Norwegian’s Norway-based subsidiaries for pilots and cabin crew have asked a court for bankruptcy protection, the carrier revealed in a statement on February 23. They have applied for similar restructuring as their parent company has in Norway and Ireland, where most of its assets are registered.
Norwegian Pilot Services Norway and Norwegian Cabin Services Norway, both of which the parent wholly owns, sought protection at the Asker and Bærum District Court in Sandviker, about ten kilometres west of Oslo.
There are 520 pilots and 850 cabin crew in the two companies, and Norwegian stressed that the news does not affect their terms of employment, salaries, and other conditions. Nor does it affect the layoffs the companies have made until now. The operation of the airline will also continue, as usual, it said.
“The goal of the reorganisation process is to emerge from the crisis as a stronger company with reduced debt. The boards of the two subsidiaries have seen it as expedient that they have the same protection as the parent company,” Norwegian CEO Jacob Schram commented in the statement.
Norwegian said in the same statement that its own court protection and examinership, initiated in December, “is ongoing as planned” but did not elaborate.
On February 22, the Irish High Court extended by an additional 50 days Norwegian’s protection period from its creditors, the Irish Times reported. Justice Michael Quinn granted the extension, now at 150 days, after he was satisfied that exceptional circumstances, namely Covid-19, had impacted the airline to such as extent as to allow the court to extend the period.
Requesting the extension, the airline’s examiner Kieran Wallace of KPMG, had argued that he needed additional time to agree with creditors to allow the company to continue as a going concern.
Describing this examinership as one of the biggest and most complicated in Irish history, Wallace said that despite the difficulties, he “remains confident” he can assemble a proposal to allow the airline to survive. There was no opposition to extend the protection.
Creditors include several lessors as well as subsidiaries of Airbus and Boeing. It emerged on February 23 that AerCap was no longer protesting Norwegian’s restructuring proposal, although its lawyer Rossa Fanning emphasised it still had misgivings about the process.
Norwegian’s lawyer, Brian Kennedy, confirmed that “advanced negotiations” were also underway with other creditors. The lawyers for two of these, Airbus and Rolls-Royce, revealed that there had been good progress in the negotiations and that they may reach an agreement soon.
However, on the same day, unnamed “industry sources” told Reuters that both Airbus and Boeing were bracing for heavy aircraft order cancellations from Norwegian.
Norwegian has 88 aircraft on order at Airbus (fifty-eight A320-200Ns and thirty A321-200NX(LR)s, according to the ch-aviation fleets module). It said in June 2020 that it had cancelled orders for 97 Boeing jets (ninety-two B737-8s and five B787-9s), but Boeing has not confirmed this.
In related news, Norwegian announced in an Oslo Stock Exchange filing on February 22 that it had received conversion notices from bondholders representing USD1,878,309 worth of perpetual bonds and USD17,652,897 in future maintenance bonds to issue 485,054 new shares in the company, increasing its share capital by NOK48,505.40 kronor (USD5,718).
