Norwegian Air says it could run out of cash in early 2021

Pandemic-hit Norwegian Air could run out of cash in the first quarter of 2021 unless it secures fresh funding, the budget carrier said while reporting third-quarter results on Tuesday.

Passengers board a Norwegian Air plane in Kirkenes, Norway October 26, 2019. [Reuters]

The airline’s cash and cash equivalents stood at 3.4 billion crowns ($376 million) at the end of September, down from 4.98 billion crowns at the end of June.

“Norwegian is dependent on additional working capital in order to continue operating through the first quarter of 2021 and beyond,” the carrier said in its earnings report for the July-September quarter.

Norway’s government on Monday rejected a plea for more state support, arguing it was too risky, and the company soon after said it would furlough 1,600 more staff, leaving just 600 people still working, down from a pre-pandemic 10,000.

“Our third-quarter results clearly show that the effects of the global COVID-19 pandemic continue to heavily impact our operations and financial position,” Norwegian’s Chief Executive Jacob Schram said in a statement on Tuesday.

The company said funding could potentially come from debt refinancing, a sale of aircraft and other assets, a conversion of debt to equity or from its owners.

Norwegian’s operating loss stood at 2.8 billion crowns in the July-September period, down from a profit of 3.0 billion in the same months of 2019.

A pioneer in low-fare transatlantic air travel, Norwegian Air’s rapid expansion left it with overall debt and liabilities of 66.8 billion crowns by the end of the third quarter, making it vulnerable to the fallout from the COVID-19 pandemic.

The company’s interest-bearing debt stood at 48.5 billion crowns, down from 61.7 billion at the start of the year as parts of its debt had been converted to equity in May.

Norwegian will now operate just six of its 140 aircraft, down from 21 last month, leaving most of its short-haul planes grounded as well as its entire fleet of 37 Boeing 787 Dreamliners used for transatlantic journeys.

The company’s share price has fallen by 99 per cent so far this year.