Norwegian is poised to unlock a crucial £230m state bailout after investors backed a painful restructuring of the airline’s finances.
Shareholders approved plans on Monday for lenders and aircraft leasing firms to swap debts of more than 10bn crowns (£770m) for shares in the carrier.
The debt-for-equity swap was vital for Norwegian to access government support from Oslo after operations were brought to a near standstill by the coronavirus pandemic.
Norwegian, the third-biggest airline at Gatwick airport, was left particularly exposed by the global emergency, having racked up debts of more than £6bn to fuel a dramatic expansion programme in recent years.
The shareholder backing came after a series of impassioned pleas by the airline’s founder and former chief executive Bjorn Kjos.
Domestic media reported that he managed to change the minds of several groups of investors who feared the structuring, which will almost completely wipe out its equity value, would leave the airline in foreign hands.
Shareholders will be left with little more than 5pc of the company after the restructuring but will have the chance to participate in a £30m rights issue scheduled to take place on May 11.
Norwegian, which even before the pandemic was belittled within the industry as “the next airline to fail” due to its debt mountain, had been expecting to run out of cash in mid-May.
The airline said: “With the significant contributions from lessors and bondholders, the company expects to convert more than 10bn crowns ($958m) in debt to equity."
The swap will unlock Norwegian state guarantees of up to 2.7bn crowns on top of 300m crowns it has already received.
Norwegian’s rescue is a rare piece of good news in the aviation sector, which has been left reeling by the fallout from coronavirus.
It will also come as a boost to Gatwick airport, which would otherwise have been staring down the barrel of losing two of its three largest customers.
Last week British Airways warned that it could pull out of the UK's second-busiest airport after announcing up to 12,000 job cuts.
EasyJet, BA and Norwegian collectively represented about three-quarters of Gatwick's flights prior to the lockdown.