Norwegian Air won the support of shareholders owning 95% of equity to a debt-for-equity swap on Monday which will see the airline fall into the hands of aircraft leasing companies and bondholders.

The carrier also reported support from “a significant number of lessors” to converting their debt to shares in the airline and announced the agreement of bondholders to a debt-for-equity deal that should erase NOK10 billion (£775 million) in debt.

In a statement, Norwegian Air said: “With the significant contributions from lessors and bondholders, the company expects to convert more than NOK10 billion ($958 million) in debt to equity.”

Together the agreements should allow Norwegian to access NOK3 billion (£240 million) in state aid from the Norwegian government.

The carrier warned last week it would run out of cash by mid-May unless creditors and shareholders approved its escape plan.

The deals will leave aircraft leasing companies owning 53% of the airline and bondholders owning 42%, with shareholders holding just over 5% before a new rights issue which Norwegian conceded would leave shareholders “wiped out”.

The rescue should now be signed off on May 18. However, the bailout leaves the carrier still heavily in debt.

Norwegian warned last week that most of its fleet would remain grounded for at least a year and said its fleet would be cut by about one third once the crisis is over.

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