Lossmaking Norwegian Air Shuttle announced an emergency multibillion rights issue on Tuesday as worries increased about the low-cost carrier’s finances and it said it was no longer in takeover talks.

The size of the rights issue at NKr3bn ($350m) is more than half the airline’s equity value of NKr5.6bn, highlighting the problems it faces as it struggles to stay afloat.

Investors had long been worried about Norwegian’s finances as it lost money after a rapid expansion on low-cost long-haul flights. Buyers have been circling the group since last year as its transatlantic services put pressure on its finances.

Shares fell as much as 30 per cent to a six-year low but recovered to stand down 12 per cent as the airline said it would change from “growth to profitability” by divesting aircraft, postponing deliveries and continuing its NKr2bn cost savings plan.

The company said it was open to fresh takeover negotiations but conceded there were none ongoing after IAG, the owner of British Airways, last week announced it would sell its stake in the Oslo-based carrier after failing to agree on a deal.

Shares fell more than 20 per cent last week after the IAG news.

Some analysts said last week that Norwegian’s share price could have halved if it were not for the prospect of a potential takeover from a rival such as Lufthansa or Ryanair.

Norwegian said that a reinforced balance sheet should aid its “standalone financial strength”. It added: “The board will nevertheless continue to be willing to engage in consolidation discussions that can develop shareholder value in Norwegian.”

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Strikingly, it said the rights issue would be backed not only by its largest shareholders, who include chief executive Bjorn Kjos and chairman Bjorn Kise, but also by the shipping-to-oil rigs billionaire John Fredriksen.

Norwegian did not disclose what stake his family investment company would take, nor the discount the new shares would be issued at.

It pre-announced preliminary results for 2018 with revenues increasing by a third to NKr40.3bn but its earnings before interest, tax, depreciation and amortisation dropped to a loss of NKr2.2bn compared with a NKr59m profit a year earlier and a NKr3.1bn gain in 2016.

Cash and cash equivalents was NKr1.9bn at the end of 2018 compared with NKr4bn a year earlier.

Mr Kjos said he was confident that Norwegian could become profitable but admitted there would be “seasonal variations”. He denied that Norwegian had been in breach of its loan covenants.

He added that talks were ongoing over a potential joint venture for the large number of aircraft Norwegian owns itself, rather than leasing as is common in the airline industry.

Norwegian, Europe’s third-largest low-cost carrier behind Ryanair and easyJet, has aggressively expanded into long-haul travel with destinations in North and South America and Asia.

In recent weeks, it has closed several routes and bases as it seeks to cut costs.

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