Beleaguered airline Norwegian has begun a reorganization process and has sought protection under Irish law from its creditors.
Share sales were suspended in Oslo as the news emerged, signaling an enhanced period of worry for the airline and its workers.
Employees gathered in the Norwegian capital this afternoon to protest the lack of funding for the airline from the Norwegian government.
Seeking protection under Irish Examinership
Following the confirmation that Norway would not be giving any more aid to Norwegian Air, the airline has today entered a restructuring process under Irish law.
The process, known as ‘examinership’, will protect the airline from its creditors for 100 working days.
The airline explained in a post on its website that it had chosen an Irish process because most of its aircraft assets were held in Ireland. It says this is in the interest of its stakeholders.
By protecting the airline’s assets, Norwegian says it will be granted the flexibility to refocus on the rightsizing of its future fleet and business.
It will also be working to secure new capital, in a process that is likely to take up to five months. Norwegian’s CEO Jacob Schram commented,
Seeking protection to reorganize under Irish law is a decision that we have taken to secure the future of Norwegian for the benefit of our employees, customers and investors. Our aim is to find solutions with our stakeholders that will allow us to emerge as a financially stronger and secure airline.
Despite the insolvency protection in place, the airline will continue to fly, albeit on a reduced route due to COVID.
It also said that it would continue to trade as normal on the Oslo Stock Exchange, although share trading was halted earlier today in anticipation of this announcement. Schram continued,
Our intent is clear. We will emerge from this process as a more financially secure and competitive airline, with a new financial structure, a rightsized fleet and improved customer offering.
According to its announcement, the airline believes it has sufficient liquidity to get it through this process.
Protests outside parliament
Even before the announcement of the restructuring and examinership was made, airline workers had gathered in Oslo to protest against the lack of funding for the airline from its government.
Around 100 workers are reported by Reuters to have gathered in front of the parliamentary building to seek support for the airline.
Workers held up banners reading ‘save our jobs’ and ‘red nose warriors’, in reference to the red tip on the nose of the airline’s planes.
However, inside parliament, Conservative Prime Minister Erna Solberg was resilient in her reluctance to provide any further support for the airline.
She argued that any further direct financial support would primarily benefit foreign creditors, commenting,
We’ve told Norwegian Air that we don’t have any money for equity. The ball is now in their court.
While the airline remains in a precarious financial position, today’s 100-day breather will give it every opportunity possible to get back on its feet.
The protection from creditors will ensure it doesn’t have any aircraft repossessed, so it can carry on flying and generating revenue.
However, it is absolutely crucial now that the airline secures capital by another route, something that is a significant challenge in the current climate.
