16 Months After Its First Flight, Norway Airline Flyr Seeks Crisis Funding

The board of Norway-based budget airline Flyr has approved an alternative financing plan from its investors less than a day after the investors refused to inject the necessary $39 million of fresh capital to save the airline.

The approved plan will see Flyr attempt to raise approximately $68 million in capital through four different measures. According to a stock exchange announcement, the proposal for a new structure made up of existing and new professional investors “is the best for the company and the shareholders.”

The airline has also struck a deal with an unnamed European airline to lease at least one of its aircraft, many of which now stand unused due to Flyr’s recent cuts to its flights schedule.

Difficult months ahead for Flyr

Despite the agreements, there’s a long way to go before Flyr becomes a financially sustainable operation. First and foremost, the airline must raise the necessary new capital before the end of the first quarter of 2023.

Flyr must also now overcome the negative publicity that the latest round of financial trouble has caused. Just a few days ago, the Norwegian Consumer Council warned people to only pay for Flyr tickets with credit cards, or better still to hold off entirely until the airline’s financial future was decided.

Rivals Norwegian even stopped selling refundable tickets on routes where they compete with Flyr, to prevent Flyr customers using them as “insurance.”

The rapid rise and fall of Flyr

A new budget airline for Norway was the brainchild of aviation veterans, many of whom had long experience during the successful growth years of Norwegian.

For ten years Erik G. Braathen led Braathens SAFE, an airline that was eventually acquired by SAS. After that he held several positions with Norwegian, including chairman of the board from 2004 to 2009. Flyr CEO Tonje Wikstrøm spent more than 10 years with Norwegian, where she rose through the ranks to become vice president of crew management.

The founders felt there was room in Norway for a new budget airline focused on Oslo. Braathen often referred to the simplicity of the business model” which focused on an app-based booking system for popular point-to-point routes within Norway and to/from European leisure destinations.

Despite launching during the latter half of the pandemic, early signs were positive, with more domestic routes and new European destinations introduced several times during the airline’s short lifetime. But despite ultra low fares, the airline failed to fill its planes and financial trouble came quickly.

Just a few weeks ago, Flyr announced massive cuts to its flight schedule for the 2022/23 winter season. Last week, Flyr announced quarterly losses of almost $43 million and its desire to raise $39 million of new capital in an emergency share issue. Shares fell almost 70% in the days following the announcement.

Before Tuesday’s meeting, several of Flyr’s most important shareholders told Norwegian business news service e24 that they were undecided about joining the new share issue. Frislid also said that she and the other senior leadership team would take a “major” pay cut.

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