New Norwegian airline Flyr is seeking to raise around $50 million of new funds to help ease its “very strained financial situation” and get through the leaner winter season.
The low-cost carrier has already taken steps to bolster its finances ahead of winter, including cutting domestic routes in Norway to a minimum. Flyr has warned that it expects lower demand this winter because people are expected to spend less on items such as travel due to higher interest rates, inflation and energy costs.
Now, Flyr says it wants to raise NOK 430 million ($40 million) by issuing new shares in the company in a private placement, with an option for a further offering of NOK 100 million ($9.4 million).
The proceeds from the placement will be used to boost its financial position to get it through the winter season and allow it to ramp up operations in spring and summer 2023. Any amount raised in the additional offering will provide more of a financial buffer for the new airline.
“By implementing these measures, we will be well positioned to ramp-up with full force for the coming spring and summer," said Chairman Erik G. Braathen in a statement on November 3, 2022.
A company owned by Braathen has already pre-subscribed for NOK 10 million in the private placement.
Flyr said in the statement that the subscription price of NOK 0.01 had been determined after talks between management and advisers. The carrier said it wanted to ensure the transaction was successful due to “the very strained financial situation of the Company with a near-term liquidity need” and “challenging capital market conditions”.
A loss-making airline
The airline, which began operations in June 2021, also reported third quarter results on November 3, 2022. It made an operating result loss of NOK 231.7 million ($22 million), due to a weak Krone, high fuel prices and weak demand for its domestic routes in Norway.
“It has taken longer than expected to build loyalty among business travelers on domestic routes in Norway,” CEO Tonje Wikstrøm Frislid commented in the financial statement.
At the end of September 2022, Flyr had a fleet of 12 Boeing 737 aircraft, including six MAX aircraft. During this winter, it expects to operate only five to six aircraft on routes to European destinations.