Norwegian Air says liquidity ‘satisfactory’ as it cuts costs

Bloomberg

Norwegian Air Shuttle ASA said its cash position is “satisfactory” and a cost-savings plan is bearing fruit as the debt-strapped budget carrier faces disruptions to its long-haul flights during the slow winter season.
“To meet the competitive environment in a period with seasonally lower demand in Europe, the company has made several changes to its route portfolio as well as adjusted its capacity,” Norwegian said in a statement on Monday. “These measures should improve the financial performance from the start of 2019.” The plan to cut costs will save at least 2 billion kroner ($230 million) next year.
Spokesman Philip Allport made the comment about the carrier’s liquidity position separately and said the airline is continuing to attract new passengers every month. Norwegian is also making “significant progress” in selling parts of its fleet, according to the statement. That plan was designed to bolster finances.
Winter months are a critical time for European carriers as travel slows. Rising fuel prices, persistent engine issues, and delivery delays on new planes have already heaped pressure on Norwegian Air’s strategy of offering heavily discounted fares. Added to that has been chaos at Gatwick Airport in the last week after suspected drones were spotted around the runway, grounding flights, including some operated by Norwegian Air.
Having leased an Airbus A380 double-decker plane to ferry passengers stuck on New York routes, Norwegian Air said it’s close to repatriating all its stranded customers. It’s too early to put a figure on the financial cost of the UK airport’s shutdown, Allport said.
Norwegian Air must have a book equity value higher than 1.5 billion kroner and more than 500 million kroner of liquidity to comply with bond covenants, according to a company presentation. There’s no financial covenant on a 1 billion-kroner revolving credit facility agreed with bank lender DNB ASA.