A lot will really depend on how much Norwegian's creditors are willing to bet on state aid saving the airline. If the company goes into bankruptcy, the creditors will assuredly lose a lot, and they will have to take their chances with the bankruptcy process to see what, if anything, they can recover. If they are confident that the Norwegian government will come through to save the airline, they may be more willing to gamble with converting their debt into equity in the hopes that in a few years they can sell their shares to recoup their money. Both seem like a big risk either way. It does seem like Norwegian is putting on the full court press within Norway, trying to scare the politicians and public into (probably somewhat realistic scenario) believing that much of Norway will lose flights if Norwegian goes under, and that what is kept will be operated by the likes of Ryanair and WizzAir.

Can you quote a source that the government want to "save the airline"? I have only seen a state guarantee of some $290M~ being offered. Which is against a debt pilot of $5,700,000,000 (Five point seven billion)

Lease payments have not been made on two 787s in March according to this article. Is it really reasonable for the owner of assets worth $300M~ to wait to recoup their money in shares that will become highly diluted?

No, I can't because that is the big question right now. That is why I used qualifying words in what I said, such as "If they are confident..." and "willing to bet". It is also why I included the last sentence, because Norwegian is trying to sway the politicians and public support in favor of trying to save the airline. We should know soon if their campaign and efforts will work.

$300M might be the book value, but I can't see anyone signing a lease on an aircraft right now. To that end, it might be as well to leave the plane where it is.

Yes, they have produced a report that says the government can pay them 12 billion NOK and still come out on top.
To scare the public they claim it will cost the traveling public 7 billion NOK in increased air fares if they go under. Not sure how this mixes with the introduction of another loco in the Norwegian market.
Fact is, when SAS went on strike, the price of a ticket Oslo Stockholm with Norwegian jumped to 8000 NOK. So much for their low cost guarantee.
The Norwegian market is just a small part of Norwegian, and for the Norwegian state to pay to support staff in Ireland, UK, France, Spain, USA, Thailand, etc is just pain stupid. These worker contribute nothing to Norway.
Let these countries carry the cost. If they want to.

^^^^
you say that but surely even the Norwegian government will want to keep the bits that have the potential to be profitable , intra Scandinavian or not as the case may be to help repay the debt

All staff are employed on local contracts with terms and conditions for the country in which they’re based. Therefore, respective Government Covid 19 assistance is applicable i.e. here in the U.K. JRS for LGW based employees etc. There is no extra burden for Norway in that respect.

I was not talking about support for individual crew members. I'm talking about the parts of the company that are not near Norway, with production outside Norway and with no Norwegian citizens as staff.

This is a real mess. The Norwegian oil fund is the biggest owner in Norwegian. If the company manages to get their debt exchanged for stocks, the stock price will drop like a rock, and the fund will get a huge loss. That on top of the 3 billion NOK the Norwegian government has promised. If they want to maintain their share of the ownership, they have to feed more money into the company. In return they get a big ?. If this was a company with a solid foundation before corona, that would maybe be a risk worth taking. It was not, and it is now a big gamble if they will get any value for their money. Both in terms of the future of the company and 0 income from those parts (most of the company) based outside of Norway.
I bet a lot of those holding Norwegians loans are thinking like this: Cut our losses and get out, or gamble on CPR working on a half rotten body.
It will take time to get over corona, and chances are it will take even more money to keep them alive.

What they are trying to do is convert debt to shares so they can take up more debt. My bank would kick me out if I suggested anything like that.

So the company deliberately organized their business model in a way that minimized their contribution to the Norway economy, but now expect the Norwegian peoples tax dollars to bail them out.

The best line ever for how business executives see the world was on another PPRUNE thread

”Capitalization of profits, socialization of loses”

I was going to say “have they no shame ? “ .......but I realize how silly that sounds

This, from a guy working for sas 😂

But tell me. Does converting debt to shares mean taking up more debt? Will the total debt be more or less after this exercise?
New Norwegian will be very much alive after corona, with a strong equity, a lot less debt and one of the newest and most environmentally friendly fleets out there. Restructered, but stronger than ever.

Quite incredible optimism, the likes of which I’ve never read before.

The ones writing about a Norwegian stronger than ever with a loss less debt have no f... clue about what a debt/equity swap means and it consequences

Enlighten us, educate the masses. Im already
holding my breath..

No need. Unfortunately the hard reality will enlighten you in a couple of weeks, but of course, stronger than ever

"New Norwegian will be very much alive after corona, with a strong equity, a loss less debt and one of the newest and most environmentally friendly fleets out there. Restructured, but stronger than ever."

After Covid-19 has dissipated, practical reality suggests that prospective air travelers will be in no hurry to fill seats, share armrests and rub elbows with strangers. All passenger carriers will be operating below break-even load factors for many months to come. Because the fear factor of asymptomatic transmissions of the virus will linger.

Can I have some of what you've been taking?

The increasingly desperate financial measures could be almost copy and pasted from the story of the final days of Thomas Cook.

Wonder what the future looks like if the creditors/lenders accept this deal and become majority owners of the company. My guess is that they will sell it section by section when value increases in coming years.

Converting debt to shares will give Norwegian access to financing from the Norwegian government. That is a loan, not free money.
In the process all shareholders will lose a lot when the share price nose dives. That will affect at lot of regular people out there.

Ok, I’m not too familiar with the deal NAS is proposing with its creditors (maybe someone could spell it out) however they need to offer a very rosy future. Creditors/bond holders will have taken out insurance again NAS failing in the form of credit default swaps (CDSs) so if NAS goes bump they still get paid.

The worst thing for most bond holders would be dilution meaning they are stuck with a smaller slice of a problem company. I’d be surprised if they agree but we are in fairly unprecedented times right now so anything’s possible.

BTW, this is looking almost a carbon copy of TCX and back then I’m fairly sure the bond holders chose their insurance payouts rather than throwing more money after bad.

Sincere good look though I have a family member there so hoping for the best....

If we were BC (before Coronavirus) I would have said that Norwegian had a slightly better than evens chance of trading to longer term profitability and paying down it debt pile.

PC (Post Coronavirus) and we aren't anywhere near PC I just don't see how Norwegian can dodge this bullet shy of state aid on a massive scale, having said that its worth remembering that Norwegian was historically structured in such away that dead limbs could be cut off thus protecting the core (K area) The Norwegian Government will not be keen on a total collapse of the Norwegian brand or the loss of tax revenue from well paid employees in Norway.

I just can't see anyway the Government of Norway will or should bail out the entire group, so my best guess is that they will underwrite a chapter 11 style of restructuring which will be an Oslo centric operation (wasn't it always thus) flying short haul MAX & NG aircraft across Europe with few if any European bases, this new Norwegian will be largely state owned and will be re privatised in 3-5 years

If I recall the LGW slots were monetised and used for loan security so may well be called in but they are probably of little value now.

Anybody who thinks that in a few months it will be all over and business as normal is delusional, this year is a write off for the travel industry especially long haul at least until a vaccine is available to all and I can't see that before 2021

When airlines can fly again it will be Ryanair out of the blocks first with ultra low fares and will use its massive cash reserves to buy market share and push weakened companies to the wall.

Well fingers crossed....I shudder to imagine a transport option that mainly revolves around Ryanair

Somebody already did: "Wings" by Robert J Serling

-50% on the share price today, something is happening?

Record drop in Norwegian share price today, understandable as shareholders will be either massively diluted or the company will cease to exist.

NAS market cap around £80m........something has to happen.

Existing shareholders stand to lose around 96% of the value, as a Norwegian share with a nominal value of 100 will be worth only 4, if the plans of converting debt to equity goes through. Whilst that is indeed doubtful, shareholders are bailing en masse in order to save what can be saved. Hence the value has dropped around 50% within the first 20 minutes of trading on the Oslo stock exchange this morning.

The thing is, without converting debt to equity Norwegian cannot access the next - and by far largest - tranche of support from the NO government. Without that support, they look to be pretty much buggered.

Feels like the last gasps of Thomas Cook, again.
Sympathy to all the employees and small shareholders.

Macdo. ..and TCX previously, and Mytravel before that. Its a good thing the chinese Zn/Au mine is still going!

Alert from BALPA that Norwegian UK don’t have the money to pay OSM April salaries and unless they get money from the UK Government nothing forthcoming from OSM who don’t have the funds either. Thoughts with all colleagues there :(

Really can't see either the Irish or UK Govt coughing up to support Norwegian Air International or Norwegian Air UK
Bit of a long shot, but I wonder if the Swedes mights put some money in the pot to keep a couple of planes for Norwegian's base at Stockholm to provide competition against SAS for connections to the far north - or would they prefer to bail out BRA instead ?

And don't forget the financial tightrope AIH walked. Same old same old, in my (long) experience the directors will come up smelling of roses in another field while the pbi take a hit. Glad to be permanently out of it post September '99. Good luck delving those foreign mines:)

I really feel for the people working there at this time of utter uncertainty. No-one is safe in this industry at the moment.

However, Norwegian's business plan appeared to be:

1. Get lots and lots of expensive aeroplanes
2. ???
3. Profit!!

And it doesn’t seem to have worked that well, even pre-pandemic...

For they who where contemplating a long distance low cost operation there is something to be said for buying the company for sub 80 million euro without its overpriced plane leases and then negotiate with each batch of planeowners for a post corona pricing plan. With luck and financial patience one could even get the inital purchase price ++ back from Boeing in Max settlements. There is multiple AOC's, a governements approved transatlantic route network and a batch of new planes, already built so cheaper than new, to get quickly started post lockdowns, and a market name slightly more respected than the bottom of the low fares pile.
One would think that would be better than pursue expansion in the lowfares space overcrowded european market. In addition one would have a strong out of the blocks foothold in the intra Norway and Scandinavia markets which was always the moneyspinners Norwegian used to finance their longhaul. Trondheim-Oslo (with cheapest fares of 100 euro equivalent even out of season) is a core route with volume levels and frequency comparable to Dublin-London . Bergen-Oslo and Oslo-Copenhagen was not far behind in volumes.

No April salary
 

Wise words Viking. About the most intelligent post I have read on here for quite some time.

IAG could do the above, as they displayed a certain interest in Norwegian a while back. I expect any offer would be around the €1 mark ±10c...

FFS get real. Anyone who buys Norwegian at this point is also taking on all the debt too. Over 7Billion dollars worth. Who in their right mind is going to do that in the current climate?

Also there is brand value, atleast to some extent. They're after all biggest foreign carrier out of NY, so that definitely has some value in it.

Debt is mostly in plane leases and quite a bit to of US export finance who will not be interested in owning a foreign airline. All those planes sold at overprice on delivery against a overcost leaseback would have to have their leases renegotiated or planes returned. Preferably by a company that have other business with the same planeowners. Or a cash rich finance company with an interest in the airline industry that could buy out the planeowners at a discount in the current market and lease the planes effectively back to itself. And then in 3-5 years, when Boeing the Max payout has been scooped up and markets normalise, relaunch Norwegian back to the market as a well financed and well established airline. I could se a 5 to 10 fold payback on initial investment.
Pricing of a takeover would need to be in the 1-10c a share range through an enormous expansion of number of shares, to which existing shareholders for legal reasons would have to be invited to participate. Any pure buyout of existing shares would just be giving money to existing shareholders and would not only increase the price but would neither help the company survive. A new top management team with extensive airline experience and preferably scandi experience would also have to be put in place.
An umbrella company like IAG could be an option, but I suspect they don't want a long haul low fares competitor to BA or a Spain competitor to Iberia, so would shrink Norwegian to Scandinavia only taking away halve the advantages, but there are others.