Irish aircraft lessor Aercap could be offered shares in Norwegian Air under the troubled airline's plans to swap its debts for equity in the business.
Norwegian intends offering creditors, including aircraft lessors, shares in the airline to satisfy the terms of part of a €265 million state aid package aimed at getting it through the Covid-19 crisis, which has grounded air travel.
Dublin-based Aercap has leased 11 craft to Norwegian, so as a result could be offered shares in the company under the proposal, along with other creditors including banks and bondholders.
Aercap did not comment on Thursday. Industry analysts have questioned how creditors are likely to respond to Norwegian Air’s offer given its shares have lost more than 70 per cent of their value so far this year.
Credit Suisse analysts Neil Glynn, Arthur Truslove and Hannah Burrows said in a note recently that it would be "interesting" to see if creditors accepted the deal in light of Norwegian's share price performance and given that they did not normally invest in airline equities.
Companies such as Aercap buy craft and lease them to airlines, earning revenue from the rent the carriers pay. The lessors can repossess planes if airlines fail to pay the rent.
It is understood that Aercap could take back its 11 craft if it were to refuse the shares-for-debt deal and Norwegian were unable to continue paying for them.
Norwegian Air did not comment. The Scandinavian carrier said recently that the debt-for-equity conversions would release cash for a Norwegian government guarantee scheme.Alongside that Norwegian intends issuing new shares to raise further cash.
However, both moves would reduce the holdings of existing shareholders, who have seen the value of their investment collapse this year as coronavirus has grounded air travel.
Headquartered in Dublin and listed on the New York Stock Exchange, Aercap is one of the world's biggest aircraft lessors.