The airline Norwegian has seen a rare stock market crash this past week. On Thursday, the stock fell 21 percent, meaning half of its market value has been wiped out this week.
Virus fears are currently gripping the world's airlines. The sector has plummeted on the world's stock markets in the past week, but the question is whether Norwegian is not having one of the bleakest developments.
At 2 p.m. on Thursday, the share price fell 21 percent, meaning Norwegian has seen double-digit price declines every day this week. Compared to Friday's closing price, the share price has now fallen 50 percent.
The share is now trading for just under 18 Norwegian kroner. The share has not been at such low levels since the financial crisis of 2009.
In addition to the general corona situation, an analysis from ABG Sundal Collier has also added to the concern. In the analysis, which was published on Sunday, ABG writes that they are concerned about the company's strained liquidity situation. The analysis firm writes that Norwegian's cash of 3.1 billion Norwegian kroner at the end of last year was clearly below ABG's estimate of 5 billion kroner.
”"The company must address the negative development in working capital, especially considering that the company has a debt of SEK 600 million and the delivery of two Dreamliners that will cost an estimated SEK 1 billion during the first quarter of 2020," the analysis reads.
Due to the strained economy, ABG believes that there appears to be a high risk that Norwegian will need to carry out a new share issue. As recently as November last year, Norwegian carried out a directed new share issue and an issue of convertible bonds, which meant that the company was able to raise a total of 2.5 billion Norwegian kroner.
Norwegian's CEO Jacob Schram himself believes that liquidity in the company is a major problem area.
Later on Thursday morning, Norwegian issued a stock exchange release in which the company made it clear that it stands by the outlook it gave in connection with the latest quarterly report. They also write that the convertible that the company issued in November is secured by its subsidiary Arctic Aviation Asset, AAA. The loan terms state that AAA must meet certain levels regarding share capital and debt ratio. According to Norwegian, the company issued the release in "response to market speculation in recent days.".
After the announcement, Norwegian shares rose slightly but then plummeted to new lows for the day.
Source: di.se
