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Norwegian Air has secured an initial cash infusion of 300 million Norwegian crowns ($26.6 million) from a government rescue package for the airline industry, the budget carrier said on Tuesday.

Norway said on March 19 that Norwegian Air could obtain credit guarantees worth up to 3 billion crowns to help it weather the coronavirus crisis subject to a series of conditions.

Norwegian, which has grounded most of its aircraft and temporarily laid off 90% of staff, amounting to about 7,300 people, had said it needed access to cash “within weeks, not months”.

A condition for receiving the first 300 million crowns from Norway’s rescue package was that commercial lenders were willing to supply 10% of that amount while the government would provide the remaining 90%.

“Norwegian is pleased to announce that two Nordic banks have obtained credit committee approval to provide a guarantee for the required 10%,” a company statement said.

“Norwegian will secure the necessary headroom to pursue further guarantees from the Norwegian government.”

Norwegian’s shares rose following the announcement, trading up almost 5% at 9.36 Norwegian crowns ($0.87) at 0852 GMT.

On Monday, leasing company DP Aircraft said a unit of Norwegian Air had failed to make payments relating to two Boeing 787 Dreamliner aircraft in its fleet, which had been due on March 13.

DP Aircraft and its asset manager, DS Aviation, will prioritize discussions with Norwegian “in order to determine whether and on what basis it may be able to meet its obligations,” DP said.

Norwegian did not immediately respond to a request for comment on Tuesday.

Further Funds

The airline is now working with state credit agency GIEK and Norway’s trade and industry ministry to clarify the criteria and terms for receiving the remaining tranches of the scheme, it said.

A tranche of 1.2 billion crowns is dependent on creditors postponing installments and scrapping interest payments for as long as the guarantee lasts.

Another of 1.5 billion crowns would require Norwegian to boost its equity, the government has said.

The company said it is now seeking further guarantees from financial institutions to help it access these tranches.

“The government guarantee scheme is crucial for the company as the current state of the capital markets in combination with the challenging times for the airline industry limit the options available,” Norwegian said.

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Photo Credit: A Norwegian Air 737-800. The carrier has secured the first tranche of a cash infusion. Norwegian Air