Norse Atlantic Airways (N0, Oslo Gardermoen) has announced plans to raise an additional USD45 million to tie it over the slower autumn and winter seasons and settle obligations with a key supplier until summer revenues are collected.
In a statement accompanying its 3Q23 financial report, the airline attributed decreased liquidity availability to adverse working capital movements in the last quarter and seasonal softening from September. "In addition, the company is in the process of concluding a negotiation with a key supplier that will require a payment plan to be accelerated," it explained. "As a consequence, the company is exploring additional fundraising of up to USD45 million to improve liquidity through the shoulder and winter season until such time as the revenue generated from the seasonally stronger summer programme bookings are collected."
Major shareholders Larsen & Co Ltd and Scorpio Holdings Limited expressed strong support for participating in the fundraising, to be managed by Pareto Securities AS and SpareBank 1 Markets AS. The timing, structure, and terms of the fundraising would be subject to prevailing market conditions and necessary corporate resolutions, and more information would be announced in due course. Scorpio Holdings Limited will, in future, be represented on the airline's board.
The transatlantic carrier also disclosed it had received inquiries and held discussions with various industry players interested in exploring potential business opportunities - suggesting it may consider selling a stake. "It is the company's clear impression from these discussions that the company's business, market position, and assets are perceived as attractive and that the company may be well positioned to capitalise on this through industrial or strategic actions," it explained. The board of directors has enlisted advisors to assess and provide guidance on strategic alternatives.
Norse Atlantic Airways reported its first profitable quarter during the 2023 summer, more than doubling revenue from the previous quarter to USD205 million. Its EBITDAR increased from USD2 million in 2Q23 to USD41 million in 3Q23. The airline achieved record ticket prices and yields, increased ancillary revenues, and maintained an 83% load factor with a 99.8% flight completion rate. While it continued to control costs effectively, higher fuel prices and a weaker cargo market placed pressure on profitability.
Norse Atlantic Airways aims to optimise its network and compensate for the seasonally weaker winter market by seeking attractive ACMI (wet-lease) and charter opportunities, where inquiries were increasing. During the 4Q23, the airline will launch an upgraded premium product and further initiatives to further grow ancillary revenue.
The airline operates four B787-9s while its UK subsidiary, Norse Atlantic (United Kingdom) (Z0, London Gatwick), operates a further six of the type - all leased from AerCap and BOC Aviation respectively. Destinations served by both AOCs include Oslo Gardermoen (Norway), London Gatwick (UK), Bangkok Suvarnabhumi (Thailand), Miami International, Los Angeles International, Orlando International, and New York JFK (US), and Paris CDG (France), according to ch-aviation fleets and ch-aviation schedules data.
"Norse Atlantic has come a long way since the initial flight in June 2022. After a short first summer season in 2022, we had our first full summer season in 2023, growing to a ten-aircraft operation while delivering a robust performance," commented Chief Executive Officer and major shareholder Bjørn Tore Larsen.
