Norwegian Air’s bondholders have accepted the company’s plea to postpone repayment of $380 million by up to two years, the carrier said yesterday, providing the loss-making airline some financial relief and sending its shares higher.
In return, Norwegian has promised to pay a premium on the bonds while pledging lucrative take-off and landing slots at London’s Gatwick Airport as security.
“We’re pleased with the bondholders’ decision to amend the bonds as it will give us added financial headroom going forward,” acting CEO Geir Karlsen said in a statement.
Norwegian Air remains on track to cut costs by 2 billion Norwegian crowns ($223 million) in 2019, he added.
To alter the terms, two-thirds of bondholders at a meeting in Oslo had to back the proposal. In the end, 89.8% of owners of the NAS07 bond gave their consent, while support for the NAS08 bond stood at 99.64%.
Norwegian Air had said on Sept. 11 that preliminary indications showed that enough bondholders would accept the measures.
The company’s shares, which rose strongly in the days leading up to the decision, traded 5.6% higher at 1214 GMT, outperforming an Oslo benchmark index up 1.01%.
Europe’s third-largest low-cost carrier by passenger numbers after Ryanair and easyJet has made major inroads in the market for transatlantic travel, but haemorrhaged cash to pay for the rapid expansion.
Norwegian switched this year to prioritise profits over growth, but that goal is being hampered by the global grounding of Boeing’s 737 MAX aircraft and long-running technical problems with Rolls Royce engines on Boeing Dreamliners.
