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* Budget carrier says still expects to return to profit
* Investors unconvinced, shares slump 25% to 11-year low
* Shares now down 52% this week on coronavirus concerns
* Other airline stocks also down sharply
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By Terje Solsvik and Tommy Lund
OSLO, Feb 27 (Reuters) - Shares in Norwegian Air
plunged a quarter in value on Thursday, leading airline stocks
lower as investors bet the debt-laden budget carrier would be
the most vulnerable to a coronavirus pandemic.
The slump in Norwegian shares to an 11-year low of 16.80
crowns came despite the company trying to reassure investors by
reiterating its financial guidance.
The stock has now lost 52% since the start of this week as
the coronavirus has spread around the world, threatening an
extended period of disruption to international travel.
"This (share price slide) is the worry that corona depletes
demand and that (it) creates a cash flow crunch at Norwegian,"
Bernstein analyst Daniel Roeska wrote in an emailed comment.
He added, however, that Norwegian's ongoing cost cuts and
planned asset sales could see the company through.
Norwegian, which has repeatedly had to raise cash from its
owners to survive, said at its quarterly results on Feb. 13 that
it expected to report a profit in 2020 after three consecutive
years of losses.
"As of today, the company maintains the guidance and outlook
presented in relation to the Q4 reporting on 13 February ... The
company is monitoring the market situation on a regular basis,"
Norwegian said in a statement on Thursday.
It said it had put out the statement in response to "market
speculation" and subsequent inquiries from shareholders.
A pioneer in low-fare transatlantic air travel, Norwegian's
rapid expansion has left it in the red and heavily in debt,
forcing it to cut unprofitable routes and slash operating costs.
Rattled by the coronavirus, airlines have rushed to cut
costs in recent days.
Still, shares in Scandinavian carrier SAS fell by
12.3% on Thursday, while Easyjet was down 11.0%, Ryanair
5.7%, Lufthansa 7.2%, Air France
10.6% and British Airways parent IAG fell 10.0%.
Norwegian raised cash from its owners in late 2019 for the
third time in less than two years, and issued convertible bonds
at the same time to help shore up its finances.
The bonds have so-called covenants linked to the finances of
a key subsidiary, Arctic Aviation Assets (AAA), which must keep
its book equity and debt levels within certain minimum levels.
If covenants are broken, this could in turn lead to another
round of debt and equity restructuring, but the company sought
to dispel any such worries.
"Following 31 December 2019, there has been no change in AAA
that would result in a material change that would impact the
covenants," Norwegian said.
(Reporting by Terje Solsvik in Oslo and Tommy Lund in Gdansk;
additional reporting by Victoria Klesty; editing by Susan Fenton
and Mark Potter)
