Norwegian Air Shuttle has decided to initiate the equivalent of a Chapter 11 bankruptcy process in Ireland following the Norwegian government’s decision to withhold further financial support for the troubled airline. Norwegian has chosen a so-called examinership in Ireland because the airline holds its aircraft assets in that country.
Norwegian said it expects the process to reduce debt, “rightsize” the fleet, and secure new capital. The reorganization process, which includes the group’s Norwegian Air International unit and wholly-owned Arctic Aviation Assets and its subsidiaries, will take up to five months to complete, Norwegian estimates.
Norwegian said it will continue to operate its route network—currently limited due to the Covid-19 situation—and trade as normal on the Oslo Stock Exchange. It added that safeguarding as many jobs as possible while consolidating its asset base will continue to rank as a top priority for the management team throughout the process.
“Seeking protection to reorganize under Irish law is a decision that we have taken to secure the future of Norwegian for the benefit of our employees, customers, and investors,” said Norwegian CEO Jacob Schram. “Our aim is to find solutions with our stakeholders that will allow us to emerge as a financially stronger and secure airline.”
The process of examinership in Ireland allows for bankruptcy protection through a court-appointed examiner and aims to ultimately allow a company to secure new capital and implement a legally binding plan for the settlement of debts.
“Our intent is clear. We will emerge from this process as a more financially secure and competitive airline, with a new financial structure, a rightsized fleet, and improved customer offering,” said Schram.
Based on Norwegian’s current cash position and the projections, the company believes it controls sufficient liquidity to successfully go through the process, said the airline.