Norwegian Air has asked investors to stump up US$350mln (3bn krone) to help bolster its finances, days after British Airways owner International Consolidated Airlines Group PLC (LON:IAG) ruled out a takeover bid for the budget carrier.
The loss-making airline is yet to set a price for the rights issue, but the market is pricing in a big discount, with the Oslo-listed stock falling by almost a third on Tuesday morning before recovering slightly.
Norwegian started off as a small, regional carrier back in the early 90s but it has changed tack in recent years, taking on the likes of BA and Virgin by offering cut-price transatlantic fares on its new fleet of Boeing 787 Dreamliners.
But the rapid expansion has left it with heavy losses and high debts; its preliminary earnings report for 2018 showed an operating loss of 3.8bn krone (US$450mln).
“The company is changing its strategic focus from growth to profitability,” Norwegian said in a stock exchange announcement.
“We will now get in place a strengthened balance sheet that supports the further development of the company … [and] will increase its competitiveness and stand-alone financial strength.”
There are currently no talks ongoing with potential buyers, the airline added, although it kept the door open, saying it is still “willing to engage in consolidation discussions”.
The final terms of the rights issue, including price and number of shares, are expected to be confirmed on 18 February.
Norwegian’s chief executive, chairman and other shareholders have already committed to investing 610mln krone (US$72mln), with the remaining 2.4bn krone jointly underwritten by oil shipping magnate John Fredriksen and brokers DNB Markets and Danske Bank.