Norway plans Norwegian Air loan in extra pandemic spending plan

Norway proposed 16.3 billion crowns ($1.9 billion) in extra fiscal spending this year to help businesses, including Norwegian Air, and municipalities weather the COVID-19 crisis.

The package includes 1.5 billion crowns for a hybrid loan to the struggling airline, which is undergoing a restructuring, provided terms are agreed and pending parliament’s approval.

Norway’s government said last week it would back Norwegian, which aims to emerge from court-ordered bankruptcy protection as a slimmed-down carrier focused primarily on the Nordic region.

The government said on Friday, January 29, the amount earmarked for the airline was in line with what Norwegian had asked for.

Pareto Securities, which advised the government on the support for Norwegian, said the airline’s scaled-down business plan appeared to make it a “sensible financial investment,” according to the finance ministry.

“The government’s support significantly increases our chances of raising new capital and getting us through the reconstruction process we are currently in,” a Norwegian Air spokeswoman said in an email to Reuters.

Fiscal deficit

Norway has imposed some of the toughest travel restrictions in Europe to stop the spread of a more contagious coronavirus variant first identified in Britain.

The non-European Union country announced a lockdown of the region around its capital Oslo, closing non-essential stores for the first time in the pandemic.

The government’s overall fiscal package would further deepen Norway’s structural non-oil deficit for 2021 to 363.2 billion crowns from an estimate of 344.6 billion forecast in December and a prediction of 313.4 billion made last October.

Conservative Prime Minister Erna Solberg’s 3-party minority coalition needs the support of the right-wing Progress party to push legislation and budgets through parliament. – Rappler.com