The lossmaking low-cost airline Norwegian Air Shuttle has launched an emergency fundraising, with a 3bn krone (£270m) cash call on its shareholders, after IAG, which owns British Airways, ruled out a takeover last week.
Shares in the carrier slumped 15% as the rights issue was announced, taking them to their lowest level since 2012.
The decline came on top of a 25% fall last week when IAG said it was no longer interested in making a bid. IAG had bought almost 4% of shares in Norwegian and had been in takeover talks, with two tentative offers rebuffed.
Norwegian’s financial results for 2018 showed the airline running up an operating loss of £340m.
The carrier will get its cash, as the rights issue is fully underwritten. The airline’s bosses and largest shareholders, chief executive Bjørn Kjos and the chairman Bjørn Halvor Kise, have both committed to subscribe to the rights issue. John Fredriksen, a Norway-born shipping billionaire who is now based in Cyprus, is also backing the cash call.
Norwegian started out in the early 1990s as a regional Scandinavian airline, but has grown swiftly over the past decade to become the third-biggest low-cost airline in Europe. It also pioneered no-frills transatlantic flights.
It carried a record 37.4 million passengers last year, launching 35 additional routes and taking delivery of 25 new aircraft. However, its finances are stretched and rivals and some analysts have been predicting the airline’s demise since 2017.
The airline told investors it was switching its focus from growth to profitability, after years of rapid fleet expansion and building up low-cost, long-haul networks.
Norwegian said it would cut its fleet and delay further deliveries, after having placed some of the biggest orders in aviation for new fuel-efficient aircraft.
The airline is also aiming to cut costs by £180m this year and reorganise its bases and route network. It should also start to benefit from compensation from Rolls-Royce for the Trent 1000 engine failures on Dreamliners that disrupted its long-haul operations last year.
Kjos said: “We will now get in place a strengthened balance sheet that supports the further development of the company. ”