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– Now, going forward, we will focus fully on restructuring and trying to find solutions with creditors, says CEO Jacob Schram during tonight’s press conference.
The airline Norwegian has more debt than the company can handle in the long term, and on Wednesday it initiated a process with bankruptcy protection for subsidiaries in Ireland.
Bankruptcy protection means that Norwegian is trying to prevent the bankruptcy of Irish subsidiaries Norwegian Air International, Arctic Aviation Assets (AAA), as well as some of the latter’s subsidiaries.
The companies are based in Dublin, Ireland. All of the company’s aircraft are owned by Arctic Aviation Assets, according to CFO Geir Karlsen. According to him, it is too early to say what will happen to the planes.
– The result of the process with the government was negative, and then this is the plan that we have been working on for some time and that was implemented today. Normally the process will take a hundred days in Ireland, so you have a 50-day chance on top of this, he tells NRK.
Government dilemma
Therefore, Norwegian has bought time in the coming winter months. The government has not found a solution to the crisis that can help the company in the future with money in the coffers.
Frp’s tax policy spokesperson Sylvi Listhaug tells NRK that she hopes the Norwegian part of the business will survive.
– It means jobs, and it means a company that many Norwegians love. […] That means they have to keep up. It’s important, Sylvi Listhaug tells NRK.
FRP Fiscal Policy Spokesperson Sylvi Listhaug.
Photo: Terje Pedersen / NTB
Prime Minister Erna Solberg said Wednesday at the Storting Question Time that the government will help viable businesses. He noted that Norwegian entered the crown crisis with a lot of debt.
– It is a dilemma how much of the tax money of Norwegian teachers, nurses and store employees we will use in companies that may end up in international venture funds or Chinese guarantee solutions, Solberg said, according to NTB.
When Listhaug confronts the statement, he notes that the government will study a separate compensation plan for aviation in January.
– We hope so. It is clear that there are many companies that are in a difficult situation, he says.
Sp leader Trygve Slagsvold Vedum with a draw with Norway at the Storting on Wednesday. He asked Prime Minister Erna Solberg what the government would do with the Norwegian crisis.
Photo: Heiko Junge / NTB
It has no guarantees
Earlier, the Norwegian boss warned that the company will not survive the winter without help.
During tonight’s press conference, Schram stresses that the situation is so dire that he cannot give guarantees to employees.
– It has looked dark for the industry for a long time, but now we see vaccines that are just around the corner. I’m pretty sure people are starving to travel whenever possible, he says during the press conference, continuing:
– It is not given in advance how this process will develop, but as I said, it is the companies that have passed it, those that have achieved it. It is a complex process, we have high hopes and we have planned it well. We will come out of this as a much stronger company, says Schram during the press conference.
You must agree with the creditors.
Bankruptcy protection means that Norwegian will receive help from the judiciary to solve corporate debt problems in Ireland.
UiO Private Law Fellow Morten Smedal Nadheim explains that the scheme in Ireland is similar to the new scheme with reconstruction that Norway received in the spring and to the scheme in Chapter 11 of US law.
– This means that the court decides whether you receive bankruptcy protection. Now they have requested this. The purpose is to bring creditors to the table and negotiate with them to come up with a plan other than bankruptcy. As long as negotiations are ongoing and bankruptcy protection is effective, creditors cannot bankrupt the company and the company’s assets cannot be forcibly sold, he tells NRK.
The course of the negotiations depends on what the creditors have to gain by helping Norwegian survive, compared to what the creditors have left if the company fails.
– Creditors have a lot of money outstanding with Norwegian. If they go bankrupt, creditors run the risk of having only a small portion covered. If they renegotiate, they may be better off forgiving some debts so that the business survives. This is something that will be discussed, says Smedal Nadheim.
The next 100 days are crucial
Some of the creditors of Irish companies can recover money through a US guarantee scheme if the Irish companies fail.
CFO Geir Karlsen will not comment on the negotiating position of this group of creditors specifically with NRK.
– Now there is a set of different creditors that will be involved. We just have to sit down and argue more with them, he says.
– What will it mean if Norwegian can’t find a solution?
– The goal is to come up with a solution, then time will show how this develops over the next 100 days. One solution will be best for everyone with a stake in the company, he says.
Norwegian notes that several companies in the tourism industry during the pandemic have gone through similar processes and have “come up with a solution for customers, employees, shareholders and others with interests in the company.”
Norwegian CFO Geir Karlsen during the Norwegian press conference tonight.
Photo: Fredrik Hagen / NTB
Norwegian quota at 47 øre
Norwegian writes that they will continue to fly as planned and that stock trading will continue normally on the Oslo Stock Exchange.
Norwegian Reward continues as normal, so members can continue to earn and use CashPoints.
Hours earlier, the airline Norwegian announced a break in the stock market “pending a major announcement” from the company. The break went into effect at 1.39 p.m.
At its lowest, the Norwegian share cost NOK 0.44 on Wednesday. Just before the trading break, the Norwegian share was down 0.32 percent and one share cost NOK 0.47.
The airline, already burdened with debt, was hit hard by the first coronation shutdown in March.
In the third quarter of this year, Norwegian carried 91 percent fewer passengers than in the same quarter last year. The airline has 10,000 employees, of which about 600 are not laid off.
The company ended with a pre-tax loss of NOK 980 million in the third quarter, and the company’s cash balance dropped dramatically.
Earlier this month, it was announced that the government will not provide further crisis assistance to the airline. Norwegian has long said it needs financial help to survive the pandemic.
The company carried out a restructuring in May, but has made it clear that it needs more help. The CEO, Jakob Schram, has stated that he does not rule out bankruptcy.
