Norwegian Air is looking to raise 3-billion Norwegian kroner (around £268 million) by offering current shareholders the chance to buy new shares at a special price, known as a rights issue.
The company’s 2018 preliminary earnings showed an operating loss of around 3.8-billion kroner, so this move has been made deliberately to improve Norwegian Air’s finances.
British Airways parent IAG had been in talks to purchase the airline for the past eight months before negotiations fell through last week, leading to Norwegian’s shares dropping by 16%.
Bjorn Kjos (CEO) and Bjorn H. Kise (Chairmen) have secured the help of Norway’s richest man John Fredriksen to help underwrite the rights issue, meaning that they guarantee the 3-billion kroner will be raised.
“I’ve known John Fredriksen for a long time, and we even have a CFO who has worked for Fredriksen,” Kjos said. “We’re very happy to have the Fredriksen group as a part of that guarantee consortium.”
“We will now get in place a strengthened balance sheet that supports the further development of the company.”
The airline added that this change in focus to making cost savings will “increase its competitiveness and stand-alone financial strength,” and “will nevertheless continue to be willing to engage in consolidation discussions that can develop shareholder value in Norwegian.”
The good news for customers, however, is that flights will remain unaffected by new developments. It seems it’s very much business as usual for travellers.