Norwegian is strengthening its balance sheet through a fully underwritten rights issue of three billion Norwegian kroner (NOK, approximately $353.2 million) in order to increase its financial flexibility and create headroom to the covenants of its outstanding bonds. The company has during the past years made considerable investments in new aircraft and launch a wide range of new routes, not least intercontinentally. The growth will now abate and the profitability increase.
“Norwegian has been through a period of significant growth. Going forward, we will see an increased focus on cost savings and CAPEX reductions. We will now get in place a strengthened balance sheet that supports the further development of the company. We are very pleased to see that our main shareholders offer strong support in a time where the market is still challenging. With the strengthened balance sheet, the organization can now devote all its attention to further development of the company,” said CEO Bjørn Kjos of Norwegian.
A series of initiatives will contribute to reduced cost:
- -Aircraft divestments, including establishing a joint venture for aircraft ownership
- -Postponement of aircraft deliveries
- -The extensive cost reduction program, #Focus2019, will contribute to estimated reduction of minimum NOK 2 billion in 2019
- -Optimization of the base structure and route network
- -The agreement with Rolls-Royce related to compensation for the operational disruptions on its long-haul operations
The additional capital of three billion NOK will be raised through a fully underwritten rights issue, which will be voted on during an extraordinary general meeting on February 19, 2019. In connection with the fully underwritten rights issue, the company will publish its Q4 2018 results on February 7, 2019. The traffic results for February 2019 will be published on March 11, 2019.
