Norway backed Norwegian Air’s survival plan Thursday. Industry Minister Iselin Nyboe stated that the government did not intend to be a shareholder, but would contribute money if private investors would do so as well.
The heavily indebted low-cost airline, which has been forced to ground all of its 138 planes due to the coronavirus crisis, asked the government for help last week, Reuters reported.
Last year, courts in Ireland and Norway granted Norwegian bankruptcy protection to shed much of its debt.
The government’s participation, in the form of a hybrid loan, will depend on private investors participating in a planned share issue, Nyboe said.
“Government support significantly increases our chances of raising new capital and getting through the rebuilding process,” Norwegian CEO Jacob Schram said in a statement.
If its rebuild is successful, Norwegian has said it will initially reduce its fleet to about 50 aircraft.
Norwegian’s policy change came as a surprise, but cannot be underestimated in an aviation market where state aid has been key to survival in 2020, Sydbank analysts said in a note.
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