Norwegian Air has increased its planned capital raising as it stressed that debt will be cut.

The Scandinavian budget carrier issued an update after winning approval for financial restructuring by courts in Ireland and Norway.

The upper limit for raising capital has been increased to NOK 6 billion.

Debt will be “sharply reduced” by as much as NOK 65 billion and aircraft orders totalling NOK 85 billion have been cancelled.

The carrier, which last year withdrew from low cost long-haul flying in the face of the Covid-19 pandemic, has been running limited domestic flights in Norway over the winter.

Chief executive Jacob Schram said: “The capital raise has been revised to between 4.5 and 6 billion kroner, this is due to several factors.

“We want to take a conservative approach at a time when the pandemic and travel restrictions continue to create unpredictability in the travel sector.

“Therefore, we must take this uncertainty into account in our forward planning strategy. At the same time, we have also taken into consideration feedback from investors, as well as dialogue with our board.”

He added: “The new Norwegian, with a simplified organisational structure and operating model, will be a significantly more competitive company than before.

“This will not only be the case when compared to how we were before the pandemic struck, but also in view of the competitive environment we envisage across the aviation industry in the future.”

Chief financial officer Geir Karlsen said: “We greatly appreciate the long-term support that we have already received for the restructuring and capital raising from individual investors during this time of unpredictability as a result of the pandemic.

“The debt will be reduced by between NOK 62 and 65 billion compared to the end of 2019, and we have cancelled aircraft orders worth NOK 85 billion.

“Total debt will therefore be between NOK 16 and 20 billion, of which NOK 6-7 billion is related to our aircraft fleet.”