Norwegian shares opened at NOK 100 (£8.95) on the Oslo exchange on Tuesday morning (January 29), down from NOK 141 (£12.62) when trading closed on Monday.
It is the second time in a week Norwegian’s share prices have been rocked after British Airways owner IAG last week revealed it would not pursue its interest in acquiring Norwegian and would dispose of its 4.61% stake in the carrier, sending prices falling more than 20%. According to Reuters, no discussions over a potential sale or acquisition are ongoing.
The airline announced on Tuesday it was now aiming to raise around NOK 3 billion (£270 million) with a rights (share) issue to shore up its balance sheet.
Norwegian’s largest shareholders, chief executive Bjorn Kjos and chairman of the board Bjorn Halvor Kise, have committed to buying a further NOK 343 million (£31 million) worth of shares in the airline, while other shareholders have committed to NOK 267 million (£24 million) shares.
In a trading update, the carrier said its focus would shift “from growth to profitability” with the aim of capitalising on the “market position and scale” it has built up in recent years.
It has also reiterated its ambition to reduce capital expenditure by continuing to divest aircraft stock and postpone further aircraft deliveries.
Late last year, Norwegian detailed its #Focus2019 cost reduction programme, which will seek to save at least NOK 2 billion (£180 million) this year.
Other cost-saving measures include “optimising” its base structure and route network while recovering compensation from Rolls-Royce following disruption to its long-haul programme caused by issues with the Trent 1000 engines on its Boeing 787 Dreamliners.
Earlier this month, Norwegian confirmed it would close five bases – Palma, Gran Canaria, Tenerife, Stewart (New York) and Providence (Rhode Island) – and cease 737 operations at Rome Fiumicimo airport, although its Dreamliner base will continue to operate there.
“Norwegian has been through a period with significant growth,” said chief executive Bjorn Kjos on Tuesday. “Focus going forward will increasingly be on cost savings and CAPEX [capital expenditure] reductions. We will now get in place a strengthened balance sheet that supports the further development of the company.
“With the strengthened balance sheet, the organisation can now devote all its attention to further development of the company.”
According to its preliminary figures for 2018, the carrier delivered annual Ebitda (earning before interest, tax, depreciation and amortisation) of NOK -2.2 billion (£197 million), compared to NOK -1.8 billion (£161 million) last year. Ebitda excluding other losses and gains came in at NOK -1.2 billion (£107 million).
Norwegian will publish its results for Q4 2018 on February 7 before holding an extraordinary general meeting on or around February 19 to discuss the rights issue.
