Norwegian Air raises €137m to boost finances
The company is plotting a rapid expansion and aims to raise capacity 40% this year
A Norwegian Air Boeing 737 MAX aircraft. Photograph: Norwegian Air/PA Wire
Norwegian Air has raised 1.3 billion Norwegian crowns (€137 million) in a share issue and may raise a further 200 million crowns in a subsequent offering, the budget carrier said on Wednesday, to boost its finances and pay for rapid expansion.
The share issue, including the subsequent issue for those who did not take part in the private placement, would add up to 9.67 million new shares, an increase of 27.6 per cent to its current base of 35 million shares.
The shares were sold at 155 Norwegian crowns each, a 9.7 per cent discount to the last traded share price in Oslo of 171.6 crowns.
Norwegian Air is trying to crack the transatlantic market by undercutting established rivals, but faces pressures to control costs and shore up its balance sheet in the face of stiff competition.
Its fate rests on the still unproven strategy of adapting the success of low-cost short-haul travel to long-haul routes. Shares have fallen 36 per cent over the past year, suggesting some investors have doubts.
Late on Tuesday, the company warned of a wider-than-expected first-quarter loss, and said it would raise cash amid higher oil prices and fluctuating currencies.
The budget airline said first-quarter pretax loss would come in at 2.6 billion crowns, versus a 1.8 billion crown loss in the same period last year, and that fuel expenses were 12 per cent higher than anticipated so far this year.
While the January-March revenue projection of 7.1 billion crowns was almost in line with the 7.24 billion estimated by analysts, according to Thomson Reuters, the pretax loss was 550 million crowns bigger than expected.
The airline is massively expanding its transatlantic network to win market share, with routes between Canada and Europe starting in July. It recently launched flights from Britain to Argentina, and will also fly within the south American country.
The company plans to raise its capacity by 40 per cent in 2018.
Norwegian Air is also in talks to sell up to five Airbus 320neo aircraft, currently leased to HK Express. – Reuters