Struggling Norwegian Air sells stake in NOFI to boost cash holdings

Norwegian ©AirTeamImages

The loss-making carrier Norwegian Air has agreed to sell its 17.5% stake in Norwegian Finans Holding (NOFI) for 2.2 billion kroner, a move which saw its share price jump 5.8%. The stake is being sold to Cidron Xingu Limited, which is indirectly controlled by Nordic Capital Fund IX and Sampo, a leading Finnish financial services group. The deal includes Bank Norwegian, a credit card company set up and owned by Norwegian Air. The Scandinavian carrier has struggled to turn a profit for some time owing predominantly to overcapacity and also the grounding of its 18 Boeing 737 MAX jets. The sale will see its cash holdings increase to 934 million kroner and provide an accounting gain of 196 million kroner.

“The sale of the NOFI shares is part of Norwegian’s strategy to strengthen our core airline operations and focus on the transition from growth to profitability,” Norwegian Air’s acting Chief Executive Geir Karlsen said in a statement. Though the sale may help the airline refinance a €250 million (US$305.25) bond maturing in December, it is possible Norwegian Air may need to raise more cash from shareholders at a later date. Market analysts Bernstein commented in a research note that: “Without an ongoing sustained improvement in the unit revenue position or unit cost position of the business, we struggle to see how the company can get through the next nine months without needing to return to capital markets for additional equity.” (US$1.00 =8.97 kroner (NOK).)

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