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Norwegian faces an almost impossible task with his gigantic rescue plan. The acquisition or state bailout could be the only way out for the airline, analysts at Sydbank fear.
CRISIS PLAN: Norwegian chief Jacob Schram launched a comprehensive plan to save the airline from the virus crisis on Easter.
Reuters Staff / X01095
published:
Norwegian shares fell 44.38 percent to NOK 4.60 on Tuesday. In the worst case, the stock fell more than 60 percent.
Last week, the airline launched a crisis solution aimed at converting debt into equity to ensure the company is strong enough to meet the government’s demands for more state aid.
On Tuesday night, Norwegian stated that it called creditors to bondholder meetings on April 30, where the goal is to approve the company’s proposal.
Like other airlines around the world, Norwegian is in crisis after the coronavirus has ended travel activity.
– It doesn’t surprise me, but it is a big restructuring that Norwegian is trying to carry out. The task seems almost impossible to do now, Sydbank analyst Jacob Pedersen tells E24.
Norwegians’ rescue plan
Acquisitions?
The analyst is unsure whether Norwegian will succeed.
– If they fail, there are only two opportunities left; Either they are purchased by another airline, or the state saves the company, he says.
Pedersen believes that several low-cost airlines, such as EasyJet and Ryan Air, are well-capitalized enough to take over Norwegian. But he thinks it can be difficult in the current situation, where it is almost impossible to see what the future will be for the aviation industry.
– Uncertainty is now extremely high for the Norwegian, he says.
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Sell the Norwegian shares and you can make a good purchase on the airline
Brokers houses are cutting
The brokerage firm Bernstein calls the crisis solution a “loss-loss” situation for shareholders and downgrades the shares to sales (underperforming), with a target price of zero crowns, according to a recent analysis.
Bernstein believes there is hope that Norwegian can continue to fly, as today’s shareholders agree to a near-total eradication of their securities so that the debt can be converted into equity, triggering state aid.
“If they disagree, we expect all company operations to stop, bankruptcy proceedings to begin, and shareholders to be left with nothing,” Bernstein writes.
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The proposals will be presented at an extraordinary general meeting on May 4.
Nordea Markets and SEB also downgrade Norway’s stock rating and set price targets in a single crown.
So far this year, the rate has fallen 84 percent from around NOK 100 at the end of the year.
