Shares in low-cost long-haul airline Norwegian rebounded this morning after the Oslo-based carrier announced it was selling a near 20 per cent stake in Norwegian Finans Holding (NOFI) which also trades as Norwegian Bank. The sale will give the struggling airline a cash boost of $246 million which may be used to pay off a bond of a similar amount that is set to mature in December.
However, an analyst quoted by Reuters questioned whether Norwegian could survive the next nine months without raising further equity or seeing a sustained improvement in unit revenue.
“The sale of the NOFI shares is part of Norwegian’s strategy to strengthen our core airline operations and focusing on the transition from growth to profitability,” commented the airline’s acting chief executive, Geir Karlsen.
Norwegian’s longtime chief executive and co-founder Bjørn Kjos stepped down suddenly last month. A permanent replacement for the 72-year old aviation executive has not yet been found and Kjos remains at the airline in a specially created role as advisor to the chairman.
Last year, Norwegian made a net loss of NOK 1,454 million ($169 million USD) on the back of revenue that totalled NOK 40 billion. The airline blamed higher fuel prices, increased competition and aggressive pricing, as well as significant issues caused by the Rolls-Royce engines on its fleet of Boeing 787 Dreamliners.
The carrier has faced further setbacks this year with Dreamliner engines still causing problems and the grounding of Boeing 737MAX aircraft hitting Norwegian hard.
At the start of the year, Norwegian raised $350 million in additional equity after facing down rumours of imminent collapse in the lead up to Christmas. The carrier hopes to saves hundreds of millions of dollars throughout 2019 and has slashed a number of routes and closed several crew bases as it attempts to shore up its finances.
Despite its difficulties, Norwegian has proven to be incredibly robust and has survived every challenge thrown at it. The airline has hinted at the possibility of a joint venture or even buyout coming soon, although such rumours have been dragging on for some time now.