Cash-strapped Norwegian has raised three billion Norwegian krone (£268 million) from shareholders and said it changing its strategic focus “from growth to profitability”.
The carrier has been synonymous over the last few years for opening new routes and buying aircraft, but has recently sold aircraft, and closed routes down, although in 2018 it still opened up a subsidiary in Argentina and expanded into Brazil.
In a statement the airline said it is “strengthening its balance sheet through a fully underwritten rights issue of NOK 3 billion in order to increase its financial flexibility and create headroom to the covenants of its outstanding bonds compared with the Company’s business plan”.
The company it said is changing its strategic focus from growth to profitability and it intends to capitalise on the market position and scale built up over the last years. As a consequence of the changed focus, the capital expenditures will be reduced, which is expected to be achieved by a combination of aircraft divestment, including JV, and postponement of aircraft deliveries.
Further, the company is working on several operational improvements, including the extensive cost reduction program, #Focus2019, which will contribute to estimated reduction of minimum NOK 2 billion in 2019, optimisation of the base structure and the route network and the agreement with Rolls-Royce related to compensation for the operational disruptions on its long-haul operations which was entered into in December 2018.
Norwegian chief executive officer, Bjørn Kjos said: “Norwegian has been through a period with significant growth. Focus going forward will increasingly be on cost savings and CAPEX reductions.
“We will now get in place a strengthened balance sheet that supports the further development of the company. With the strengthened balance sheet, the organization can now devote all its attention to further development of the company.”
According to its preliminary 2018 figures, Norwegian delivered revenues of NOK 40.3 billion, EBITDA of NOK -2.2 billion, EBITDA excl other losses/gains of NOK –1.2 billion, EBIT of NOK -3.8 billion and EBT of NOK -2.5 billion in 2018.
Last week, British Airways parent company IAG ruled out a bid for the cash-strapped carrier. It had acquired 4.61 per cent in April last year but Norwegian said in due course, it will be selling its shareholding.
The airline said it has received enquiries from several parties who expressed interest for structural transactions, financing of the company and various forms of operational and financial cooperation and discussions with such parties have been “ongoing on several levels and with different approaches”.