16 months after its first flight, Norway Airline Flyr seeks crisis financing

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The board of Norwegian-based low-cost airline Flyr has approved an alternative funding plan from its investors less than a day after investors refused to inject the $39 million in fresh capital needed to save the airline.

The approved plan will see Flyr attempt to raise approximately $68 million in capital through four different measures. According to a stock announcement, the proposal for a new structure made up of existing and new professional investors “is best for the company and shareholders.”

The airline has also struck a deal with an unnamed European airline to lease at least one of its planes, many of which are now idle due to Flyr’s recent cuts to its flight schedule.

Difficult months ahead for Flyr

Despite the deals, there is still a long way to go before Flyr becomes a financially viable operation. Above all, the airline must raise the necessary new capital before the end of the first quarter of 2023.

Flyr must also overcome the negative publicity the latest round of financial trouble has caused. Just a few days ago, the Norwegian Consumer Council warned people to only pay for Flyr tickets with credit cards, or better yet not to wait until the company’s financial future airline be decided.

Rivals Norwegian has even stopped selling refundable tickets on routes where they compete with Flyr, to prevent Flyr customers from using them as “insurance”.

Flyr’s rapid rise and fall

A new low-cost airline for Norway was dreamed up by aviation veterans, many of whom had long experience during Norwegian’s successful growth years.

For ten years, Erik G. Braathen ran Braathens SAFE, an airline eventually acquired by SAS. He then held several positions at Norwegian, including Chairman of the Board from 2004 to 2009. Flyr CEO Tonje Wikstrøm spent more than 10 years at Norwegian, where she rose through the ranks to Vice president of crew management.

The founders felt there was room in Norway for a new low-cost airline focused on Oslo. Braathen has often referred to the simplicity of the business model “which focused on an app-based booking system for popular point-to-point routes in Norway and to/from European leisure destinations.

Despite launching during the second half of the pandemic, early signs were positive, with more domestic routes and new European destinations introduced several times over the airline’s short lifespan. But despite ultra-low fares, the airline failed to fill its planes and financial problems soon arose.

Just a few weeks ago, Flyr announced massive reductions to its flight schedule for the 2022/23 winter season. Last week, Flyr announced quarterly losses of nearly $43 million and its desire to raise $39 million in new capital through an emergency equity offering. Shares fell almost 70% in the days following the announcement.

Ahead of Tuesday’s meeting, several of Flyr’s largest shareholders told Norwegian business news service e24 they were undecided about joining the new share issue. Frislid also said she and the other management team would take a “major” pay cut.

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