Norse Atlantic Airways has obtained around $15 million in new capital through a combined equity and loan transaction by its founding shareholder.
It disclosed the support as it posted a third-quarter operating profit of $4.6 million, but a net loss of $6.3 million – a contrast to last year’s narrow net profit of $1.6 million for the period.
The shareholder, BT Larsen & Co, is a vehicle linked to founder and chief executive Bjorn Tore Larsen.
Norse says the investment involved private placement of new shares raising around $8.7 million, plus a shareholder loan of about $6.3 million.
The carrier states that the capital will be used for “general corporate purposes”.
Chairman Terje Bonin Larsen says the investment “demonstrates the commitment and belief” of the shareholder in the company’s strategy.
Norse has shifted towards leasing part of its fleet capacity in order to offset seasonal variations in demand for its passenger flights.
It has reached a preliminary agreement to wet-lease six of its aircraft to an international carrier next year.
The newly-issued private-placement stock will account for some 13% of the company’s outstanding shares, and give BT Larsen & Co around 29.46% of the total capital.
Norse says the shareholder loan terms require any drawn amounts to be repaid by the end of 2025. The financing arrangement also extends the maturity date of a previous $20 million credit facility, which is pushed back from 15 December this year to 31 March 2026.
The carrier’s board says the private placement will provide “immediate secured funds to execute on its business plan”.
Norse states that alternative structures to the private placement were considered.
It acknowledges that the measure “entails a deviation” from shareholders’ pre-emptive rights, and intends to “limit” the dilutive effect by giving other shareholders the opportunity to subscribe to shares at the same price.
This subsequent offering will involve issuing up to 82.8 million new shares, the equivalent of NKr414 million ($37.4 million) in gross proceeds.
Norse’s revenues for the third quarter rose by 8% to $222 million, and it achieved a record average load factor of 86%, although per-passenger revenues were down by 7.3%.
Larsen says the summer yields have “not been at satisfactory levels” and the third quarter was “disappointing”.
But he says the long-term leasing and charter strategy has “strong market potential” and will “represent a new era for the company”. This will leave Norse with a business model “carrying lower market risk”, while potentially securing “significant revenues”, he adds.
Norse will undergo a transition to the new strategy next year. Larsen expects the carrier to be profitable in 2025 adding that, in 2026, the carrier’s operations will be a 50:50 mix of its own flights and charter services for external customers.
