calypso
Broadly correct, however, the large creditors already have a judgement which means they would get some chance of picking at the the bones if the plug was pulled, having said that, with such a huge mountain of debt its about 1 cent in the dollar. The exchanging debt for shares only works if the companies supporting the debt are happy to keep effectively writing off the debts as the shares now only worth less than 10% of the debt they were exchanged for.
Regarding AC maintenance at Norwegians costs.. this is not happening, the maintenance fees are also being accrued as balance book debt (agreed at bail out), so effectively the leaseholders are paying to maintain their own assets, aged debt is driving share prices down, which is why they want them back and the compensation judged in their favour.
If 400M were invested now it would only wipe the slate off the aged debt since May and a day later the airline would be cash strapped again.
The real issue on agreement will be getting the lease holders to accept shares and also take their aircraft away as part of the "right sizing", all the 787 would need to go and the majority of the 738s, leaving about 20 A/C in service. This is a big ask of the lease holders that had no choice back in May, now they have a choice and some may just say sod it and not support the "new/old/same plan"
On the other hand, Lease holders may prefer to have their assets free to market, albeit the market is dead at the moment, and accept the deal on the basis they have already lost the money, what they won't want is A/C tied up on PBH contracts and history repeating itself.
With external investment and a 80% reduction in fleet and staff, the Company may survive, or at least be in a shape to be acquired by another player, unfortunately, the likes of Wizz are seizing this opportunity and chaos to expand rapidly into the traditional markets served by NAS and whilst nationalists may be loyal to a local company the travelling public just want the cheapest route from A to B
As of the 4th Dec they required a cash investment of 340M to keep operation going through this process.
To get an idea of the scale of the problems:
In May converted £1.5 Billion in debts to shares, also got £250M state aid, and agreement to convert £250m in PBH costs to shares/bonds.
In reality the debt conversion was not "cash" so it's fair to say the cash reserves plus the state aid and a dribble of revenue is what they've been operating off with heavily reduced crewing costs through government furlough support. The government support may last until March but the daily overheads have sucked all the reserves. Now they need £340M to see them through the next few months despite the CEO saying they could last until next spring through the Examinership process of 150 days.
It's understandable the Irish courts may want to ring fence the Irish assets, but without real cash injection approaching £1B they will only be protecting the brand and jobs in the home market.
Last edited by Kirks gusset; 5th Dec 2020 at 15:58.