Staff of Reuters 2 minutes Read (Reuters) – OSLO (Reuters) – Norwegian Air acted rashly when it awarded bonuses to top executives just weeks after emerging from government-backed bankruptcy procedures, according to Norway’s industry minister. On November 7, 2019, a Norwegian Air plane is refueled at Oslo Gardermoen airport in Norway. The photo was taken on November 7, 2019. REUTERS/File Photo/Lefteris Karagiannopoulos Norwegian concluded a court-ordered financial reorganization in late May, after shedding thousands of jobs during the pandemic and forcing creditors to swap billions of dollars in debt for stock in the slimmed-down airline. To preserve Norwegian from bankruptcy, the government gave 3 billion Norwegian crowns ($350 million) in loan guarantees in mid-2020, followed by 1.5 billion crowns in a hybrid loan. However, soon after the restructure, Norwegian began rewarding managers with bonuses of 30 million Norwegian crowns ($3.5 million) as a reward for preserving the company, according to business news site E24. In a statement, Minister of Trade and Industry Iselin Nyboe said, “That displays terrible judgment.” “The board of directors and Chief Executive Geir Karlsen face a difficult task in explaining this and restoring Norwegian’s credibility.” Karlsen, who served as CFO during the reorganization, was named CEO last week. The reimbursements were approved as a retention bonus during the financial reorganization to ensure important managers did not quit during a tough moment, according to Norwegian Air. In a letter to the ministry, the corporation’s lawyers stated that the company had not broken any government loan terms. “The cost of the retention bonuses has not been paid by the state as a lender. In May 2021, the reconstruction was completed and new share capital was created, and in the end, the company’s shareholders, not its creditors, will suffer the costs “At the law firm Bahr, Richard Sjoeqvist wrote. (1 Norwegian crown = 8.5546 dollars) Victoria Klesty contributed reporting, while Terje Solsvik and Edmund Blair edited the piece. Continue reading
