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CHINA

China becomes one of Norwegian’s biggest owners after rescue deal

The aircraft leasing company BOC Aviation, controlled by the Chinese state, has become a major shareholder in Norwegian Air Shuttle as part of the ailing airline's rescue plan, Norwegian said on Wednesday.

Already faced with a substantial debt burden, the low-cost airline ended up in dire financial straits when the new coronavirus pandemic paralysed global air traffic.
   
In early May, Norwegian adopted a rescue plan, which included a deal with creditors to convert some of the company's financial liabilities into equity.
   
The plan enabled the company to strengthen its capital position and meet conditions by the Norwegian state to provide guarantees for 2.7 billion Norwegian kroner ($270 million or 247 million euros) in loans, in addition 300
million kroner in loan guarantees already provided.
   
Leasing companies, from which Norwegian rents part of its aircraft fleet, will take over a significant chunk of the airline's share capital.
   
Ireland's AerCap Holdings will become the largest shareholder with 15.9 percent of the shares, as well as convertible bonds representing a further 7.2 percent.
   
BOC Aviation, controlled by the Chinese state through multiple companies, will in turn hold 12.67 percent of the capital.
   
While welcoming the closure of the deal, Norwegian CEO Jacob Schram cautioned that “the months ahead will remain challenging and with a high degree of uncertainty for the industry.”
 
   
“Norwegian will still need to collaborate closely with a number of creditors as the company currently has limited revenues,” Schram said in a statement.
   
Heavily indebted after an ambitious expansion effort, Norwegian now plans to focus on profitable routes and reduce the number of flights, especially long-haul ones, where the company was a pioneer among low-cost carriers.
   
The dilution of shares sent the share price tumbling on the Oslo Stock Exchange on Wednesday.
   
Late morning on Wednesday the share was down 25 percent, bringing the decline for the year to more than 90 percent.

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AIRLINE

Airline Norwegian posts 15 billion kroner loss after nightmare 2020

Low cost airline Norwegian has registered a loss of 14.9 billion Norwegian kroner for 2020, a year in which the company saw a drastic reduction in passenger numbers and was on the brink of bankruptcy.

A file photo of a Norwegian Air Shuttle plane in Finland.
A file photo of a Norwegian Air Shuttle plane in Finland. Heikki Saukkomaa / Lehtikuva / AFP

Low cost airline Norwegian has registered a loss of 14.9 billion Norwegian kroner for 2020, a year in which the company saw a drastic reduction in passenger numbers and was on the brink of bankruptcy.

The company published its annual results on Friday, revealing the huge operating loss.

Norwegian’s 2019 result, a loss of around 1.7 billion kroner, had put the company in a difficult position even prior to the outbreak of the Covid-19 pandemic.

The coronavirus outbreak and its consequent travel restrictions reduced the company’s passenger numbers to 6.9 million in 2020. That is 29 million fewer than in 2019.

Not all of the loss is due to fewer passengers. Around half of the company’s devaluation is attributed to a depreciation of the value of its aircraft fleet, news wire Ritzau reports.

“2020 was an exceptionally demanding year for air travel and for Norwegian,” CEO Jacob Schram said in a statement on the annual results.

“In light of that, the result for the fourth quarter (of 2020) is not surprising. Unfortunately, the majority of our employees are furloughed and many have lost their jobs – in part because of the closure of long distance services,” he added.

The company was already in debt prior to the pandemic and is now under bankruptcy protection in Ireland and is undergoing similar process in Norway.

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