Norse Atlantic considers raising $500 million – E24

In the third quarter, Norse Atlantic Airlines made a profit, but the quarterly report also offers many other news.

These are the main points the company talks about in its quarterly report late Tuesday evening:

• The company made money for the first time.
• Norse Atlantic is considering raising $45 million, equivalent to 500 million kroner. The money will ensure the company gets through the winter.
• The board will engage strategic advisors after “several industry players” approached the company.
• Scorpio, a subsidiary of the Italian Lauro family, which is Nourse’s largest shareholder, has accepted an invitation to represent it on the board.

Norse Atlantic Airways filed a comprehensive third-quarter report for the company on Tuesday evening.

It appears that revenues for the quarter ended at $205 million, equivalent to 2.29 billion kroner.

The company is also meeting its expectations for a positive result. In this quarter, the company generated $1.6 million, equivalent to 17.8 million kroner.

The third quarter is usually good for airlines. This is the time to make money and build a buffer zone before the harsh winter.

Consider fishing for money

During the results presentation on Wednesday (which will take place at 10 a.m.), there will likely be many questions about other news the company presented on Tuesday evening.

The company is now considering raising $45 million, equivalent to just over 500 million kroner. This is due to several factors that the company describes in the report:

• Available liquidity decreased in the quarter, primarily due to lower net cash flow and higher net cash outflow related to financial activities.
• The company is in negotiations with a major supplier, which are about to be completed. To speed up this process, a payment plan is needed.

The funds will be used to strengthen the liquidity position until the income generated by the seasonally stronger summer season is raised.

The company states that both CEO Bjørn Tore Larsen’s BT Larsen & Co and the Italian Lauro family’s Scorpio have expressed their support for the capital search, and plan to contribute at least their equity stake to the company.

How the money will be raised, or when it will happen, is not the company’s input. It also stipulates that the capital shall not be increased. Here Sparebank 1 Markets and Pareto Securities are acting as advisors.

Strategic review

The report also notes that “several industry players” have contacted and participated in discussions with the company. They are said to have sought to explore “industrial possibilities” with the Scandinavians.

The company does not mention anything about the identity of these representatives in the message, or what opportunities are available.

“The company’s clear impression from these discussions is that the company’s operations, market position and assets are viewed as attractive, and that the company may be well positioned to capitalize on this through industrial or strategic actions,” the airline wrote.

Based on these discussions, the Company’s Board of Directors decided to seek and engage advisors to explore and advise on strategic alternatives.

Revenues increased more than costs

In advance, investors were given a picture of the company’s income through monthly traffic reports.

Founder and CEO Bjørn Tore Larsen said he was particularly happy with the planes filling more and more until the peak month of July, when the filling rate reached 86 percent. Low load factors were previously among the reasons for large airline deficits.

Demand moderated in some markets towards the end of September. However, this was expected as the company then switched to a winter schedule.

As a result, the stress was linked to the costs in the company’s accounts.

The report shows that operating costs, excluding asset write-downs and aircraft leasing, rose to $163.7 million in the quarter. There is an increase of 67 percent over the previous quarter. In comparison, revenue rose 105 percent during the quarter.

The price of oil rose towards the end of the quarter to more than $90 per barrel. High fuel costs, all other things being equal, help reduce airline profitability.

Larsen was recently dethroned as Nourse Atlantic’s largest shareholder. The new major shareholder is the Italian Lauro family. This is known for its investments in shipping.

It is also known in the quarterly report that Scorpio has received an invitation from the company and agreed to take a seat on the board of directors.

Other Scandinavian shareholders are investor and shipping captain Magnus Halvorsen, shipowner Arne Blystad, Björn Kjos, investor Christian Valnes and Ketil Skoorstad.