Support Skift’s Independent Journalism

Skift’s editors and reporters produce over 150 exclusive stories every month. We are the leading source of news for the global travel industry.

The embattled carrier Norwegian Air has won support from aircraft lessors for its rescue plan as it faces a crunch shareholder vote on the $1.2bn (£950m) plan to convert debt into equity at an emergency meeting on Monday.

Norwegian’s shareholder meeting got under way in Oslo on Monday morning, as the European Union’s competition watchdog approved French state aid worth €7bn (£6bn) for Air France. The Covid-19 pandemic has plunged the global aviation industry into its worst crisis, bringing air travel to a near-standstill.

Airlines across Europe have sought government help as coronavirus lockdowns have forced them to ground their fleets. As it approved the French state guarantee and shareholder loan to Air France, the European Commission noted the importance of the carrier, with more than 300 planes, to the French economy and its role in repatriating stranded citizens and transporting medical supplies.

Norwegian – one of the biggest airlines at London’s Gatwick airport – grounded 95% of its fleet in mid-March and has warned it could run out of cash by the middle of the month unless it pushes through its rescue plan.

The plan will hand majority ownership to the airline’s creditors and leave current shareholders with just 5.2% of the company, but there was no alternative, Norwegian’s chief executive, Jacob Schram, said.

He told Norway’s TV2: “Without a yes [from shareholders], it will be game over.”

Norway’s government has offered a 3bn kroner (£230m) aid package to see the airline through the coronavirus crisis, but has made this dependent on Norwegian wiping out its debt. It has already received 300m kroner from the government.

Bondholders finally backed the plan on Sunday, after rejecting it in a vote on Friday. The airline said it had secured written consent from the largest holders of the NAS07 bond after it improved some of the terms.

The lessors, who own Norwegian’s aircraft, had also signed up to the plan, the carrier said. “With the significant contributions from lessors and bondholders, the company expects to convert more than 10bn kroner in debt to equity.”

Shareholders are casting their vote on the debt-for-equity swap that will nearly wipe them out, and are also being asked to approve a 400m kroner share issue, expected on 11 May. Another bondholder vote will take place on 18 May, where the airline will have to formally secure 67% support.

In recent years Norwegian transformed itself from a small local carrier into a pioneer of low-cost long-haul flights, for example to the US. It carries almost 6 million UK passengers each year from Gatwick, Edinburgh and Manchester airports to 30 destinations worldwide.

Norwegian warned a week ago that virtually all of its 160 fleet would remain grounded until 2021, with just seven flying at the moment, mainly transporting essential cargo on state-subsidised domestic flights in Norway. It has temporarily laid off more than 80% of its workforce.

This article was written by Julia Kollewe from The Guardian and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Photo Credit: A Norwegian Air Dreamliner Norwegian Air