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Norwegian Air secures a cash injection to carry on flying into 2019

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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:

Norwegian 787

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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Comments (26)

  • Phil says:

    Useless airline. Disgraceful customer service. The sooner they’re out of business the better.

  • Nicola Walton says:

    That is a relief having a flight to Chicago booked with them in April. We have been lucky on our previous flights and had great customer service and also managed to get good seats in the bulkhead.
    Btw what is the form with people going across the bulkhead in front of you seat to go to the bathroom? ??

    • Shoestring says:

      That’s always just been plain rude IMV. Try and block it, keep your feet up or something like that. It only takes them a few moments more to go round the proper way.

      • Nicola Walton says:

        That is what I do, but I wanted to check I was in my right to do this.

  • Chris says:

    This is good news (as it keeps the legacy carriers honest a little longer on pricing) but I assume that the downward spiral is hard to escape – is there much precedent for airlines taking these measures to shore up balance sheets ever recovering from the growing debt mountain it creates?

    I have a load of cash points but am loathe to use them – either for work or leisure because the potential cost of last minute alternative flights is too great a risk. (And of course leisure would be my preference, and 5x backup avios bookings while possible would cost a chunk of the cash points value anyway.)

    They have their faults but to be fair to them they leased an a380 to maintain their NYC service. That has to have been pricey…

  • Tom says:

    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

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