Norwegian offers slots to delay bond repayments

Scandinavian low-cost airline Norwegian is requesting to delay the repayment of bonds in exchange for its takeoff and landing slots at London Gatwick.

The airline says it is requesting extension of the maturity dates for two sets of unsecured bonds – NAS07 and NAS08 – until November 2021 and February 2022, respectively.

The two bonds were originally set to mature in December 2019 and August 2020.

Norwegian claims that its Gatwick slots are valued at more than the $380m (£316m) current nomial value for NAS07 and NAS08. It added that the exchange would enable it to “ensure successful operations and adequate liquidity headroom.”

Norwegian’s expansion woes

Norwegian is Europe’s third-largest low-cost airline by passenger numbers after Ryanair and EasyJet. In recent years, the airline has pursued an aggressive growth strategy, investing millions into new aircraft, new routes, and long-haul expansion.

Rapid expansion has come at a cost, however, with the airline being plagued by hefty losses and high debt. Earlier this year, it was forced to raise NOK 3bn (£280m) from shareholders, and it announced yesterday that its working capital had decreased in 2019 to around NOK 1.5bn (£140m) due to Rolls-Royce engine issues and the grounding of the MAX fleet.

In addition, tighter industry rules on advance ticket payments led to a decrease in the amount received from credit card acquirers, negaitvely affecting working capital by NOK 4bn (£360m) when compared to Q2 2018.

In preparation for a quieter winter period, Norwegian is looking to build up its liquidity reserves. It has already agreed to sell its shareholding of an internal bank, and it is also discussing deferral of payments with lessors.

Norwegian has requested to discuss the terms of the outstanding bonds, with a bondholders’ meeting scheduled for 16 September.