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Norwegian Air secures first cash infusion from state rescue package

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Norwegian Air has fulfilled the first condition to access a government-led rescue package for the airline industry and secured an initial cash infusion of NOK 300m (€25m), the budget carrier said on Tuesday.

Norway said on March 19 that Norwegian Air could obtain credit guarantees worth up to 3bn crowns to help it to weather the coronavirus crisis but must first comply with a series of conditions.

Norwegian, which has grounded most of its aircraft and temporarily laid off 90pc of staff, amounting to about 7,300 people, had said it needed access to cash "within weeks, not months".

The condition for receiving the first 300m crowns from the package was that commercial lenders were willing to supply 10pc of that amount while the government would provide the remaining 90pc.

"Norwegian is pleased to announce that two Nordic banks have obtained credit committee approval to provide a guarantee for the required 10pc," a company statement said.

"Norwegian will secure the necessary headroom to pursue further guarantees from the Norwegian government."

The airline is now working with state credit agency GIEK and Norway's trade and industry ministry to clarify the criteria and terms of the remaining tranches of the scheme, it said.

The first of those, consisting of 1.2bn crowns, is dependent on creditors postponing instalments and scrapping interest payments for as long as the guarantee lasts.

The second, amounting to 1.5bn crowns, would require Norwegian to boost its equity, the government has said.

The company said it is now seeking further guarantees from financial institutions to help the company to access these remaining tranches.

"The government guarantee scheme is crucial for the company as the current state of the capital markets in combination with the challenging times for the airline industry limit the options available," Norwegian added.

Reuters