Norwegian has offered its “attractive” take-off and landing slots at Gatwick airport as part of a security package in exchange for an extension to repayments for two unsecured bonds as the airline continues to target a return to profit.
The low-cost carrier has transitioned from rapid growth to a plan to return to profitability. By requesting an extension to bonds NAS07 and NAS08 to November 2021 and February 2022 respectively, Norwegian is aiming to “ensure successful operations and adequate liquidity headroom”.
In exchange, the airline is offering a security package consisting of a pledge over all shares of Norwegian Air Norway AS, which includes its runway slots at Gatwick airport.
These slots represent a huge operational stronghold for Norwegian, acting as a gateway for passengers to travel between the airline’s European network and North and South America – something the carrier says is “an important part” of its strategy moving forward.
Norwegian says the take-off and landing slots are worth more than the bonds’ current value of US$380 million, according to an independent valuation. It also claims previous transactions involving slots at Gatwick “demonstrate the ability to monetise” them.
The company has taken a number of steps to return to profitability after a period of rapid international growth, including delaying deliveries of Airbus aircraft and an underwritten rights issue earlier this year. It also sold its shares in banking firm Norwegian Finans Holding ASA for £203 million.
The airline has sold aircraft to pay back US$127 million of debt and says it is in negotiations to establish a joint venture for part of its fleet.
Co-founder and CEO Bjorn Kjos stepped down from his role in July after 17 years at the helm, with deputy chief executive Geir Karlsen filling the job until a replacement is found.
After reporting a loss of around £133 million for the first quarter of 2019, Norwegian saw a 13 per cent increase in unit revenue in Q2 and a cost reduction of more than £50 million.
Norwegian has suffered from the grounding of the Boeing 737 Max aircraft and will cease flying between Ireland and North America this month as a result. It expects to take a sizeable hit from the grounding in 2019.