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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)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • TripRep says:
    24 Dec24 December 21:04

    Interesting development Rob, appreciate the update especially given the timing, hope one and all have a relaxing festive break.

  • Omar says:
    24 Dec24 December 21:21

    Long haul budget seems hard for most airlines, I. Guess air Asia has made it work somewhat. Interesting to see who follows next.

    • Brighton Belle says:
      24 Dec24 December 22:04

      I’m happy to spend my £ thinly by flying up the back across continents when my usual seat is up the front on the bus in those reserved seats for the incontinent.

      Long haul economy on a budget airline feels poor value after all the addons are rolled up. They haven’t convinced me saving 50 quid and eating my own sandwiches and using hand baggage is a great deal when the hotel at the destination costs as much the flight.

      If I have committed to a week away with all the costs it is nice to feel very slightly pampered with a modicum of service. Long haul self service when flying seems a bit mean minded.

      Maybe if i had a long distance relationship that required fortnightly flying to NYC the lowest cost would tempt me.

      2019 New Years Resolution made.

  • Voltron says:
    24 Dec24 December 21:52

    Do most companies lease out their aircraft? Is there any companies that actually own their aircraft?

    • Rob says:
      24 Dec24 December 23:07

      Options include a) secured bank loans, b) leasing the plane short-term from a finance company which owns it or c) leasing it yourself.

      When you lease the plane, the debt is not on your books BUT you are liable for the same monthly payments. Most countries have accounting rules to capitalise leases so they are treated as loans in your accounts.

      • Wetboy1uk says:
        25 Dec25 December 00:15

        That is until next year when ifrs16 willmean all leases are treated as on balance sheet. Then all will be capitalised and included as loans.

  • Nic says:
    24 Dec24 December 23:21

    That means the 24% off sale may be worth a punt! You have 40 minutes. 🙂

  • Alan says:
    24 Dec24 December 23:40

    Thanks for the update, Rob – makes me a bit more relaxed about my positioning flights to/from Oslo next month! (would be looking at 4-6h otherwise on multiple carriers!)

  • TimM says:
    25 Dec25 December 00:41

    If ever fuel duty is applied to air transport to the same degree as other forms of transport, most airlines would cease to exist within a few days. Norwegian flew great services from Manchester last year at a ticket price of less than getting to the airport. Something is seriously unsustainable.

  • ChrisC says:
    25 Dec25 December 02:03

    How much is£ $ € is NOK 2 Bn?

    Not all of us keep up to date with exchange rates.

    • John says:
      25 Dec25 December 07:17

      Use 1 to 10 as a rule of thumb but everything in Norway costs twice as much, apparently except for flights. Is knowing the amount in £ actually any more use?

      • Matt says:
        25 Dec25 December 12:05

        2bn NOK is GB£180m.

        Having just got back from an overnight trip to Oslo. And John is very right. A 50cl beer is about £10-£11. But my return flight with FY was £10!

    • Mr(s) Entitled says:
      25 Dec25 December 13:02

      Do you keep up with internet searches?

  • Simon says:
    25 Dec25 December 06:20

    Any idea for how long this keeps them in the air?

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