Flyr, the low-cost Norwegian airline, is again seeking new financing to bankroll its operation through the spring and summer of 2023. Without an urgent cash injection, the future looks uncertain for the airline.
Ongoing financial woes
Having been struggling with its finances for several months now, Flyr is once again facing extreme pressures on its financial position. Despite having raised additional capital through the selling of additional shares in November 2022, the airline’s financial performance has continued to fall short of forecasts, with the carrier’s share price failing to reach required levels, despite the capital injection.
Flyr’s refinancing plan of November 2022 also called for further capital to be raised by the end of Q1 2023. This funding was sought primarily to pay the Emission Trading System quotas (EU ETS) in April 2023 and to ramp up the carrier’s operations for the coming spring and summer based on the company’s business plan and market assumptions.
However, despite its best efforts, the airline has so far failed in its search to secure the financing it needs to survive, and the company’s management is now said to be in the process of considering all options so that the airline’s survival, even in the short term, is assured.
Will wet leasing save Flyr?
According to a press release issued today, Flyr’s management is working intensively to achieve a viable long-term solution for the company’s operations, which would strengthen the business plan of Flyr and increase the chances of raising the necessary liquidity to sustain operations.
In cooperation with its financial advisors, the airline has been exploring several different alternatives, including increased wet lease operations (including to US airlines) along with other strategic options. Due to the general global shortfall in aircraft availability, the carrier has experienced stronger-than-expected demand for wet lease and charter operations over the winter months, which has assisted its financial position.
In mid-December 2022, the company finalized discussions with an undisclosed European airline regarding a wet lease arrangement of six aircraft for the 2023 summer season, with commencement at the end of March 2023. Although the commercial terms of this wet lease agreement were agreed in principle on 23rd December 2022, the deal’s signing was conditional on Flyr securing further financing.
The evaluation carried out by the company, and its financial advisors was that this wet lease agreement would have secured the income and a profitable operation for 50% of the company’s fleet for the entire period from the end of March to the end of October 2023. In turn, this agreement would have provided the funding the airline desperately needs in the short term.
However, to be able to perform its obligations under the wet lease agreement, the company has been forced to reverse some of the cost-saving measures it has recently implemented. This has led to Flyr running down its cash reserves over the winter.
The management believed doing this was necessary to secure the wet lease agreement, thereby increasing the chances of the airline securing longer-term financial investment to keep it in the air.
Subsequently, the airline instructed its financial advisors to seek additional investors to inject up to NOK 330 million – the amount the airline says it needs to secure the wet-least agreement and replenish the company’s overall cash position.
However, despite the best efforts of Flyr’s directors and several key shareholders’ support, the airline has not yet been able to raise the requisite capital. Market conditions and continued uncertainty regarding airline travel through 2023 have deterred investors from committing the money required, despite the airline’s winter wet lease operations and improving ticket sales.
Flyr’s short-term future is uncertain
Due to the unsuccessful attempts to secure additional funding or to sign the critical wet lease agreement, Flyr states that “it is now in a critical short-term liquidity situation.”
According to the airline’s statement, the company will continue exploring all solutions to ensure Flyr’s continued operations. However, it would appear that time is short, and the cash reserves at the carrier are running even shorter.
Only time will tell as to whether Flyr survives. Simple Flying will, of course, report on any updates to this story.