Norwegian Air said today that it has secured vital funding from shareholders as it battles to survive the coronavirus pandemic that drove down April passenger volumes by 98.7%. 

The deeply-discounted share issue of up to 400 million Norwegian crowns ($39m) is central to the airline's plan of qualifying for state credit guarantees.

The share issue had been oversubscribed by investors, the budget carrier added. 

Shareholders, bondholders and lessors agreed this week on a plan to convert nearly $1 billion of debt into equity and raise up to 400 million crowns from the sale of new shares. 

The airline's new shares are sold at 1 crown each, 76% below yesterday's closing price of 4.16 crowns. 

The debt conversion and share sale will allow Norwegian Air to tap government guarantees of up to 2.7 billion crowns, which hinge on a reduction in leverage, in addition to 300 million crowns it has already received.

If it fails, Norwegian risks running out of money by the middle of May. 

The equity sale and debt conversion will lead to a massive dilution of the current owners' stakes, however, increasing the number of shares in Norwegian to around 3.5 billion from just 163.6 million. 

The airline said today it carried 41,311 passengers last month, down from 3.14 million the same time last year. 

"Norwegian continued to operate a limited number of domestic flights within Norway on behalf of the government to ensure that vital connectivity was maintained between regions," the company said in a statement. 

It also operated some flights between Oslo, Stockholm and Copenhagen in early April.

"All other network activity was temporarily suspended and is therefore reflected in the sharp decline in traffic figures this month," Norwegian Air said. 

The plan to save the carrier will involve further restructuring, grounding 95% of the fleet for up to 12 months and leaving just seven aircraft in operation before a slow build-up can start in 2021, it said last month. 

A pioneer in low-fare transatlantic air travel, Norwegian Air's rapid expansion left it with some $8 billion of debt at the end of 2019, making it particularly vulnerable to the fallout from the novel coronavirus that causes Covid-19.