MIAMI – Today, the Irish High Court granted creditor protection to Norwegian Air International (D8) and the Group’s Irish subsidiaries. The Court also extended the creditor protection to parent airline Norwegian Air Shuttle (DY).
Norwegian Air International, a fully-integrated subsidiary of DY, operates 26 out of 139 total aircraft of the Norwegian Group (NAX). It has bases in Spain, Denmark, Finland and the UK. In February 2014, D8 received its operating license and air operator’s certificate issued by Ireland.
High Court Ruling
Judge Michael Quinn assigned KPMG Head of Restructuring & Forensics, Kieran Wallace as an examiner of the restructuring process. In addition to Norwegian, he will have to work with Arctic Aviation Assets, Drammersfjorden Leasing, Torskefjorden Leasing and Lysarkerjorden Leasing.
The process of examinership in Ireland allows financially sustainable businesses to address elements of the business that require restructuring with the aim of protecting jobs and preserving the core values of the business. This protection, through a court-appointed examiner, ultimately allows a company to secure new capital and implement a legally binding scheme for the settlement of debts.
While the examination takes its course, NAX will receive creditor protection, meaning that the airline has more time to restructure. After the Norwegian Government declined funding to NAX, the group applied for Protection under Irish Court.
The next Court hearing will come next week in the US, as NAX sued Boeing for US$1bn. The airline would seek compensation for the Boeing 737 MAX groundings and issues with the Boeing 787 aircraft. The airline had to ground several Dreamliners for longer periods of time due mainly to engine issues. We have more details on Norwegian’s December prior to the ruling.
With its request for funding denied, DY was in a hard place even without the COVID-19 pandemic. Today, the airline has six aircraft operating out of its 140+ strong fleet. In addition to the pandemic and Boeing issues, not to mention its somewhat rapid expansion, DY also has to deal with new competition.
A few weeks ago, DY’s liquidation would leave it with a deficit of $6bn. Furthermore, the airline group owes about US$5bn to creditors and has further US$2bn debts. With today’s ruling, it seems the Fornebu/Oslo-based company can have some sense of hope come 2021.
Featured image: Norwegian Boeing 787 takes off from Rome Fiumicino (FCO). Source: Andrea Ongaro