TROUBLED airline Norwegian was on the brink last night as its pilots were warned there was no money to pay them – or make them redundant.
The carrier is “mortgaging everything they own” to try and stay afloat.
Frantic bosses are converting debts into shares in a bid to stop flatlining.
But the move is predicted to wipe out the value of existing shares.
The airline’s jets have left their slots at the UK’s second major hub Gatwick airport.
The firm has around £5billion of debt against a market value of £78million.
Pilots were last night warned they face a pay freeze – and will rely on the government’s job retention scheme plan for any salary.
The company’s entire fleet, across different subsidiaries, is believed to be hit – around 1,500 pilots and 3000 cabin crew.
A letter from cook pit crew union Balpa revealed discussions with OSM Aviation, whose parents firm is Norwegian.
It stated: “Norwegian have indicated to OSM that they will not be in a position to fund the April salary, and also OSM do not have sufficient funds to cover the salary or redundancies.”
The carrier’s subsidiary is “positive” the government’s furlough scheme will be implemented, but can’t guarantee when funds will be paid.
Shortly after the Oslo stock exchange reopened following the long Easter weekend, Norwegian’s share price was at one point down more than 60 per cent compared with when the market closed on 8 April.
The carrier’s chief executive, Jacob Schram, said the proposed measures were necessary to secure “the next tranches of the Norwegian government state guarantee programme”.
Norway last month announced a £464million bailout for the aviation sector, half of which is earmarked for Norwegian.
Norwegian Air said it would hold a meeting with bondholders on April 30 to approve the terms of its rescue plan, Reuters reported.
In a 14 April research note, Bernstein analyst Daniel Roeska describes Norwegian as being “at the end of the line”.
Mr Roeska believes there are two likely outcomes for the airline: “Either the bondholders agree a conversion price for their debt into equity, or they do not.
“If they agree, the firm continues to operate, but shareholders will be severely diluted.
“If they do not, then we expect operations to cease, bankruptcy proceedings to start, and shareholders to get nothing.”
The Sun has contacted Norwegian Air for comment.
Last month, The Sun told how Norwegian was feared to be days away from folding as its UK staff were told to choose between a 70 per cent pay cut or redundancy.
Last year they were teetering on the edge of collapse before receiving last-gasp financial backing to keep going.
The airline – the eight largest in Europe and third biggest low-cost carrier after Ryanair and easyJet – carried 30 million passengers in 2016.
The Sun was shown a shock ‘emergency payment option’ sent to Norwegian UK employees.
They help run a fleet of 13 carriers from Gatwick airport.
Bosses at parent firm OSM Aviation said they had been “compelled to take immediate action in order to assure that operations will remain intact, once the commercial difficulties as caused by the present situation, cease to remain”.
The Nordic airline has already announced it would cancel 85 per cent of flights and faces laying off 90 per cent of its workforce, around 7,300 people.
Norwegian is struggling on, analysts said, thanks in part to a delay in delivery of their new 737 MAX aircraft.
In more airline news, British Airways pilots have been forced to take three months’ unpaid leave as the airline struggles to survive.
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