Norwegian has signed a letter of intent for the formation of a joint company with an unknown Asian investor to lease its surplus aircraft.

The agreement is part of a plan that will also see the carrier issue new shares to investors to pay off some of its £2.9 billion debt after incurring a £131.4 million loss last year.

Geir Karlsen, chief financial officerat the airline, told Norwegian media “talks were ongoing”, but did not name the company involved.

The carrier admits it has expanded too fast and must now divest some aircraft, mainly short-haul.

Norwegian has already signed deals to lease or sell 18 of these, according to the country’s stock exchange.

Norwegian is set to receive another five wide-body Boeing 787 Dreamliners in spring and its final five 787s in 2020, after which its long-haul expansion will be complete.

Last year’s losses at the airline follow 2017’s £162.3 million deficit.

The carrier rebuffed a takeover bid from British Airways parent IAG in 2018.

Attempts to revive the airline’s fortunes may be hampered by industrial action in Spain, where the carrier has said it will close bases in Palma, Tenerife and Gran Canaria to cut costs.

Pilots there are said to be considering industrial action.