Norwegian Air warns it could go bust despite bailout
Updated : 12:54
Norwegian Air Shuttle warned on Friday that it could go bust despite a government bailout, as it reported its first-half results.
The airline said that while there are reasonable prospects for it to resolve potential defaults and obtain necessary working capital, there is a "significant" risk it becomes insolvent if it cannot reach an agreement with its creditors, access to working capital and regain "normalised operations".
"The directors have concluded that the combination of these circumstances represents a material uncertainty that casts significant doubt upon the company’s ability to continue as a going concern and that, therefore, the company may be unable to realise its assets and discharge its liabilities in the normal course of business," it said.
Chief executive Jacob Schram noted that the Covid-19 crisis has impacted aviation and the travel industry particularly hard, with most companies requiring government support to survive.
"We see that many of our main competitors receive considerable liquidity support from their governments as aviation represents the backbone of infrastructure," he said. "We are thankful for the loan guarantee made available to us by the Norwegian government which we worked hard to obtain. However, given the current market conditions it is not enough to get through this prolonged crisis."
In its results for the first half of 2020, the company said losses widened to NOK5.4bn from NOK1.4bn in the same period a year ago, with revenue down to NOK7.1bn from NOK20.2bn.
Norwegian said the figures were, as expected, "heavily impacted" by the pandemic, with passenger numbers down 71% over the half compared to 5.3 million.
The company estimated it will need additional working capital in the first quarter of next year to meet its obligations in the upcoming 12-month period. It expects to get this through additional financing, the private placement of shares, reconsidering its business plan and scale of operations, selling and refinancing assets or pursuing "other sources of finance".