Norwegian Air Shuttle (NAS) is cancelling an order for 88 Airbus jets in its bid to restructure.
The troubled Scandinavian carrier and four Irish subsidiaries have High Court protection from creditors while examiner Kieran Wallace of accountants KPMG works on a rescue plan for the business.
The court heard on Wednesday that the airline had agreed terms of a consent order to cancel an order for 88 Airbus aircraft.
Under those terms, the European aerospace giant will keep pre-payments while NAS will pay it a further €700,000.
The order included 30 Airbus A321 long-range aircraft. NAS is axing its long-haul business to focus on Scandinavia and the rest of Europe as part of its restructuring.
An Airbus representative declined to comment. The aircraft maker has generally had success in persuading weakened customers to defer rather than cancel orders.
So while it has a strong backlog for the A320 series jets, the cancellations would mark a setback.
Contracts
NAS is asking asked the court to repudiate contracts including aircraft leases in a hearing that is due to continue on Thursday.
This involves ending these agreements with settlements covering both the period of the examinership and payments due before Mr Wallace’s appointment in November.
Creditors who have their agreements terminated in this way will receive the same dividend as that agreed by the examiner with all other claimants, on any outstanding debt due under those deals.
Brian Kennedy, NAS's senior counsel, told the court that repudiation would result in a better outcome for the affected creditors than an insolvency.
NAS is due to exit examinership, a court-supervised rescue process for insolvent or troubled companies, in April.
Part of the group’s business plan involves raising €490 million, half of it from existing creditors.
NAS also wants to cancel an order for more than 90 Boeing jets, mostly the 737 Max aircraft. The airline is suing the aerospace manufacturer in the US courts.
The Scandinavian group chose the Republic’s courts for its restructuring bid as Irish-registered companies hold its aircraft. – Additional reporting Bloomberg