The High Court of Ireland and Oslo Byfogdembete approved the Norwegian Air Shuttle proposed scheme of arrangement to exit the bankruptcy protection in Ireland and Norway.
A green light from the High Court
On May 18, 2021, Norwegian Air Shuttle announced that the High Court of Ireland and Oslo Byfogdembete has approved its debt reconstruction plan, meaning that the troubled air carrier has made a step further in its attempts to emerge from bankruptcy protection in Ireland and Norway.
“Reference is made to the stock exchange announcements of Norwegian Air Shuttle dated 26 March 2021 and 12 April 2021 regarding the approval of the proposals for a scheme of arrangement for an exit of the examinership process and the reconstruction process as further described in the Restructuring Proposal by the High Court of Ireland and Oslo Byfogdembete respectively,” written in the Norwegian Air Shuttle statement.
Following the latest announcement, Norwegian Air Shuttle now expects to complete its financial reconstruction process on May 26, 2021, as it has initially planned.
“At the expiry of the appeal period no appeals have been filed and consequently the Reconstruction Plan is final and binding,” the airline said.
After receiving a debt restructuring approval from creditors on April 12, 2021, Norwegian Air Shuttle revealed its plans to raise around $725 million (NOK6 billion) in fresh capital by the end of May 2021 and emerge from bankruptcy protection. To complete its financial rescue, the airline is now focused on raising around $226,162 (NOK1,875 million) by offering new capital perpetual bonds.
Another planned move to raise the capital is to carry out a private placement of new shares and conduct a rights issue for another $47.6 million (NOK395 million). If the capital raises plan succeeds, the airline counted that investors would own 75.7% of the company shares, while unsecured creditors would own 20.6% and existing shareholders would have the remaining 3.7% of shares.
To emerge from bankruptcy protection in Norway and Ireland, the airline has already reduced its debt by approximately $7.7 billion (NOK63-65 billion) and terminated aircraft orders amounting to $10.25 billion (NOK85 billion).
Currently Norwegian considers emerging with a fleet consisting of 51 aircraft as it signed agreements for 4 owned and 44 leased planes with a further intention to acquire an additional 3 jets later.
Massive base closures in Europe to cut costs
As part of its restructuring process, Norwegian Air Shuttle has been closing its bases in Europe and the United States. However, the move is still causing a row with employees and unions in Spain, France, Italy, and the United Kingdom.
In Spain, for example, the airline plans to close three out of five of its bases: Gran Canaria, Barcelona, and Tenerife, while planning to continue operating at reduced capacity with only a single jet in Malaga and Alicante hubs. The planned move is putting more than 1,191 employees at unemployment risk, however, local unions say they are negotiating with the company in an attempt to minimize the expected number of layoffs.
Meanwhile, a group of 286 airline employees in France is taking legal action to push the air carrier’s subsidiary Norwegian Air Resources France (NAR France) into liquidation. They claim that the French branch left them jobless while their contracts were still valid, this way preventing them from benefiting from the state-guaranteed salary insurance.
Norwegian Air Shuttle base closure in Italy left its Italian staff in a high discontent. A group of Italian employees raised concerns about whether they would get their salaries or severance pay after the company’s subsidiary Norwegian Air Sources Italy (NAR Italy) has stepped into the liquidation process. The Italian staff also fears being stuck in a limbo similar to the one in France.
After the air carrier ceased operations from London Gatwick Airport (LGW), UK, leaving around 1,100 pilots and cabin crew without a job, the staff complained about being not paid the owed salary, holiday, or notice pay ‒ but offered to keep their uniforms and branded cabin bags instead.