Norwegian shares plunge as it reveals need for more cash
Budget airline Norwegian Air saw its shares plunge more than 9% today after it launched its third share sale in two years.
The airline sold 27.25 million new shares at 40 krona per share to raise about £211.5 million.
It raised a further $150 million through a convertible bond issue. Norwegian said the money will see it through 2020.
“The private placement received significant interest from both existing shareholders in the company and new high-quality investors. The convertible bond issue received significant interest from international and domestic investors,” the airline said in a statement.
Norwegian Air is also attempting to cut costs after the grounding of its 18 Boeing 737 MAX aircraft forced it to shelve expansion plans.
In October it entered into a joint venture with a subsidiary of China Construction Bank to add 27 Airbus aircraft to its fleet.
The Chinese bank will own 70% of the venture, which will allow Norwegian to buy the A320neo aircraft between 2020 and 2023.
Norwegian said the deal would ease financial pressures by cutting its capital expenditure by $1.5 billion.
In September, the airline had asked lenders for more time to repay $380 million of loans, one of which was due to mature as early as December. It even offered to put up as collateral its take-off and landing slots at Gatwick, where it is the third biggest airline after British Airways and easyJet.
Yesterday, the airline said: “After the completion of the transactions, Norwegian is fully funded through 2020 and beyond based on the current business plan.”
It revealed that revenue rose in October for the seventh month in a row and was up 6% compared with the same month last year.