Norwegian Air Really Needs Cash — $350 Million, to Be Exact

Jan 30, 2019

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

Norwegian Air is looking for cash.

On the heels of a weak preliminary 2018 earnings report that showed an operating loss of 3.8 billion Swedish krona (about $419 million USD), the low-cost carrier said Tuesday it wants to raise $353 million in a share sale to shore up its shaky financial situation, Reuters reported.

Following the announcement, the airline’s stock plummeted 30%, the most ever on record, according to Bloomberg.

Norwegian, well-known and beloved among flyers (even some TPG staffers) for its low transatlantic fares and relatively enjoyable inflight experience, has been on precarious financial footing after a period of rapid expansion that included unexpected engine trouble with its Dreamliners, rising fuel bills, fierce competition and a strong dollar. The carrier has been the fastest-growing low-cost carrier to date and, at the end of 2018, it said it would be slowing its expansion to shore up its financial situation.

In a statement on Tuesday, the airline’s CEO, Bjørn Kjos, echoed the fact that Norwegian is shifting away from growth and toward cutting costs.

“We will now get in place a strengthened balance sheet that supports the further development of the company,” Kjos said, according to the BBC. This strategy, he said, would “increase its competitiveness and stand-alone financial strength.”

The shares sale, officially called a rights issue, is an opportunity for current shareholders to buy additional shares at a special price. Details like price and the amount of shares available will be announced on or around Feb. 18. Underwriting Norwegian’s share sale are Kjos, the airline’s chairman Bjørn H. Kise and shipping magnate John Fredriksen, the richest man in Norway.

Additionally, the airline reportedly said on a conference call that, to help significantly lower its spending, Norwegian is still working on a plan from last year to find a joint venture partner to share the ownership of its aircraft fleet, according to Reuters.

The search for cash comes days after British Airways’ parent company, IAG, officially withdrew from a months-long bidding process to buy the budget airline. IAG had submitted two failed bids for the carrier in 2018, which would’ve provided a nearly critical cash infusion for the operation. Norwegian, however, rejected the bids because they were too low.

“Norwegian is in a race against time,” BBC’s Theo Leggett wrote. “It needs to become consistently profitable, before the money runs out.”

Delta SkyMiles® Platinum American Express Card

Earn 90,000 bonus miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new card in the first three months of card membership. Offer ends 11/10/2021.

With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.

Apply Now
More Things to Know
  • Limited Time Offer: Earn 90,000 Bonus Miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new Card in your first 3 months. Offer expires 11/10/2021.
  • Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
  • Earn 3X Miles on Delta purchases and purchases made directly with hotels.
  • Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
  • Earn 1X Miles on all other eligible purchases.
  • Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
  • Enjoy your first checked bag free on Delta flights.
  • Fee Credit for Global Entry or TSA Pre✓®.
  • Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
  • No Foreign Transaction Fees.
  • $250 Annual Fee.
  • Terms Apply.
  • See Rates & Fees
Regular APR
15.74%-24.74% Variable
Annual Fee
$250
Balance Transfer Fee
N/A
Recommended Credit
Excellent/Good
Terms and restrictions apply. See rates & fees.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.