Struggling Norwegian Air raises $272 million from share sale, bond issue

By Gwladys Fouche and Lefteris Karagiannopoulos OSLO (Reuters) - Norwegian Air on Tuesday raised 2.5 billion crowns (£211.59 million) to meet the struggling airline's cash needs through 2020 with its third share sale in two years and a bond issue. The airline said it sold 27.25 million new shares at 40 crowns per share in a private placement, a 13% discount to Tuesday's closing price.

Reuters November 06, 2019 05:05:37 IST
Struggling Norwegian Air raises $272 million from share sale, bond issue

Struggling Norwegian Air raises 272 million from share sale bond issue

By Gwladys Fouche and Lefteris Karagiannopoulos

OSLO (Reuters) - Norwegian Air on Tuesday raised 2.5 billion crowns (£211.59 million) to meet the struggling airline's cash needs through 2020 with its third share sale in two years and a bond issue.

The airline said it sold 27.25 million new shares at 40 crowns per share in a private placement, a 13% discount to Tuesday's closing price. It also raised $150 million via convertible bond issue.

With mounting debts and suffering from the grounding of its 18 Boeing 737 MAX aircraft, Norwegian has replaced breakneck expansion with cost cutting to regain profitability.

The company also announced a deal with a Chinese firm in October to offload 27 new Airbus planes to ease pressure on its finances and avoid becoming the latest airline to collapse.

"The private placement received significant interest from both existing shareholders in the company and new high-quality investors. The convertible bond issue received significant interest from international and domestic investors," it said.

In a statement after the stock market closed, Europe's third-largest budget airline by passenger numbers said the transactions would fully fund it "through 2020 and beyond based on the current business plan."

"The proceeds ... will secure required financing of working capital during the winter season and create headroom to financial covenants while completing the strategic transformation of the company," it said.

The airline also reported monthly figures showing passenger traffic declined in October from a year ago, the first such fall on record as the carrier cut loss-making routes from its network. The data had been scheduled for release on Wednesday.

Overall traffic, a measure of distance flown and the number of people carried (RPK), fell 3% year on year in October, the company said. Analysts in a Reuters poll on average had expected a fall of 12.1%.

Norwegian's RPK had until now risen every month since it was first listed on the Oslo Bourse in 2003, its records show.

Trimming capacity at a rate of 5% year on year helped it fill aircraft, raising the so-called load factor to 87.1% from 85.0% in October 2018, in line with a Reuters poll.

Its yield, or income per passenger carried and kilometre flown, rose to 0.40 crown in October from 0.38 crown a year ago, also in line with expectations.

(Additional reporting by Terje Solsvik; Editing by Edmund Blair and Cynthia Osterman)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.