Aercap and Avolon are among the lessors who have agreed to convert debt in Norwegian Air into equity as part of efforts to save the airline from collapse.
A shakeup of Norwegian’s management team, the Covid-19 crisis, and the prospect of government support were key factors in convincing Aercap to participate in the airline’s debt-for-equity proposal, chief executive officer Aengus Kelly has disclosed.
“We've done it with Norwegian as part of the restructuring of that airline as its business plan changed and the government of Norway invested in the airline,” he said on an analysts call on 5 May.
Kelly said it was “extraordinarily rare” for Aercap to convert debt to equity and would only be done in “very unusual circumstances”.
Aercap has 11 Boeing 787s on lease with Norwegian, Airfinance Journal’s Fleet Tracker shows.
Avolon also signed up to the proposal, a source tells Airfinance Journal. The lessor has two 787s and one 737 on lease to the low-cost carrier, Fleet Tracker shows.
On 4 May Norwegian secured the support of enough of its lessors to convert a minimum of $730 million of debt into equity and gained support from bondholders and shareholders for its proposal.
The moves clear the way for the Oslo-backed airline to unlock state-guaranteed funding totalling NOK2.7 billion ($256 million).
One lessor told Airfinance Journal that it was “pretty grim that lessors have signed up to it” and was a sign of the difficult trading conditions created by the Covid-19 crisis.
Macquarie Airfinance have also signed up to the programme, Airfinance Journal understands. The lessor could not immediately be reached for comment.
The airline appointed Jacob Schram as its new CEO in January 2020, replacing acting chief executive Geir Karlsen, who returned to his role as chief financial officer and deputy CEO.
Karlsen had temporarily replaced Bjorn Kjos, who left the airline he helped to found in July 2019 after 17 years in the role.
Norwegian has since announced it intends to raise NOK300 million to NOK400 million through a public offering.
ABG Sundal Collier, Danske Bank, Norwegian branch and DNB Markets, part of DNB Bank, are acting as managers in the offering.
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