file for bankruptcy protection in Ireland last month.


The troubled carrier asked an Irish court to carry out a process of examinership, which would protect the group’s assets while it tries to slash its debt pile, offload aircraft and raise new capital funding as part of a restructuring.

The process could take up to five months to complete.

Norwegian Air Shuttle subsidiary Arctic Aviation Assets, which handles all aircraft financing and airline ownership, is based in Dublin, making Ireland the obvious location for the airline’s reorganisation.

“Seeking protection to reorganise under Irish law is a decision that we have taken to secure the future of Norwegian for the benefit of our employees, customers and investors,” said Norwegian’s chief executive Jacob Schram.

“Our aim is to find solutions with our stakeholders that will allow us to emerge as a financially stronger and secure airline.”

Schram said the company wanted to work with its stakeholders to find solutions to its financial problems and intended to save as many jobs as possible, and believes the carrier has enough liquidity to get through the examinership process.

He added, “Our intent is clear. We will emerge from this process as a more financially secure and competitive airline, with a new financial structure, a right-sized fleet and improved customer offering.”

Norwegian will also reportedly continue to operate its current flight schedule, which is greatly reduced thanks to COVID-19, throughout the process and its shares will still be traded on the Oslo stock exchange.

Norwegian’s fate appeared to be sealed when the Norwegian government refused to give it a second bailout this year. 

Ministers in Oslo stated they did not think it was a “sound use” of taxpayers’ money to prop up the low-cost airline, which appeared to enter the pandemic already vulnerable thanks to its debt-fuelled rapid expansion into long-haul international flights.

Norwegian Air said the government’s decision has left the airline with a “very uncertain future”.

The company’s shares have plunged 99 per cent in the past year, wiping out shareholders, as the stock was briefly suspended.


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