Norwegian Air today said that that there is a "significant risk" it becomes insolvent and enters bankruptcy if it cannot reach an agreement with its creditors and access new working capital.
The airline has already grounded most of its aircraft and temporarily laid off most of its staff, in order to limit its expenditure and preserve its financial position. It has benefited from a state aid package from the Norwegian government consisting of loan guarantees of 3bn kroner ($330mn) earlier in the year.
But yesterday the government declined to provide Norwegian Air with further support. Together with intensifying restrictions on international travel amid a second wave of Covid-19 infections around Europe, this development has put the airline in an "even more challenging situation", it said in its third-quarter results today. It has only six aircraft in operation, and said that it is dependent on additional working capital to continue operating through the first quarter of 2021.
The company also cites the worldwide grounding of the Boeing 737 MAX aircraft as a risk factor. It has filed a legal claim seeking the return of pre-delivery payments related to undelivered aircraft of that model and compensation for losses relating to the grounding.
The company made a loss of Nkr979.6mn in the third quarter, compared with a profit of Nkr1.67bn a year earlier. The airline's fuel consumption was naturally much lower this year, at just 34,000t in the third quarter compared with 570,000t a year earlier. Its fuel costs were correspondingly lower year-on-year in the quarter, at just Nkr162mn down from Nkr3.6bn.
