Seeking Bankruptcy Protection in Ireland to Save Norwegian – E24

The development of the crisis-hit Norwegian airline took a dramatic turn on Wednesday.

Norwegian announces that it is now seeking bankruptcy protection for subsidiaries Norwegian Air International and Arctic Aviation Assets in Ireland, under what is called an “examinership”.

This is no different from what is known as Chapter 11 in the United States.

“Norwegian Air Shuttle will also seek and receive protection from the Irish examination process as a related party,” the airline writes. According to the company, it will ensure that the entire group of aircraft is protected from bankruptcy in the process.

The review process “can take up to five months,” notes the airline.

Norwegian Air International was Norwegian’s first foreign subsidiary and was the cornerstone of the company’s international expansion, especially when it came to long-haul routes. The company is in fact a fully fledged airline registered in Ireland with its own air license (AOC – Air Operator Certificate).

Norwegian also has subsidiaries with their own flight licenses in Norway, Sweden and the UK.

Arctic Aviation Assets is Norwegian’s subsidiary in Ireland that physically owns Norwegian’s own aircraft. “Norwegian has chosen the Irish process as the company’s aircraft is owned by Ireland,” Norwegian writes.

Bankruptcy protection will mean that the court appoints an “examiner” who manages the process and allows the company to restructure debt, raise fresh capital and secure a binding debt agreement.

Saving as many jobs as possible, while reducing the fleet and the size of the company “will remain the first priority for management,” the company writes.

P.S! Norwegian has announced a press conference at 6:00 p.m. E24 is following the case!

Norwegian Stock Exchange Announcement of Bankruptcy Protection

I think they have enough money so far

According to the company, Norwegian’s decision to take this step comes “as a result of the Norwegian government’s refusal to support the airline in the ongoing COVID-19 pandemic.”

– We have made the decision to apply for protection to reorganize under Irish law to secure Norwegian’s future, in a way that benefits our employees, customers and investors, says CEO Jacob Schram in Norwegian in a press release.

– Our goal is to find solutions in collaboration with our stakeholders that will allow us to overcome this as a financially stronger and stronger airline, continues the CEO of Norwegian.

Norwegian consumes your savings account with each passing day. In the third quarter, an average of NOK 524 million left the coffers each month.

E24 has previously written that Norwegian’s coffers may be bottomless in the spring if nothing drastic is done.

“Based on Norwegian’s current cash position and future projections, the company believes it has sufficient liquidity to go through” bankruptcy protection in Ireland, the airline writes.

Norwegian, along with the rest of the aviation industry, has been hit hard by the corona pandemic. The company avoided bankruptcy this spring when it managed to secure a comprehensive financing package that secured the company’s access to NOK 3 billion in government-guaranteed loans.

During the summer and fall, the company has worked on a new rescue package. On November 9, the government announced that it would not stand up with special support for Norwegian, something that CEO Jacob Schram described as a “punch to the stomach.”

Will keep flying

Various airlines throughout history have gone through bankruptcy protection and come out the other side. A recent example is the Irish airline CityJet, which recently exited the process, with very little debt.

In the United States, a long list of airlines has gone through the “Chapter 11” process, including the aviation giant American Airlines.

The characteristic of the processes is that airlines operate externally in a roughly normal way for customers. Norwegian also has plans to do so:

“Norwegian will continue to operate its route network, and the company’s bonds and shares will normally trade on the Oslo Stock Exchange,” the company writes, continuing:

“Norwegian Reward will continue to earn and credit points as normal for its members.”

Although Norwegian will continue to fly, there is a very limited route offering that the company now operates.

After the government said no to further support, Norwegian announced that it had grounded 15 of the 21 planes it had used this summer and fall. In addition, 1,600 more employees were laid off.

The market waited excited

It was in an announcement on the stock exchange shortly after 1:30 on Wednesday afternoon that it became known that the stock in Norwegian was halted pending an announcement from the company.

The Norwegian share was down 0.32 percent at a price of NOK 0.47 before the close. At the same time, SAS stock received a boost following news of a stock market break with the competitor. SAS stock rose 6.4 percent on Wednesday afternoon.

The Oslo Stock Exchange may introduce a stock market break if it has received a message from the company in question, if there are “irregular price movements”, if there is a suspicion of an uneven flow of information to the market or “in response to other events, “according to Børsen.

For example, a company may request the Stock Exchange to stop trading before publishing a notice that will be of great importance to the company.

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