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Norway extends Norwegian Air loan guarantees by two months

Suban Abdulla
·2-min read
The budget airline secured a state aid package worth $330m (£256m), earlier this year. Photo: Getty
The budget airline secured a state aid package worth $330m (£256m), earlier this year. Photo: Getty

Norway’s industry ministry has announced it has extended loan guarantees for Norwegian Air (NAS.OL) by two months, until the end of 2020.

Earlier this year, the country’s airline secured a state aid package worth $330m (£256m), after a debt restructuring, but it said it would need to raise more funds to get through the impact of the coronavirus crisis.

While Norway’s government didn’t disclose any details of the deal, it did say that the terms of the state guarantee scheme had changed.

“The changes we now propose are designed for the scheme to help more airlines than those who have already used it,” industry minister Iselin Nyboe said in the statement.

READ MORE: Norwegian Air shares fall as Sweden rejects a key state guarantee scheme

In August, Sweden rejected a state credit guarantee for the struggling airline.

Sweden’s debt office, which runs the government support programme, said that the credit can only be granted to airlines that were financially viable on the last day of 2019.

Norwegian Air’s July passenger volume fell by 90.4% on the year, after the COVID-19 crisis and global lockdowns saw most of its fleet grounded. It flew only 356,093 passengers during July 2020, compared to 3.7 million in the previous year.

In June, following the grounding of Boeing’s (BA) 737 MAX and for engine issues on its 787 Dreamliner jets, the group said it would claim compensation from the US plane maker after it cancelled orders for 97 aircrafts.

Norwegian Air also filed a legal claim seeking compensation for the company’s losses following the grounding of the 737 MAX and the return of pre-delivery payments related to the aircraft.

It became Europe’s third-largest budget airline — after rapid growth and expansion — and the biggest non-US carrier serving New York and other major US cities, which caused it to accrue debts and liabilities totalling about $8bn by the end of 2019.

The European budget airline revolutionised transatlantic travel after placing a multi-year order in 2012 for up to 372 planes, of which 222 were from Boeing and 150 from Airbus (AIR.PA).