OSLO (Reuters) – Norwegian Air plans to convert up to $4.3 billion of its debt into equity and to issue new shares as it seeks to stay in business following the COVID-19 outbreak that has grounded almost all of its fleet, the budget carrier said on Wednesday.

The move would allow the airline to tap government guarantees of up to 3 billion Norwegian crowns ($292 million), which are dependent on the company reducing its ratio of debt to equity.

Growing rapidly in the last decade to become Europe’s third-largest low-cost airline and the biggest foreign carrier serving New York and other major U.S. cities, Norwegian had accumulated debts and liabilities of close to $8 billion by the end of 2019.

On March 16, the company announced temporary layoffs of 7,300 employees, about 90% of its workforce, and the following day called on Norway’s government for help, saying it needed cash “within weeks, not months”.

“The proposed measures are necessary in securing the next tranches of the Norwegian government state guarantee program,” Chief Executive Jacob Schram said in a statement on Wednesday, announcing the measures on the eve of Norway’s Easter break.

Reuters
Photo Rob Vogelaar