Widerøe to borrow 500 million with state guarantee – E24

NHO, Luftfart, SAS, Widerøe and Norwegian lined up on Friday to tell the Minister for Trade and Industry and the Minister for Transport how bad things are.

There were no promises of new measures by the ministers, because it was intended to be a meeting of contributions. The two ministers will also have direct meetings with each of the airlines in the future.

– We did not receive any comments on the table, but we did not expect it either, says Torbjørn Lothe, CEO of NHO Luftfart and continues:

– We gave a description of the situation, the state and we talked a little about traffic and finances, as well as future prospects. They are sad and I think the ministers understood. Now more measures are needed, says Lothe.

– What kind of measures do you want then, compensation and no more loans?

– This is a portfolio of measurements. There are fiscal adjustments and compensation for the measures and restrictions implemented. There is no question that we must look beyond 2021 because this will continue for quite some time, says Lothe.

– It was a good and constructive meeting. We were all allowed to present our concerns in a very concrete way, both the crisis we are in and to discuss how the state can help, Norwegian CEO Jacob Schram tells E24 as he leaves the meeting.

– Both NHO and the industry have done a good job here and now it remains to be seen what comes next, but I am convinced that the state councils have understood the seriousness of the situation, he continues.

– Do you think that the aviation industry needs help from the state until well into 2021?

– Yes, I believe. 2021 will be a transition year to 2022 when, hopefully, we are back in full production. 2021 will be bad, but hopefully much better than the disaster of 2020, says Schram.

Widerøe has decided: Accept a loan guarantee

The Widerøe boss has previously refused to use part of the government’s loan guarantee scheme because he thought it was too expensive, both because the state should have a commission to provide a guarantee and because the interest rate is high when borrowing. in times of crisis.

– Widerøe was in a very strong financial position when the crown hit us. We had a lot of unused credit lines and more than 30 percent equity ratio, says Stein Nilsen.

So far, Widerøe’s banking connection, Sparebank 1 Nord-Norge, has ensured that the company has received more loans to keep the wheels moving. But now more is needed and Widerøe will use the state loan guarantee this fall:

– Yes, we decided to use it. We are working on it now and there are around 500 million. But sadly it’s expensive, Nilsen tells E24 after the meeting.

– Is the private part of the 10 percent guarantee required by the State implemented?

– Yes, and that means that the owners have to come with more money because we have nothing else to mortgage. They have said yes under certain conditions, because they would like to know if the authorities want to tolerate more measures before entering, says Nilsen.

The Torghatten transport group owns Widerøe together with Fjord1.

– So it’s part of the process now. It’s not particularly attractive for homeowners to take in the full impact of the crown alone, he adds.

– How long do you insure a loan of this type?

– It assures us until 2021, given a rather depressing vision and conditions in the market. But if this crisis lasts, we will still need more financial preparation, Nilsen.

Norwegian: – Government assistance is an important element

Norwegian management announced once again that the company will need more financial help before the new year, when they presented the second quarter results at the end of August.

This spring, the company received a large rescue package and was able to convert a large amount of debt into equity, so the pressure eased. They have also used the state’s credit guarantee and thus received their total installment of $ 3 billion in new loans.

– Do you need government assistance as part of the notified package you are working on?

– Yes, I think the state will be an important element, but not the only one, says Schram.

– Is the state willing to give more support to Norwegian when they are now working on a second financing package?

– It is a discussion that started here and will continue with Norwegian, and that we must have in the government. We are not finished, says Trade and Industry Minister Iselin Nybø.

Schram is very concerned that not only must the crisis of the crown be dealt with in the here and now, but that an airline that is competitive and has good speed must also be built when the crisis is over.

– One thing, one thing is to handle the crisis now with liquidity and solvency, another thing is how through the crisis we make sure that on the other hand we have a good company that has speed and is competitive, says Schram and continues:

– We are not only working on how we will survive tomorrow, but on how we will be ready when we return, continue.

The government has not decided

– It was very nice to bring up the issues and what they envision, and then we should have discussions with all the companies separately, says Trade and Industry Minister Iselin Nybø after the meeting.

She and the Minister of Transportation and Communications say the state has provided a number of important tools, from extended layoff schemes to loan guarantees, the purchase of air routes and tax breaks.

– When I entered the summer, I was hoping to enter a fall where things would become increasingly normal, but now we see bleaker prospects for this industry, among other things, says Hareide.

Nybø is aware that airlines will not be covered by the announced package of measures for tourism, but will have their own measures if necessary.

– Aviation has been treating itself all the time because it is a special industry, says Nybø.

– Will they continue to buy flights depending on the looming pandemic?

– We have said that we will continue until further notice. My plan was to finish this on October 1, but that was before we saw that fall was getting much darker. So when we now go to ESA, we proceed with a broader perspective than we had, but it is true that we have not decided on the measures yet, says Hareide.

– We will take this with the government now in the future, says Hareide and receives support from Nybø.

– You don’t want to say specifically what you want to do here, but do you foresee that you should support this published industry in 2021?

– We have not made up our minds either, because this discussion is now ahead, both respond.

– The industry predicts they will need help well into 2021, Nybø says, before Hareide continues:

– We have our thoughts and we want to make sure we have healthy and good competition in the Norwegian market, but before landing something, we must go to the rest of the government, says Hareide.

– A particularly vulnerable industry

Aviation analyst Hans Jørgen Elnæs says that, unsurprisingly, no action has yet been taken.

– But it’s on the cards that aviation is a particularly vulnerable industry and will need different forms of government action packages, says Elnæs.

Although the Norwegian boss says state aid is a natural part of his new financing package, he also believes that the owners have a plan to bring in more capital.

– However, the Norwegian authorities must support through subsidies, the expansion of route purchases, keep charges low and, above all, abolish air passenger charges. For Widerøe to get $ 500 million in loan guarantees is strategically smart. So they will have good liquidity in 2021, which will be another difficult year, I think.