OSLO (Reuters) – Norwegian Air NORR.OL aims to secure funding this year for the next 18 months or more to see it through the COVID-19 pandemic, the budget airline said on Friday after reporting first-half losses of $610 million (459.61 million pounds).
The company will put five more aircraft back in the air in September, raising the total to 25, while leaving 110 to 115 planes grounded through the upcoming winter season, a difficult time for the industry even in normal circumstances.
Norwegian’s share price fell by 11% in early trade to a record low of 1.10 crowns (0.0940 pounds) and is down 97% so far this year.
Creditors and lessors took control of Norwegian in May with a financial rescue that allowed it to access state-guaranteed loans of 3 billion crowns, with the aim of keeping the airline in business until demand for air travel resumes.
“Given the current market conditions it is not enough to get through this prolonged crisis,” Chief Executive Jacob Schram said in a statement.
The airline said additional funding could come from the sale of aircraft, from additional debt deferrals or from owners or the government but it declined to quantify any amounts.
“It needs to be completed throughout the autumn,” Schram told Reuters on the sidelines of a news conference. “The solution must be in place this year.”
The company is not currently strapped for cash, Chief Financial Officer Geir Karlsen said, adding that it needed money “during the next six to seven months”.
“The target for us should be to not just put out fires, but one where we can see all the way into 2022,” Karlsen said.
The airline, which has racked up debts as it tries to make the long-haul budget travel model pay off, said talks with the government were still ongoing, however.
It posted a net loss of 5.4 billion Norwegian crowns ($610 million) in the first six months of 2020, up from a loss of 1.4 billion crowns in the same period a year earlier.
All of its long-haul routes remain suspended and the company has not yet decided when to relaunch them.
Norwegian’s overall debt and liabilities had declined to 71.7 billion crowns by the end of June from 87.7 billion crowns a year ago.
The company’s monthly cash burn is in the upper half of the 300 million to 500 million crown range the company has forecast, Karlsen said.
The hard-hit industry saw Virgin Atlantic Airways [VA.UL] this week secure backing from creditors for a 1.2 billion pound ($1.6 billion) rescue plan, while American Airlines AAL.O, United Airlines UAL.O and Delta Air Lines DAL.N have announced big layoffs.
Nordic rival SAS SAS.ST, which is trying to gather support for a 14-billion Swedish crown recapitalisation plan, posted a multi-billion crown loss for its May-July quarter this week.
Norwegian aims to gradually rebuild operations from the second quarter of next year, albeit on a smaller scale than before the crisis, hoping to reach full capacity in 2022.
“Hopefully we’ll see a much better summer in 2021 compared to this year,” Schram said.
Reporting by Terje Solsvik and Victoria Klesty; Editing by Kim Coghill, Shailesh Kuber, Amy Caren Daniel and David Clarke