Struggling Norwegian Air to sell more shares, launch bond issue

By Gwladys Fouche and Terje Solsvik OSLO (Reuters) - Norwegian Air plans to raise up to $316 million (£245.53 million) through its third share sale in two years and a bond issue to meet the struggling airline's financial needs through 2020 and beyond, it said on Tuesday.

Reuters November 06, 2019 00:06:37 IST
Struggling Norwegian Air to sell more shares, launch bond issue

Struggling Norwegian Air to sell more shares launch bond issue

By Gwladys Fouche and Terje Solsvik

OSLO (Reuters) - Norwegian Air plans to raise up to $316 million (£245.53 million) through its third share sale in two years and a bond issue to meet the struggling airline's financial needs through 2020 and beyond, it said on Tuesday.

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.

It 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.

But the new share issue shows Europe's third-largest budget airline by passenger numbers still needs more cash.

"After the completion of the transactions, Norwegian is fully funded through 2020 and beyond based on the current business plan," Norwegian said in a statement, issued after the stock market closed.

It said it was considering a private placement of up to 27.25 million new shares and a bond issue of up to $175 million.

Together the deals could raise close to 2.9 billion crowns ($316 million) if the shares are sold at current market prices, a Reuters calculation showed. But it might have to sell at a discount.

"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 each 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.

(Reporting by Terje Solsvik and Gwladys Fouche; Editing by Edmund Blair)

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

Updated Date:

TAGS:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Wall Street climbs on Cisco, Disney's upbeat results
Business

Wall Street climbs on Cisco, Disney's upbeat results

By Medha Singh and Shivani Kumaresan (Reuters) - Wall Street gained on Friday as Disney and Cisco's upbeat results brought the focus back to corporate earnings at the end of a volatile trading week that saw record surges in coronavirus cases and increased hopes of a working vaccine.

Gold jumps 1% on mounting pandemic, vaccine worries
Business

Gold jumps 1% on mounting pandemic, vaccine worries

By Sumita Layek (Reuters) - Gold gained as much as 1.1% on Friday as rising global coronavirus infections re-ignited concerns about the economic toll from the pandemic, while scepticism over the reach of a potential COVID-19 vaccine further boosted the safe-haven metal. Spot gold rose 0.8% to $1,890.81 per ounce by 11:33 a.m