Norwegian warns of potential bankruptcy in the second quarter of 2021
Norwegian, which has rebuilt its business in order to continue flying, announced its latest financial results. While there are positive signs for the company’s future, the low-cost carrier still warned of a potential collapse in the near future as uncertainty persists.
Norwegian said that during the restructuring process, its equity balance improved by NOK 18.5 billion ($2.1 billion), of which NOK 5.2 billion ($607 million) were recognized in the last income statement. The airline has been operating under Irish review and Norwegian reconstruction since November and December 2020, respectively.
The company stressed that continued operations hinge on “a successful exit from these processes, with a significant reduction in the company’s aircraft fleet”, debt reduction and raising new capital. Both processes are expected to be completed in the second quarter of 2021. However, if the conclusion is not positive, “it is very likely that the company will enter liquidation and/or bankruptcy“, during the same quarter.
Norwegian aims to raise between NOK 4 and 5 billion ($466.2 million and $582.8 million), primarily through an equity offering. Regarding its fleet, the airline plans to operate 53 Boeing 737s in the future, focusing on short-haul flights from the Nordic countries.
“The company is, however, optimistic that the review and reconstruction processes as well as the success of capital increases and debt conversions,” wrote the company’s fourth quarter 2020 financial report.
In total, Norwegian ended 2020 with a net loss of NOK 23 billion ($2.6 billion), as operating revenue fell 79% from a year earlier. More importantly, the company has managed to reduce its debt by 31% and is now looking at an interest-bearing net debt of NOK 40.2 billion ($4.6 billion). Twelve months ago, the airline’s debt was NOK 58.2 billion ($6.7 billion).
On average, Norwegian operated 15 aircraft in the last quarter of the year, carrying 574,000 passengers.
“Despite the hardships the pandemic has caused, there is a great fighting spirit and commitment within the company, and together we will build a new Norwegian as we emerge from the rebuilding processes,” commented the results. of the company Jacob Schram, CEO) of the Norwegian.
The start of 2021 brought further changes to the airline, as the low-cost carrier announced its decision to ax its iconic long-haul operations on January 14, 2021.