Full crisis,’ financially
Meanwhile, newspaper Dagens Næringsliv (DN) reported on Thursday that Norwegian Air’s parent company is facing “full crisis” in 11 days if it fails to acquire fresh capital to satisfy lenders. Norwegian is saddled with heavy debt because of its aircraft acquisitions to serve its massive route expansion in recent years.
Analyst Martin Stenshall at Danske Bank thinks Norwegian will violate the terms of its loans by New Year, if it fails to sell off many of its new aircraft. That in turn can cause suppliers to demand cash to pay for fuel of aircraft landing fees. “If the company has to report a violation of the conditions surrounding its debt, it can land in an evil spiral and the crisis will escalate,” Stenshall told DN.
The financial and liquidity problems caused by heavy debt (NOK 30 billion at the end of the third quarter) have been exacerbated by weaker earnings on airline tickets and heavy losses on its purchase of jet fuel at a fixed price. Norwegian has suffered losses on operating problems surrounding its long-distance routes.