Norwegian Air Shareholders Approve $1 Billion Rescue Deal

Norwegian Air Shuttle lessors are backing the embattled carriers rescue plan as the Scandinavian low-cost carrier looks to…

Norwegian Air Shareholders Approve $1 Billion Rescue Deal

Norwegian Air Shuttle lessors are backing the embattled carriers rescue plan as the Scandinavian low-cost carrier looks to survive the COVID-19 crisis.

According to the Guardian, the agreement was reached over the weekend after Norwegian narrowly failed to get approval from its fourth NAS07 bondholders. The debt-ridden airline is now in meetings with shareholders as it hopes to convert $1.2 billion in debt into equity to comply with the Norwegian government’s criteria for help.

Norwegian Air is desperately scrambling to stay afloat after bondholders rejected a debt-to-equity swap at a meeting held on April 30. While talks are set to continue as to how Norwegian can be saved, the debt-ridden carrier’s chance of making it through the COVID-19 crisis appears to have suffered a significant setback.

Norwegian is offering bondholders debt for equity. Photo: Getty Images

While not alone in trying to overcome the unprecedented threat to the airline industry brought about by the coronavirus, Norwegians problems run much more profound than travel restrictions.

Norwegian switched from expansion to profit

After a period of rapid development that saw the low-cost airline add long-haul routes to its network, the Oslo-based airline changed its growth strategy to one aimed at profitability.

Before the coronavirus, it seemed like this tack away from growth was starting to pay off.  Now, however, all bets are off as Norwegian struggles to pay back its massive debt.

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Norwegian switched its business plan from growth to profitability Photo: Norwegian

Desperate to come up with a solution, Norwegian will run out of cash by the middle of May unless creditors and shareholders can agree to a comprehensive restructuring plan. Like other countries around the world that have stepped in to support the airline industry, the Norwegian government has promised money if the airline can reduce its debt to equity ratio. This follows on from the 300kr million ($28.7 million) that the government has already allocated for Norwegian Air Shuttle.

Majority ownership will go to the lessors and bondholders

The plan put before the bondholders would see Norwegian swapping $1.2 billion of its debt into equity while handing over majority ownership in the airline to bondholders and lessors. While voting on the proposal on Friday, three of the bonds gained enough support to back the plan, but holders of the fourth bond rejected the idea falling short of the support needed to proceed.

The fourth bond NAS07 only received 62% of the 67% that was required with Norwegian, saying that they will try again at a bondholder meeting that is scheduled for May 18.

According to newswire service Reuters reporting on the meeting Norwegian Air Shuttle CEO Jacob Schram said:

“Our dialogue with the bondholders continues with the clear goal of reaching a solution. Unfortunately, we were not able to reach an agreement within the deadline.”

“However, the discussion is continuing through the weekend to find a solution.”

A deal was reached on Sunday

If Bloomberg is correct, it would appear as if working through the weekend was a lucky charm, with Bloomberg reporting that a deal has been reached. In a statement released by Norwegian on Sunday, CEO Jacob Schram said that loan guarantees were “crucial to getting through the crisis.”

In a separate statement carried by Bloomberg relating to Monday’s shareholder meeting, Norwegian announced that it now has strong support from its aircraft leasing companies. This is, of course, good news for Norwegian Air and its passengers, as more competition equates to lower prices.

norwegian-getty
Norwegian says it has strong support from its lessors. Photo: Getty Images

Much of course remains to be done, but at least for now, it would appear as though Norwegian will be able to tap into the three billion-kroner ($290 million) of loan guarantees that are being offered by the Norwegian government.

There seems to be a lot of controversy surrounding governments stepping in to help airlines survive, and especially so when some of them reported dividend payments for 2019. Please let us know what you think in the comments.

Source : Simple Flying More   

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Philippines Suspends International Flight Arrivals For A Week

The Philippines has placed a week-long suspension on inbound international flights starting from 08:00 on 3rd May as…

Philippines Suspends International Flight Arrivals For A Week

The Philippines has placed a week-long suspension on inbound international flights starting from 08:00 on 3rd May as a result of the COVID-19 pandemic. The move was put in place as a result of congestion at international airports after 20,000 Filipinos returned home via repatriation flights.

A suspension on inbound international flights into the Philippines will last until 9th May. Photo: Contri via Wikimedia

With an overwhelming arrival rate of 2,000 Filipinos daily, the government is seeking to mitigate the situation by allowing time for decongestion.

“This measure to temporarily suspend international passenger arrivals will enable the government to decongest the processing of this number to a more manageable level, given the need to observe strict health protocols, and the fact that existing quarantine facilities are at full capacity,” noted the Philippines’ Department of Transportation (DOTr) in a statement issued yesterday.

On top of preparing for the arrival of more overseas Filipino workers and citizens, the National Task Force has ensured that the temporary suspension will allow for the government’s front-line agencies to ramp up their protocols for testing and screening. It will also “expand the existing quarantine and treatment facilities and ensure a more comfortable quarantine arrangement”.

Which flights and airports are affected?

The temporary suspension which will last until 9th May, includes all international inbound passenger flights, except in the case of enroute emergencies.

Cargo, maintenance, medical, and weather mitigation flights will remain operating as per usual.

While the repatriated Filipinos remain quarantined in Metro Manila, this suspension affects nine international airports in the country. Those affected include international airports in Manila, Davao, Clark, Kalibo, Mactan-Cebu, Iloilo, Laoag, Zamboanga, and Puerto Princesa.

Ninoy Aquino International Airport Terminal 3
Ninoy Aquino International Airport to disallow inbound international passenger flights from landing. Photo: Anton Zelenov via Wikimedia

In a separate statement by the Civil Aviation Authority of the Philippines (CAAP), it was announced that international flights are ordered to request an exemption 36 hours before their scheduled departure should they wish to land or depart from airports affected by the suspension.

The Ninoy Aquino International Airport (NAIA) in Manila is urging worried foreign nationals seeking to return home to contact their airline directly for updates on their outbound flights.

Domestic travel remains suspended

All domestic inbound and outbound flights will remain banned until 15th May, following the country’s lockdown measures.

Luzon Island, home to more than 50 million of the country’s population, has been on lockdown since mid-March. The lockdown, initially set to end on 12th April was recently extended to 15th May, after the country saw an unprecedented increase in the number of coronavirus cases. In hopes of mitigating the virus outbreak, curfews and work and transport stoppage were also implemented, among the strictest measures in Asia.

As of today, the Philippines has reported 9,223 confirmed coronavirus cases, with 607 deaths in the country.

Airlines struggle to hold out

With similar flight suspensions being implemented in countries across the globe, it comes as no surprise that airlines are grappling to survive due to the COVID-19 crisis.

According to TTGAsia, Philippine Airlines, Cebu Pacific and Philippines AirAsia – three of the country’s leading airlines – are pleading for government assistance in the form of credit guarantees and airport charge waivers.

Cebu-Pacific-Flight-Suspension
Cebu Pacific is among several airlines heavily affected by the COVID-19 pandemic. Photo: Maksym Kozlenko via Wikimedia

Cebu Pacific, in particular, the nation’s largest budget airline, has admitted to expecting up to $78.5 million in losses following flight suspensions and reduced passenger flights.

 Do you think the temporary flight suspension is a good move by the Philippines? How long do you think the country’s airlines will take to bounce back? Let us know in the comments!

Source : Simple Flying More   

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