Long-haul budget carrier Norse Atlantic Airways admits the recent failure of strategic investment talks with a potential partner has contributed to pressure on near-term liquidity.
The airline says the situation has been aggravated by “softening” market conditions and lower fares, affecting revenues.
It adds that it is experiencing a “tail-heavy” summer booking curve while it waits for credit-card receivables, amounting to $155 million including $41 million for flights already carried out.
Norse says it is pursuing “various working capital initiatives” in response to the “negative” impact of these factors on its near-term liquidity and cash balance.
Although its second-quarter performance has fallen below expectations, it states, it expects the third quarter – and the second half overall – to be profitable.
Norse had been holding advanced discussions with a potential strategic investor but these ended without a formal agreement.
The carrier discloses that the negotiations had centred on a “major investment” in Norse and commercial co-operation.
It states that the potential partner, which remains unidentified, had been considering entering the long-haul market through this collaboration.
“The structure of Norse, both operationally and its low cost base, represented an attractive opportunity for a strategic investment that would facilitate both companies’ working more closely together for the benefit of their operations and their customers,” says Norse.
But while terms of the investment were “tentatively understood” with the potential investor’s management, Norse indicates that the investor’s board opted against entering the long-haul sector, and the tie-up fell through.
Norse says no other partnership options have reached an advanced stage but it is “still pursuing” opportunities.
