Norwegian Air is putting Gatwick take off and landing slots worth more than $380 million as security for an extension of financing packages.
The third largest carrier at Gatwick is seeking an extension of two unsecured bonds to November 2022 and February 2022 respectively.
The proposal has been put forward “to ensure successful operations and adequate liquidity headroom”.
It comes ahead of the traditionally weaker winter flying season as part of a strategic plan from growth to profitability and cash generation.
The airline said: “Norwegian’s Gatwick portfolio currently consists of take-off and landing slots which has an independent valuation from a well-reputed third-party in excess of the current nominal bond value of $380 million.
“These are important operational rights for the Norwegian Group, facilitating the feeding of passengers between our European short-haul network and intercontinental long-haul network, an important part of Norwegian’s profitability strategy going forward.
“Previous transactions in the market demonstrate the ability to monetise on slots at Gatwick.”
It added: “Norwegian’s 60/40 summer/winter seasonality effect requires a build-up of liquidity reserves before the winter season.”
The move came as the carrier reported an improved operational performance, putting it on track to reach annual earnings of 6-7 billion Norwegian krone (NOK) with further improvement expected next year.
“This would be at all-time high levels, despite the well-known issues with Rolls-Royce engines on the company’s Dreamliners and the grounding of the Boeing 737 Max fleet,” Norwegian said.
The carrier plans to cut costs by NOK 2 billion this year with further “cost improvements” expected over the next two years.
Negotiations over the creation of a joint venture for a part of the aircraft fleet “are progressing and will be announced when concluded”.
But Norwegian said: “Despite significant operational progress, the working capital has been negatively affected by the Rolls-Royce engines issues and the grounding of the Max fleet by approximately NOK 1.5 billion.
“In addition, terms in the credit card acquirer market have tightened.
“In Q2, Norwegian’s customers had bought, not travelled, tickets for NOK 9 billion.
“Compared to Q2 2018, the amount not received from credit card acquirers has negatively affected working capital by approximately NOK 4 billion.”
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