Bankrupt Norwegian Air Near Deal to End Airbus Jet Deliveries
(Bloomberg) -- Norwegian Air Shuttle ASA is near agreement to end jet deliveries from Airbus SE as part of its restructuring, wiping dozens of orders off the European planemaker’s backlog.
Terms of a consent order have been agreed with Airbus, a lawyer for the airline told an Irish court on Wednesday in comments confirmed by Bloomberg News.
The European planemaker will retain pre-delivery payments and is still owed 600,000 pounds ($846,000), Norwegian Air’s lawyer said, in comments reported earlier by Reuters.
Airbus has 88 narrow-body jet orders from Norwegian Air on its books. The insolvent carrier is in the midst of the Irish examinership process in a bid to restructure its debt and emerge as a regional carrier. It’s one of many airlines that has struggled to stay afloat in the wake of the coronavirus pandemic, which has curtailed travel for the past year.
An Airbus representative declined to comment. The planemaker has generally had success in persuading weakened customers to defer rather than cancel orders. So while it has a strong backlog for the A320 series jets, the cancellations would mark a setback.
Norwegian Air has previously said it aimed to exit Irish insolvency proceedings in April. Norwegian Air expects to raise as much as 5 billion kroner ($580 million) in capital, including up to 2.5 billion kroner from existing creditors through a hybrid debt instrument.
Norwegian will give up its long-haul business, and as part of the restructuring process, all its large creditors will be expected to take losses and their debt converted into equity, according to a presentation last month.
The company’s plan to cancel an order with Boeing Co. made up mostly of 737 Max jets is being litigated in the U.S.
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