Norwegian low-cost airline Flyr will file for bankruptcy on Wednesday, it said tonight on its website. The carrier has been unsuccessful in raising new funding after its financial plan failed to attract investors. Flyr said on Monday that its liquidity position was critical after underwriting for a wet lease agreement of its fleet fell through. The airline explored other options to continue but without success. Norway’s Flyr files for bankruptcy.
Flyr launched operations in June 2021 and tried to capture market share out of Norway that was previously held by Norwegian before that airline reduced its activities during a deep restructuring. But Norwegian bounced back while Flyr has struggled to grow and earn money. It operates a fleet of six Boeing 737-800s from various lessors and six MAX 8s from Air Lease Corporation (ALC). Two MAX are parked. The airline directly employs 450 staff.
Flyr carried 1.6 million passengers in 2022 at a load factor of between eighty and ninety percent. It cut back its winter schedule from November until March to reduce cash burn by NOK 400 million or fifty percent by reducing its active fleet to six aircraft and furlough staff. This winter, it offers flights to Alicante, Malaga, Las Palmas, Barcelona, Rome, Paris, Nice, Berlin, and Brussels, as well as to ski destinations Milano, Salzburg, and Geneva. Its domestic network includes flights from Oslo to Bergen and Trondheim.
After successful private placements in 2021 and early 2022, the airline hoped to raise NOK 430 million again in November but failed. Flyr tried again a few days later with a private placement of a combined NOK 700 million, which would be required to pay its emission trading system (ETS) quotas in April and ramp up capacity for spring and summer 2023. But the airline managed to raise only NOK 250 million and incurred a hefty reduction in its share price since then. Shares were down 71 percent on Monday at NOK 0.002.
Wet lease contract would save the day
The airline’s Board under CEO Brede Huser explored other options to raise funding to strengthen its buffer capital and successfully negotiated a wet lease contract for six aircraft with an undisclosed European airline, starting in March through October. This followed on the announcement of the wet lease of a single aircraft with an unidentified airline from February through October, announced in November.
The agreement in principle was conditional on Flyr securing further funding. Completing the agreement forced Flyr “to reverse some of the liquidity preserving measures it had planned and implemented, as the wet lease agreement was considered instrumental in securing the new financing plan that would address both the short-term and long-term funding requirements of the Company.”
Flyr sought to establish an underwriting consortium that was prepared to raise up to NOK 330 million through a rights issue, so it would fulfill the conditions of the wet lease agreement and bolster its own cash position. That’s where today’s news comes in: the airline has not been able to raise sufficient market underwriting as potential investors remain wary of spending money on airlines.
This situation has placed Flyr in a delicate position: without the underwriting, the wet lease agreements risk falling through. “Due to the unsuccessful process to underwrite a rights issue or carry out a private placement, the Company is now in a critical short-term liquidity situation. The Company and the Board will continue their efforts to explore solutions for the Company, including exploring whether there are feasible alternatives to secure continued operations, and will revert with further information as and when appropriate. There is, however, no guarantee that a solution that would create a meaningful shareholder value for the current shareholders will be found.”
In the past two weeks, Flyr said that it has signed Letters of Intent with undisclosed partners for charter flights between May and October, which would generate a combined NOK 120 million in revenues. In December it filed an application with the US Department of Transportation to operate non-scheduled and wet-lease flights in and out of the US, starting November 2023.
On its website, Flyr shared a farewell note to its customers: “Many thanks to everyone who has chosen to fly with us over the past year and a half. We will miss you all from the bottom of our hearts and deeply apologize to everyone affected by the fact that we now have to go in for landing. We encourage everyone who has booked a ticket with us to contact their credit card company for a refund.”
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
In 2022, he has gone full-time freelance. Richard has been contributing to AirInsight since December 2018. He is also writing for Airliner World and Aviation News. From January 2023, he will add a part-time role with Dutch website and magazine Luchtvaartnieuws. Twitter: @rschuur_aero.