Some press reports in Norway over the last week or so suggested that Norwegian Air was going to breach its banking covenants when they were tested on 31st December.
It looks like the reports may have been correct, as the company unveiled a number of measures on Monday to inject new liquidity into the airline.
According to Reuters and Bloomberg:
One Boeing 787 has been refinanced, raising $30m in cash (although of course long-term debt is increased by $30m)
A new cost-saving programme has been launched – no details yet – which is expected to save NOK 2bn in 2019. This will include closing unprofitable routes.
An “agreement” has been reached with Rolls-Royce over compensation for the Boeing 787 engine issues which have blighted Norwegian’s performance. However this is paid – either in cash or in kind – it will have an impact from the start of 2019.
Financing has been secured for all aircraft delivered due in H1 2019
Talks are continuing over the sale of some or all of its wholly owned aircraft
None of this is going to help Norwegian in the long term – in fact, by pushing up its long term debt it will make life tougher down the line – but it will get it over the next bump in the road. The hope will be that falling oil prices and the maturing of existing routes will improve revenues in the medium term.
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I fly Norwegian from time to time, but only at short notice. I don’t trust them to be around in 6 or 12 months time