Sweden rejects Norwegian Air credit guarantee application
Reuters
Published Aug 18, 2020 01:49AM ET
Updated Aug 18, 2020 03:11AM ET
By Anna Ringstrom
STOCKHOLM (Reuters) - Norwegian Air (OL:NORR) has been rejected for a state credit guarantee under a Swedish government support programme for airlines, the country's debt office said on Tuesday.
While there is no immediate impact on the airline, it has previously indicated that more cash will be required to rebuild after the coronavirus crisis took a heavy toll of its operations.
The group received emergency financial guarantees from the Norwegian government in May, but only after raising cash from owners and forcing creditors to convert part of the debt to equity.
The Swedish government has stipulated that its credit guarantees may only be granted to airlines assessed to have been financially viable on the last day of 2019.
"The Debt Office’s assessment in regard to Norwegian is that as of 31 December 2019 there was a very high risk that Norwegian would not be able to fulfil its financial commitments and that the company was not deemed capable then of managing further indebtedness," it said in a statement.
"Therefore, the company has not been considered financially viable as of 31 December 2019. Accordingly, Norwegian’s application has been denied."
A Norwegian Air spokesman was not immediately available for comment.
The Swedish debt office's decision cannot be appealed.
Rapid growth had made Norwegian Air Europe's third-largest budget airline and the biggest non-U.S. carrier serving New York and other major U.S. cities, but with that expansion came debts and liabilities totalling about $8 billion by the end of 2019.
Norwegian was forced to close down most of its routes in March as the coronavirus outbreak spread, including its transatlantic network. At one point, it operated only domestic flights in Norway, using eight aircaft and mothballing a fleet of about 150 planes.
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Written By: Reuters
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