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Norwegian says it is “strengthening its balance sheet” through a fully underwritten rights issue of nearly £270 million in shares that it claims will increase its “financial flexibility”.
The low-cost carrier has undergone a period of growth in its fleet and network, but was hit by financial worries after problems with Rolls-Royce engines caused a delay to the delivery of some aircraft.
Now, Norwegian says it is shifting its focus to improving profitability and plans to “capitalise” on its market position and increased scale.
The airline aims to reduce capital expenditure and is looking at operational improvements as part of its cost reduction programme, which it says will decrease costs by nearly £180 million.
CEO Bjorn Kjos said: “Norwegian has been through a period with significant growth. Focus going forward will increasingly be on cost savings and CAPEX reductions. We will now get in place a strengthened balance sheet that supports the further development of the company.”
The move comes after British Airways owner International Airlines Group (IAG) backed down on submitting further offers to buy Norwegian, selling its 4 per cent share in the carrier.
IAG had originally purchased a 4.61 per cent share in the airline and made two offers for a total buy-out, which were both rejected by Norwegian because they “undervalued the company and its prospects”.
Norwegian confirmed it had received enquiries from several parties that expressed an interest in acquiring the airline, but only said discussions “have been ongoing on several levels and with different approaches”.
The latest rights issue is being underwritten by Kjos and chairman Bjorn Halvor Kise, as well as “certain other large shareholders”, according to Norwegian, with the rest underwritten by DNB Markets, a part of DNB Bank, Sterna Finance and the Norwegian branch of Danske Bank.