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Law360 (March 12, 2021, 8:26 PM EST ) Low-cost airline Norwegian Air Shuttle asked a New York bankruptcy judge on Friday for Chapter 15 recognition of its restructuring plan, aiming to downsize its business and cut $3.6 billion in debt as it deals with the fallout of the COVID-19 pandemic.
The filing by Norwegian, one of Europe's largest airlines, asked for protection of its U.S. assets as it implements restructuring plans filed on Thursday in Norway and Ireland that will close down the budget airline's long-haul flight routes and raise hundreds of millions in new investments.
"The Examiner in Ireland and the Reconstructor in Norway both believe that this plan is in the interest of the creditors and shareholders of the company. This is an important milestone in the process of securing Norwegian's future," CEO Jacob Schram said in a statement posted to the company's website on Thursday.
Norweigan was founded in 1993, initially flying only within Norway. It began expanding its European business in 2001, and by 2019, it had nearly 9,400 staff in 11 countries, Chief Financial Officer Geir Karlsen said in a declaration filed on Friday.
"Norwegian was one of the largest airline carriers in Europe and among the 10 largest in the world, with a route network connecting North America, South America, Europe, North Africa, the Middle East, and Southeast Asia," he said.
The company began offering flights to the U.S. in 2014, and until the pandemic, it had served 15 U.S. airports, he said.
He noted that as of the filing, the company's debts stood at $5.9 billion, $5.1 billion of which consisted of aircraft financing and leasing obligations.
The company experienced a serious setback in 2019 when safety issues forced it to ground its 18 Boeing 737 MAX airliners and it experienced serious maintenance issues with its 37 Boeing 787 Dreamliners, he said. But he added that its financial results remained "promising," and the airline expected to return a profit in 2020 until the COVID-19 pandemic halted global air travel, resulting in a loss of $596 million in the first half of the year.
He said that the company managed to shed more than $1.4 billion in debt with out-of-court restructuring and secured a $331 million loan from the Norwegian government. But after the government announced in November that no more aid would be forthcoming, creditors began taking steps against the company.
As a result, Norwegian sought insolvency protection from the Irish courts on November 18, and on December 8, it began court-supervised restructuring proceedings in Norway, he said.
The plan filed in both countries on Thursday calls for Norwegian to shut down its long-haul routes to focus on its "core Nordics business" while raising $355 million in new investments, according to the declaration. The plan also calls for the airline to exit restructuring with no more than $2.3 billion in debt and between $460 million and $570 million in free cash.
In the declaration, Karlsen said that Norwegian is seeking U.S. recognition of the proceedings to protect its current U.S. assets, including aircraft on the ground in U.S. airports, $2.5 million in cash and accounts receivable, and a $16 million refund it is due from the Internal Revenue Service.
Norwegian is represented by Kelly DiBlasi, Debora Hoehne and Furqaan Siddiqui of Weil Gotshal & Manges LLP.
The case is In re: Norwegian Air Shuttle ASA, case number 21-10478 in the U.S. Bankruptcy Court for the Southern District of New York.
--Editing by Steven Edelstone.
For a reprint of this article, please contact reprints@law360.com.
