Coronavirus continues to play havoc with the fortunes of airlines, and especially those trying to break into new markets. Is a $30 million "buffer" enough to carry Flyr through to the other side?
Norwegian airline Flyr, which launched its first flight in late June, earned far less revenue than expected in the third quarter and now plans to raise more cash, the carrier said on Monday, triggering a sharp fall in its shares.
The company is one of several upstarts hoping to take a bite out of the Nordic market for air travel, which is dominated by regional airlines SAS and Norwegian Air.
Flyr’s revenues amounted to $4.6 million in the July-September period, with a loss before interest, tax, depreciation and amortisation of $16.74 million, the company said.
“While revenues in August and September were significantly lower than expected due to the general delay in the demand growth that was caused by the Covid-19 Delta variant, there has been a substantial pick up in travel activity since the reopening of society,” Flyr said in a statement.
Flyr has secured commitments from new and existing investors for a share sale amounting to $29.31 million, with board Chairman Erik Braathen among the underwriters, it said.
“The net proceeds from the rights issue will be used to re-establish the company’s financial buffer for the period until the company becomes cash-flow positive and for general corporate purposes,” it said.
Flyr flew on average between 15 and 16 flights per day in the third quarter, which has since risen to between 20 and 25, it said.
The company’s share price fell 12.9 percent by 0834 GMT to $0.39 on Monday, well below the $0.59 paid by investors in the company’s initial public offering in March.
(Reporting by Terje Solsvik, editing by Gwladys Fouche)
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Photo credit: Startup airline Flyr flies to Tromso, Norway, shown here. Munir Rani / Unsplash