Norwegian Air Shuttle tries a desperate final gambit

Among the big European carriers, nobody pushed boundaries more than Norwegian Air Shuttle. Late Wednesday, Norwegian spelled out what it will take to keep the lights on: Bondholders and lessors are being asked to convert a portion of more than $4b in liabilities into equity, so that the group can tap 3b kroner (US$290m) of loan guarantees offered by Norway’s government. Long-suffering shareholders face dilution but the airline is out of better options. Having thrice raised capital from equity investors in the past couple of years and with the markets in turmoil, a rights issue would be challenging. Norwegian’s shares are capitalized at just $130m, about half the list price of one of its Boeing 787 Dreamliner jets. It can’t borrow more without the government’s backing because lenders worry that its $5.7b of borrowings won’t be repaid. Some E250m of Norwegian bonds maturing next year sell for less than half their face value. Norway is offering only modest help and on onerous terms, unlike the US, whose airlines have been promised up to $50b in assistance.<br/>