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Norwegian Air Gets Government Backing for Survival Plan

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Norway backed Norwegian Airs survival plan on Thursday as Industry Minister Iselin Nyboe said that the government had no intention of being a shareholder but would stump up cash if private investors did too.

The heavily indebted budget carrier, which has been forced to ground all but six of its 138 aircraft due to the coronavirus crisis, asked the government for help last week.

Norwegian was granted bankruptcy protection by courts in Ireland and Norway last year as it seeks to shed much of its debt. It plans to end its longhaul service.

The governments support significantly increases our chances of raising new capital and getting us through the reconstruction process, Norwegian Chief Executive Jacob Schram said in a statement.

Norwegians share price, which has plunged 98 in the last 12 months, were up 12 by 0932 GMT on Thursday.

The governments participation, in the form of a hybrid loan, will be dependent on private investors taking part in a planned share issue, Nyboe said.

The plan appears more robust than the one we rejected last October and we are therefore inclined to contribute, she said, adding that the government does not aim to be a shareholder.

If its reconstruction succeeds, Norwegian has said it will initially cut its fleet to about 50 aircraft.

Norways change in policy came as a surprise but cannot be underestimated in an aviation market where state aid has been key to survival in 2020, Sydbank analysts said in a note.

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