OSLO (Reuters) - Norwegian Air booked an impairment charge of 12.8 billion crowns ($1.5 billion) in the fourth quarter as it cancelled a major Airbus order and plans to shrink its current fleet to avoid bankruptcy.
Norwegian received protection from bankruptcy late last year in both Norway and Ireland, where most of its assets are registered, and it aims to come out of its restructuring process with fewer aircraft and less debt.
“We are doing everything we can to emerge as a more financially secure and competitive airline with an improved customer offering,” Chief Executive Jacob Schram said on Friday.
“As soon as Europe begins to reopen, we will be ready to welcome more customers on board.”
The company said its restructuring in Norway and its examinership process in Ireland, under which it aims to get rid of 78 aircraft, were progressing as planned and expected to end during the second quarter.
The airline has warned that it risks running out of cash by the end of March if it fails to restructure its debt and liabilities.
Terminating aircraft purchase contracts with jet makers Airbus and Boeing led to a charge of 4.8 billion crowns in the quarter related to pre-delivery payments.
The company has since agreed terms with Airbus, but a deal with Boeing is unlikely before the restructuring is completed, Chief Financial Officer Geir Karlsen told Reuters.
Norwegian has cancelled all the 88 narrow-body jets that according to Airbus’ financial filings remained on order, a Norwegian spokesman said on Friday, adding that the company is in a legal process with Boeing.
Airbus said it had no comment on discussions with customers.
A person familiar with the discussions said Airbus would not contest the cancellation imposed by an Irish court but had not voluntarily agreed to the move. The planemaker is now expected to move swiftly to start selling empty delivery slots.
Norwegian unilaterally terminated its remaining orders with Boeing for 97 aircraft last year and sought compensation for the grounding of Boeing 737 MAX jets and technical problems with 787 Dreamliners.
Boeing has contested the move and also made counterclaims against Norwegian, documents filed by the airline show.
The company said it would present a detailed plan for its future next week and was preparing to carefully increase its operating fleet from 10 aircraft now, depending on demand and travel restrictions.
Norwegian has already said it will end its long-haul service and focus on the Nordic and European network.
Its total liabilities had fallen to 56.2 billion crowns by the end of December from 66.8 billion on Sept. 30, while its interest-bearing debt dropped 8.3 billion to 40.2 billion.
It hopes to cut its debt to about 20 billion crowns and raise 4 billion to 5 billion from new shares and hybrid capital. Norway has already agreed to contribute 1.5 billion crowns.
Norwegian said its fleet had been cut to 131 aircraft by the end of 2020. It is negotiating terms with lessors to reduce its fleet to 53 aircraft from 140 previously.
Additional reporting by Tim Hepher; Editing by Shri Navaratnam, Keith Weir, David Clarke and Louise Heavens
February 26, 2021 at 07:47PM
https://www.reuters.com/article/us-norwegianair-restructuring/norwegian-air-books-1-5-billion-charge-as-it-seeks-fresh-start-idUSKBN2AQ0R9
Norwegian Air books $1.5 billion charge as it seeks fresh start - Reuters
https://news.google.com/search?q=fresh&hl=en-US&gl=US&ceid=US:en
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