Norway

Norwegian Air, which is attempting to secure a second round of financial restructuring, saw a 91% decline in August passenger volume from a year earlier as most of its fleet remained grounded by the coronavirus pandemic, it said on Friday, Reuters reported. The budget carrier has said it will fly 25-30 of its aircraft in the months ahead, while more than 100 remain parked. Creditors and lessors took control of Norwegian in May with a financial rescue that allowed it to access state-guaranteed loans of 3 billion Norwegian crowns ($336 million) and thus prevent a collapse.

Norwegian Air Shuttle ASA said it will need more funds to avert insolvency and announced plans to scale back the discount long-haul operations that it pioneered in order to survive, Bloomberg News reported. The beleaguered carrier, which reported a pre-tax loss of 4.8 billion kroner ($541 million) for the first half, said it will require additional working capital in the first quarter of 2021 to meet its obligations and will consider another private placement of shares as well as selling assets.

Norway’s gross domestic product contracted in the second quarter at the fastest pace ever recorded as efforts to contain the coronavirus plunged the economy into a deep recession, data from the national statistics office (SSB) showed on Tuesday, Reuters reported. The mainland economy, which excludes oil and gas production, shrank by 6.3% in the April-June period from the preceding three months, lagging a forecast of minus 6.1% in a Reuters poll of economists. “The decline in the Norwegian economy in the second quarter was the deepest ever recorded,” SSB said in a statement.

Scandinavian budget carrier Norwegian’s Swedish division has been denied a credit guarantee by the Swedish national debt office, FlightGlobal reported. The office states that it has “decided to reject” the application because guarantees can only be granted to airlines considered financially viable on 31 December 2019. It says there was a “very high risk” at the time – even before the air transport downturn – that Norwegian would not be able to meet its financial obligations, and that it would not be able to manage further debt.

Norwegian Air Shuttle ASA dropped as much as 60% after completing a recapitalization that hands control of the company to aircraft lessors and bondholders, Bloomberg News reported. Investors had in recent days stubbornly traded Norwegian’s shares far above the price of a discounted equity issue that came on top of an $830 million debt conversion.

Norway’s central bank cut interest rates to a record low of zero but said it was unlikely to go negative as the rich Scandinavian country faces up to the twin shocks of coronavirus and an oil price collapse, the Financial Times reported. Norges Bank said on Thursday that the 0.25 percentage point cut would not prevent Covid-19 from having “a substantial impact on the Norwegian economy but can help dampen the downturn”, including by stopping high unemployment becoming entrenched.

Norwegian Air Shuttle ASA shareholders approved a restructuring plan that hands almost all of the company’s equity to its creditors, after the coronavirus crisis pushed the struggling airline to the brink of survival, Bloomberg News reported. The plan converts almost $1 billion of debt into stock, qualifying the low-cost carrier for state loan guarantees that, along with the sale of new shares, will keep it afloat for at least several months.

Norwegian Air Shuttle ASA reached an agreement with bondholders to swap debt for equity, taking the airline one step closer to securing the state loan guarantees needed to keep the struggling carrier afloat, Bloomberg News reported. Such loan guarantees were “crucial to getting through the crisis,” Chief Executive Officer Jacob Schram said in a statement on Sunday. As the airline prepares to hold a shareholder meeting on Monday, Schram said his main priority now is to reach an agreement with the leasing companies that provide their planes.

Norwegian Air Shuttle has warned that the bulk of its fleet is likely to remain grounded for the next 12 months and that a full recovery would not take place until 2022, laying bare the scale of the crisis engulfing the airline industry, the Financial Times reported. As part of a planned $1.2bn debt-for-equity swap to try to ensure the low-cost airline’s survival, Norwegian said on Monday that its base case was that its fleet would remain fully grounded until April 2021, apart from the seven aircraft currently flying in Norway.

Norway’s parliament voted through a new company restructuring law on Friday that could help save Norwegian Air and many other companies from potential bankruptcy as a result of the restrictions to stem the spread of COVID-19, Reuters reported. The legislation replaces current regulation on debt negotiations and relaxes rules for converting debt into equity. “(The new law) is a more efficient tool to ... sort out what parts of a business can be strong enough to survive,” Justice Minster Monica Maeland told parliament.