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Financial rescue package for Norwegian airlines

The Norwegian government, with support from the Labour party, Centre party and Progress party, announced yesterday evening, 19 March, that they will propose a governmental loan guarantee in the amount of NOK 6 billion for loans to airlines with a Norwegian operating license. One half of the amount, NOK 3 billion, will be aimed at Norwegian Air Shuttle, NOK 1.5 billion at SAS and the remaining NOK 1.5 billion at Widerøe and other airlines.

The guarantee scheme will be administered by Garantiinstituttet for Eksportkreditt (GIEK). The Norwegian state will provide 90 percent of the guarantee for a loan, provided external banks, credit institutions and other commercial parties provide the remaining 10 percent.

There will be conditions of financial strength in order to benefit from the guarantee. For airlines which did not have equity of at least 8 percent at the end of the last financial quarter before the corona crisis, its financial creditors must waive interest and postpone instalments for three months before the airline may benefit from the guarantee. Such airlines must also carry out measures in order to further strengthen its balance sheet.

According to the government, SAS and Widerøe fulfil the equity requirements.

For Norwegian the government will provide an immediate facility of NOK 300 million. If and when Norwegian obtains relief by way of less interest and instalment requirements from its creditors, the government will provide an additional guarantee amount of  NOK 1.2 billion. The remaining NOK 1.5 billion will be at the disposal of Norwegian when it has strengthen its solidity to an acceptable level.

The government has expressed that shareholders and lenders to Norwegian must contribute to a better financial situation for the airline if the Norwegian state shall provide the guarantee. The guarantee scheme is subject to the approval of the EFTA supervisory body ESA.

The press announcement from the Norwegian government published 19 March 2020 is available here (in Norwegian).