• The Oslo government said Norwegian Air could receive up to 3 billion krone in aid
  • Norwegian Air has already laid off 90% of its work
  • weden and Denmark have offered 3 billion kronor to Scandinavian Airlines



Norwegian Air received the first tranche of cash from the government of Norway on Tuesday that will allow it some breathing room as it prepared to begin talks with creditors and leasing companies who have already missed some payments.

The airline has been teetering for weeks as the coronavirus pandemic has wiped out most of its business.

In exchange for providing 300 million Norwegian krone ($27.26 million), the state stipulated that commercial lenders would have to supply 10% of that amount while the government would pick up the tab for the other 90%.

“Norwegian [Air] is pleased to announce that two Nordic banks have obtained credit committee approval to provide a guarantee for the required 10%,” the company said.

Last week, the Oslo government said Norwegian Air could receive credit guarantees worth up to 3 billion krone ($270 million) to help the airline endure the deleterious effects of the coronavirus pandemic.

“It’s a bit early to say what the outcome will be,” said Norwegian Air Chief Financial Officer Geir Karlsen. “Now that we’re able to access the first tranche, that helps.”

The next tranche of 1.2 billion krone ($111 million) will depend upon creditors postponing installments and eliminating interest payments for as long as the guarantee lasts. Another 1.5 billion krone ($140 million) would require the airline to boost its equity and improve its solvency.

“The government guarantee scheme is crucial for the company as the current state of the capital markets in combination with the challenging times for the airline industry limit the options available,” Norwegian Air said. “The first [300 million krone] will create necessary headroom to pursue the remaining tranches of the guarantee scheme. Norwegian will update the market with its further plan of action and implications for its stakeholders as soon as the criteria and terms have been finalized.”

Norwegian Air, one of the largest low-cost carriers in the world, has already laid off 90% of its workforce (about 7,300 people) and grounded most of its aircraft fleet.

On Monday, leasing company DP Aircraft of the U.K. said a subsidiary of Norwegian Air failed to make payments due on Mar. 13 related to two Boeing 787 Dreamliner aircraft in its fleet. DP Aircraft and its asset manager, DS Aviation, will hold discussions with Norwegian Air “in order to determine whether and on what basis it may be able to meet its obligations.”

Norwegian Air confirmed on Tuesday, it entered into talks with leasing companies, including DP Aircraft, and other creditors to meet the Oslo government’s stringent requirements for the rescue bill.

Separately, the founder of Norwegian Air and its ex-CEO, Bjoern Kjos, and former chairman, Bjoern Kise, have been reducing their jointly held stake in the airline since the coronavirus crisis erupted in February. By Tuesday, they held 9.99% of the company.

The shares have plunged more than 73% since year-to-date.

The airline is now operating domestically in Norway and Sweden and between the Nordic capitals of Oslo and Stockholm, “in order to deliver on its corporate responsibility of maintaining critical infrastructure so that people and necessary goods and medical supplies can be transported during this unprecedented crisis.”

Meanwhile, the governments of Sweden and Denmark have offered 3 billion kronor to protect Scandinavian Airlines, better known as SAS.

Under terms of the deal, Copenhagen and Stockholm will each provide 1.5 billion Swedish kronor ($151.2 million) in credit guarantees to the carrier.

"SAS is of great importance for both the accessibility of Scandinavia and Denmark. It also extends to jobs, businesses and the economy as a whole," Danish Finance Minister Nicolas Wammen said in a statement. “This is a first step and the Danish state will as a long-term and responsible co-owner of SAS closely monitor developments and do whatever is necessary for SAS to get through the crisis and be operational after.”

Sweden and Denmark are SAS' two biggest shareholders.

SAS has already grounded most of its fleet and temporarily laid off 90% of its workforce, or 10,000 employees.

Another northern European airline, Finnair, received approval for a €600 million ($648 million) government loan to help the country’s flag carrier stay afloat. (Finland is technically not considered part of Scandinavia)

“With a controlling stake of just under 56%, the Finnish government has many reasons to ensure Finnair remains solvent throughout these difficult times,” wrote Henry Bewicke in SimpleFlying. “The majority state-owned airline serves an important role within the Finnish economy, operating both passenger and cargo flights across the country.”