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Norwegian Air's Loss Balloons, Warns of Further Cash Needs

OSLO (Reuters) - Norwegian Air still needs more cash in order to weather the COVID-19 pandemic, the budget carrier said on Friday, as it reported a deep loss for the first half of 2020.

The company will put five more aircraft back in the air in September, raising the total to 25, while 115 planes remain grounded.

“Norwegian is facing challenging times ahead,” the airline said in a statement.

The hard-hit industry saw Virgin Atlantic Airways filing for bankruptcy protection in a U.S. court earlier this month, while American Airlines, United Airlines and Delta Air Lines have announced big layoffs.

Creditors and lessors took control of Norwegian in May with a financial rescue that allowed it to access state-guaranteed loans, with an aim of keeping the airline in business until demand for air travel resumes.

“We are thankful for the loan guarantee made available to us by the Norwegian government which we worked hard to obtain,” Norwegian Air’s Chief Executive Jacob Schram said in a statement.

“However, given the current market conditions it is not enough to get through this prolonged crisis,” Schram said.

Norwegian Air posted a January-June net loss of 5.4 billion Norwegian crowns ($610 million), compared with a loss of 1.4 billion crowns in the year-ago period.

Nordic rival SAS, which is trying to gather support for a 14-billion Swedish crown recapitalisation plan, posted a multi-billion crown loss for its May-July quarter this week.

Norwegian aims to rebuild operations, albeit on a smaller scale, after it won the backing of owners and creditors for a 12.7 billion crowns debt conversion and share sale, and accessed a 3 billion crowns government aid package three months ago.

With most of its business on hold, Norwegian cancelled orders for 97 Boeing aircraft in late June and said it would claim compensation from the U.S. plane maker for the grounding of the 737 MAX and for 787 engine troubles.

Reporting by Terje Solsvik and Victoria Klesty; Editing by Kim Coghill, Shailesh Kuber and Amy Caren Daniel

Source: Reuters


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