Shares in Norwegian Air Shuttle crashed this morning as the company went cap in hand to shareholders after a potential bid for the struggling airline fell through last week.
The 3bn Norwegian krone (£268m) fundraise comes as the business tries to move away from the rapid growth which has characterised it in recent years.
Shares initially plummeted by around 25 per cent, but quickly clawed back ground and were trading at 9.4 per cent down by around 10am.
The budget airline has made a name for itself as it aggressively expands its fleet and opens new lines across the world.
But now Norwegian is promising to change its business model to emphasise profitability over growth.
It plans to reduce its capital expenditure by selling aeroplanes and postpone new orders. The company also hopes to save around 2bn krone in 2019 through its Focus 2019 cost-cutting programme.
“We will now get in place a strengthened balance sheet that supports the further development of the company. With the strengthened balance sheet, the organisation can now devote all its attention to further development of the company,” said chief executive Bjorn Kjos.
The new rights issue has been underwritten by Norwegian’s largest shareholders, including Kjos and chairman Bjorn Halvor Kise, who have committed to 343m krone. Other shareholders have underwritten 267m krone to the issue.
Norwegian was already coming off a bruising week after British Airways owner IAG pulled out of a potential bid for the airline, sending shares down by as much as 26 per cent.
The company said today it had received two preliminary proposals from IAG which it rejected as too low.
A vote on the rights issue will be held on 19 February, with a third of shareholders already having declared support.