The airline Norwegian has reached a agreement with two Nordic banks that will provide the 10% required for the first of the three tranches of the plan rescue from the Norwegian government to the aviation sector, representing 24.5 million euros.
On Thursday March 19, the Norwegian Government proposed a ‘Guarantee Plan’ of 489.54 million euros to mitigate the effects of the coronavirus in the Norwegian airline industry, of which up to 244.77 million euros go to Norwegian.
The virus is a new headache for a company that was already struggling with excessive growth and was forced to cut heavily due to the 737MAX flight ban.
With the plan, which is structured in three tranches with a maximum maturity of two years, the Norwegian government will provide a guarantee of up to 90%, while financial institutions will provide the remaining 10%.
The company is working with the two Nordic banks and with the Norwegian Export Credit Guarantee Agency (GIEK for its Norwegian acronym, which will administer the Guarantee Plan) on the necessary documentation to obtain the 300 million kroner in liquidity ” as soon as possible”.
“The Norwegian Government’s Guarantee Plan is crucial for the company, given that the current state of the capital markets, combined with the difficult times for the aviation industry, limit the options available,” the company said.
Currently, most of the airline’s fleet is stranded on the ground and the company has reduced its operations to a minimum, in the face of the coronavirus crisis.
Most fleet stranded on land and cut 90% of employment
However, the airline has assured that it mainly operates domestic flights in Norway and Sweden, as well as between the Nordic capitals, “with the purpose of fulfilling its corporate responsibility to maintain a critical infrastructure so that people, goods and necessary medical supplies can being transported during this unprecedented crisis. ”
In addition, in order to reduce costs, the company has temporarily suspended the employment of 90% of its workforce and has warned that it will continue to implement additional cost containment measures in the future.