Aircraft leasing company China state-owned BOC Aviation acquired significant shares of Norwegian Air Shuttle (NAS). The initiative was to help the company's airline rescue plan.
The Norwegian Air Shuttle (NAS) announced last Wednesday that it is already faced with a substantial debt burden. Chinese state-owned BOC Aviation then lent a helping hand after NAS suffered financial losses during the pandemic. The crisis led to the company's paralyzed global air traffic that caused a significant decline in its operations.
Last May, NAS adopted a rescue plan where creditors, through a deal, may convert some of the company's financial liabilities into NAS equity. The strategy enabled NAS to strengthen its capital position and adapt to the conditions.
The restructuring plan of the low-cost carrier was completed today. The Norwegian would provide guaranteed amounting to 2.7 billion Norwegian kroner, or 270 million USD in loans on top of the 300 million kroner in loan guarantees already offered. Lessor companies of the aircraft fleet would then take over the significant share capital of the company.
One of the company's largest shareholders is Ireland's AerCap Holding that controls 15.9 percent of the company's shares. It also enjoys convertible bonds that represent 7.2 percent of the corporation. BOC Aviation, on the other hand, would hold 12.67 percent of NAS's capital.
According to NAS's chief executive officer Jacob Schram, the coming months would be challenging for the company. He noted that there is a higher level of uncertainty for the travel industry amid the closure of the deal. He added that the company still needs to coordinate closely with its creditors since it has limited revenues.
NAS has also been burdened with heavy debt. The demise made it more challenging for NAS to expand its business. At present, it focuses on establishing profitable routes since there is a significant decline in flights.
The CEO further noted that the company would also eye long-haul travels and boos low-cost carrier travel as the pioneer segment of its operations.
The dilution of NAS shares caused the decline of its share price on the Oslo Stock Exchange. On May 20, 2020, NAS's value dropped by 60 percent. Its shareholders had to resort to the rescue plan to keep the corporation afloat. It was down by 25 percent bringing the NAS decline to more than 90 percent.
The Norwegian government still maintains travel restrictions over the summer. The travel restriction would last until August, but charges might be imposed earlier. Travel towards Nordic countries and select European countries might be allowed sooner than August, depending on the pandemic situation.
