Norwegian Air Shuttle’s Revolution Comes Unstuck
The airline’s rights offering brings in desperately needed money and John Fredriksen as a guarantor. The power of the founders will hopefully diminish.
Norwegian Air Shuttle's low-price revolution was fun while it lasted. Reality may have just caught up.
Photographer: Simon DawsonThe 3 billion kroner ($353 million) rights offering announced by Norwegian Air Shuttle ASA on Tuesday brings its efforts to lead an aviation revolution back down to earth.
The share offering should provide the budget long-haul carrier with enough funds to tide it over the winter and prevent a breach of debt covenants. But the money comes at a price. It equates to almost half of the airline’s market capitalization before the announcement – a whopper in anyone’s book. Together with the 2.5 billion kroner yearly pretax loss disclosed on Tuesday, it suggests CEO and co-founder Bjorn Kjos’s big-spending flight path was imprudent.