The Chinese state-controlled leasing company BOC Aviation will become a large shareholder of Norwegian Air Shuttle. The low-cost airline has agreed with its creditors to convert part of its debt and financial commitments into shares.
Having seen its financial difficulties aggravated by the paralysis of air traffic caused by the epidemic of new coronavirus, the third low cost European has recently agreed with its creditors to convert part of its debt and financial commitments into actions. The operation has enabled it to strengthen its equity and fulfill, as announced on Wednesday, the conditions set by the Norwegian State for the granting of guarantees of 2.7 billion crowns (247 million euros), in addition of the 300 million already granted.
In this context, the leasing companies, from which Norwegian leases part of its aircraft, will inherit a significant part of the carrier’s capital. The Irish AerCap Holdings will become the largest shareholder with a 15.9% share and convertible bonds representing an additional 7.2%.
The Chinese BOC Aviation, controlled by the People’s Republic of China via a cascade of companies, will hold 12.67%. While praising the success of the operation, Norwegian managing director Jacob Schram warned that “the coming months will remain difficult with a high degree of uncertainty for the sector”.
“Norwegian will still have to work closely with a number of creditors as the company’s revenues are currently limited,” he said in a statement. Heavily indebted after an all-out expansion, Norwegian plans to focus on its profitable lines and reduce the airfoil, especially in the long haul where it is one of the pioneers in the low-cost segment.
The influx of new shares plunged its title Wednesday on the Oslo Stock Exchange. In the middle of the morning, the share lost more than 30%, bringing the decline to 93% since the beginning of the year.
ats, awp, afp