Norwegian Air now aims to raise up to 6bn crowns in fresh capital, up from a planned 4.5bn, to bolster its resources before emerging from bankruptcy protection next month as the pandemic continues to curb travel.
Financed largely by debt, Norwegian Air grew rapidly, serving routes across Europe and flying to North and South America, Southeast Asia and the Middle East before the Covid-19 pandemic plunged the airline into crisis.
"We want to take a conservative approach at a time when the pandemic and travel restrictions continue to create unpredictability in the travel sector," Chief Executive Jacob Schram said in a statement.
Courts in Oslo and Dublin have recently given their approval for Norwegian to sharply cut its debt by converting it to stock, but the rulings were conditional on the airline raising at least 4.5bn crowns in additional funds.
The survival plan brings an end to Norwegian's long-haul business, leaving a slimmed-down carrier focusing on Nordic and European routes, but the ongoing spread of the virus continues to hamper the industry.
"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," Schram said.
Norwegian said certain investors had agreed to inject 2.86bn crowns via a share issue, and that current creditors were expected to buy new perpetual bonds worth at least 1.8bn.
Norway's government has separately said it is willing to invest 1.5bn crowns in hybrid capital.
Norwegian Air faces increased competition at home, not only from SAS and Wideroe, but also new start-up Flyr which is expected to launch its first flight in Norway by mid-year.
Norse Atlantic Airways, was also recently set up by a group of industry veterans, including Norwegian Air founder and former CEO Bjoern Kjos, to offer long-haul services.
Norwegian's debt will be cut to between 16bn and 20bn crowns, the company said, 62bn to 65bn crowns less than end-2019 levels.
Norwegian is advised by Seabury Securities and DNB Markets.