Norway’s government is providing a conditional state loan guarantee for its aviation industry amounting to NKr6 billion ($533 million), and is securing a minimum level of flight operations in the country.
Half of the funding, NKr3 billion, will be directed at embattled budget operator Norwegian, with another NKr1.5 billion for SAS. The remaining NKr1.5 billion will be split between Wideroe and other carriers.
“Many countries are establishing major schemes to ensure liquidity for the airlines,” says the Norwegian finance ministry.
The scheme will be arranged through the export credit institute GIEK, with the Norwegian government providing 90% of the guarantee and external parties – such as banks and credit companies – the remaining 10%.
Conditions are being attached to the guarantees, including a minimum 8% equity requirement. While SAS and Wideroe meet this equity criterion, Norwegian will only be provided with an initial NKr300 million until it achieves a reduction in interest and repayments to creditors – at which point another NKr1.2 billion will be made available.
The remaining NKr1.5 billion will be handed over when Norwegian improves its solvency to a “satisfactory level”, says the ministry.
Norwegian chief executive Jacob Schram says the package of measures is “crucial” and the provision from the authorities is “very positive”.
“We have been clear that we need liquidity, and we are grateful that this is what we are now being offered,” he adds.
“We have to spend some time to familiarise ourselves with the conditions, but we can guarantee that we will do everything in our power to meet the requirements.”
The ministry points out that Norwegian had financial difficulties before the coronavirus crisis, and says it is making “clear” the need for the airline’s shareholders and lenders to contribute to improving the company’s financial position.
“Through the guarantee scheme, we will make substantial amounts available, if they are willing to do so,” it adds.
In return for the funding the airlines will also provide a certain minimum level of air service within Norway, to ensure that flights within the country are maintained even if they are not currently commercially viable.
Under this scheme routes will be assigned to Norwegian, SAS and Wideroe by the ministry of transport.