Norwegian fights back as analysts claim it can’t finance debts

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The new year starts with yet another story that Norwegian might be in financial trouble. A group of Danish financial analysts at a Scandinavian Danske Banke claimed it simply couldn’t finance its debts despite what it’s been doing to combat looming repayments.

The airline is basically selling its orders for 60 A320neo’s to anyone who wants to buy them, be it leasing companies or other airlines who want to jump the queue for the new aircraft type. It’s also panning on selling another 80 of its existing aircraft as new ones arrive, as well as sell direct purchase aircraft to leasing companies and lease them back.

The one high point is that Norwegian has managed to secure a favourable deal with Rolls Royce on the settlement of its claims for costs over the Dreamliner engine fiasco. This is expected to be a substantial sum as it was forced to hire in wet lease aircraft and pay passenger compensation for delayed or cancelled flights.

Norwegian claimed yesterday that it has secured finance for all of its first half of 2019 aircraft deliveries.

The bump in value the airline gained from interest shown by IAG and Lufthansa has long worn off, making it more vulnerable to a hostile take over, so any talk that it might be insolvent is something it aims to stamp on with full force.

However the airline has operated at thin edge of fiscal responsibility in the view of many, an opinion clearly still held very strongly by people who have a good understanding of these issues in the financial markets.

It was interesting that the Danske Bank was quickly contradicted by a Norwegian bank – which is no surprise bearing in mind the interest Norwegian banks have in the airline.

 

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