Norwegian Air Buys Time by Unlocking $27 Million of State Aid

(Bloomberg) --

Norwegian Air Shuttle ASA, the indebted low-cost carrier fighting for survival, bought itself some time as it managed to unlock the first, tiny slice of its state aid package.

The carrier’s shares jumped as much as 25% when trading started in Oslo on Tuesday morning, though overall the stock is still down about 75% this year.

Two Nordic banks will provide 10% of the initial 300 million kroner ($27 million) in loan guarantees, meaning Norway’s government will back the remaining 90%, Norwegian Air said in a statement on Tuesday.

The first tranche represents just a tenth of a total of 3 billion kroner that the government has put on the table, with significant strings attached. To unlock the next 1.2 billion kroner, Norwegian Air will need to get creditors to waive payments, and the last portion will only be available once the airliner has improved its finances further.

“It’s a bit early to say what the outcome will be,” Norwegian Chief Financial Officer Geir Karlsen said in a phone interview. “Now that we’re able to access the first tranche, that helps.”

Norwegian has been in talks with various stakeholders since the package was announced on Thursday, but it was too early to say when it might get clarity on whether the requirements for the next tranche are met, Karlsen said.

The CFO declined to name the two banks that helped unlock the first tranche.

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