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MarketScreener Homepage  >  Equities  >  Oslo Bors  >  Norwegian Finans Holding ASA    NOFI   NO0010387004

NORWEGIAN FINANS HOLDING ASA

(NOFI)
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Struggling Norwegian Air gets a lift from bank stake sale

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08/19/2019 | 04:53am EDT
FILE PHOTO: A Norwegian Air Boeing 737-800 is seen during the presentation of Norwegian Air first low cost transatlantic flight service from Argentina at Ezeiza airport in Buenos Aires

OSLO (Reuters) - Norwegian Air has agreed to sell its stake in banking company Norwegian Finans Holding for 2.22 billion crowns (202.68 million pounds) boosting the loss-making airline's finances and sending its shares sharply higher on Monday.

Norwegian Finans Holding owns Bank Norwegian, a credit card company originally set up by Norwegian Air. The airline is selling its 17.5% stake to Cidron Xingu Limited, indirectly controlled by Nordic Capital Fund IX and Sampo.

The deal will boost Norwegian Air's cash holdings by 934 million crowns and lead to an accounting gain of 196 million.

The European aviation sector has been struggling with overcapacity, leading some airlines to offer loss-making fares and a few smaller carriers to go bust.

"The sale of the NOFI shares is part of Norwegian's strategy to strengthen our core airline operations and focus on the transition from growth to profitability," Norwegian Air's acting Chief Executive Geir Karlsen said in a statement.

While the deal could help the airline refinance a 250 million euro bond maturing in December, some analysts said the company may need to raise more cash from shareholders at a later time.

Norwegian late last year set out plans to slash costs and focus on short-term profitability over long-term growth, but has been hampered by the worldwide grounding of the Boeing 737 MAX aircraft, of which the company has 18 in its fleet.

While the airline's earnings per passenger rose during the important early summer months, the increase was smaller than most analysts had anticipated, hitting the company's share price.

"Without an ongoing sustained improvement in the unit revenue position or unit cost position of the business, we struggle to see how the company can get through the next 9 months without needing to return to capital markets for additional equity," Bernstein analysts said in a research note.

Bernstein has an 'underperform' rating on Norwegian Air shares with a target price of 10 crowns.

The NOFI shares were sold at 68 crowns each, a 15.4% premium to Friday's close of 58.90 crowns.

Norwegian Air's shares were up 5.8% to 33.4 crowns at 0825 GMT, off an early high of 36 crowns. Norwegian Finans was up 16.1% at 68.40 crowns.

"The buyers, Sampo and Nordic Capital, already own consumer lender Nordax and have earlier said they will seek consolidation in the industry," said DNB Markets, which has 'buy' ratings on both the airline and Norwegian Finans.

(Editing by Gwladys Fouche and Mark Potter)

By Terje Solsvik and Victoria Klesty

Stocks mentioned in the article
ChangeLast1st jan.
NORWEGIAN AIR SHUTTLE ASA -2.29% 38.85 Delayed Quote.-58.30%
NORWEGIAN FINANS HOLDING ASA 0.97% 77.75 Delayed Quote.13.66%
SAMPO 0.69% 38.08 Delayed Quote.-1.20%
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Financials (NOK)
Sales 2019 5 042 M
EBIT 2019 3 723 M
Net income 2019 1 901 M
Debt 2019 -
Yield 2019 5,21%
P/E ratio 2019 7,56x
P/E ratio 2020 7,13x
Capi. / Sales2019 2,85x
Capi. / Sales2020 2,62x
Capitalization 14 380 M
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Mean consensus BUY
Number of Analysts 5
Average target price 90,00  NOK
Last Close Price 77,00  NOK
Spread / Highest target 29,9%
Spread / Average Target 16,9%
Spread / Lowest Target -2,60%
EPS Revisions
Managers
NameTitle
Tine Gottlob Kirstan Wollebekk Chief Executive Officer
Bjorn Ostbo Chairman
Tore Andresen Chief Operating Officer
Pål Svenkerud Chief Financial Officer
Merete Eikeseth Gillund Chief Information Officer
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