Norwegian starts upgrading Wi-Fi on short-haul fleet
Budget carrier Norwegian is strengthening its balance sheet through a fully underwritten rights issue of Norwegian krone 3 billion (£268 million).
The move is designed to increase the carrier’s “financial flexibility” and “create headroom to the covenants of its outstanding bonds compared with the company’s business plan”.
The new financing plan emerged the week after British Airways owner IAG said it would be selling its 4.61% stake in Norwegian after two takeover attempts were rejected. Norwegian “received enquiries from “several parties who expressed interest for structural transactions, financing of the company and various forms of operational and financial co-operation” after IAG disclosed that it was considering a takeover bid. “Discussions with such parties have been on going on several levels and with different approaches,” Norwegian said today without giving further details. The rights issue combined with cost cutting plans designed to make savings of NOK 2 billion will “significantly improve” the financial position of the carrier in 2019. This will entail postponing aircraft deliveries and disposals; “optimisation’ of routes and bases and a compensation agreement with Rolls Royce over long-haul flight disruption caused by delays in engine deliveries.
Norwegian said: “The company is changing its strategic focus from growth to profitability. “The company intends to capitalise on the market position and scale built up over the last years. As a consequence of the changed focus, the capital expenditures will be reduced.” CEO Bjorn Klos said: “Norwegian has been through a period with significant growth. Focus going forward will increasingly be on cost savings and capital expenditure reductions.
“We will now get in place a strengthened balance sheet that supports the further development of the company. “With the strengthened balance sheet, the organization can now devote all its attention to further development of the company.” The disclosure came as the airline reported a loss of as much as NOK 3.8 billion for 2018 on revenues of NOK 40.3 billion. At the end of the year 2018, the airline had cash and cash equivalents of NOK 1.9 billion and equity position of NOK 1.7 billion. Norwegian plans to publish its fourth quarter 2018 results on February 7.
News Source: Travel Weekly