Thursday, 19 March 2020

Norwegian to get a government lifeline

As the budget carrier Norwegian parks up most of its aircraft and temporarily lays off over 7,000 staff members it is about to get a lifeline from the Norwegian Government.

Officials in Norway have said they will support airlines with credit guarantees worth up to 6 billion Norwegian crowns ($537 million) with at least 50% going towards the budget airline in the hopes the cash can save the carrier from collapse.

The Norwegian Government confirmed the deal on Thursday after many requests from the aviation industry that has been particularly hard hit by the ongoing coronavirus COVIS-19 crisis.  According to Industry Minister Iselin Nyboe, Norwegian could take up to 3 billion crowns, with a requirement to that it boosts its equity to get the full amount. There would be some other conditions applied to the fund the government said.

“Norwegian had financial challenges also before the coronavirus crisis, and with this plan we make it clear that both owners and lenders must contribute to improving the company’s financial situation if the state is to provide guarantees,” Nyboe said. 

A further 1.2 billion would be made available if creditors agree to forego interest rates and instalments, while the remaining 1.5 billion hinged on the company’s ability to boost its equity capital. 

“We are very grateful that we are now being offered this,” the airline's CEO Jacob Schram said and confirmed they would study the conditions the government has imposed. 

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