Norwegian Air hailed an offer of financial support from the government of Norway as “significantly increasing” its chances of survival as it attempts to exit insolvency protection by March.

But aviation analysts and Norwegian Air’s own investment prospectus cast doubt on the outcome even if the airline pulls off the latest recapitalisation.

The Norwegian government confirmed the offer of a loan on January 21, conditional on the carrier raising new capital.

Jacob Schram, Norwegian Air chief executive, suggested the government loan “significantly increases our chances of raising new capital and getting us through the reconstruction process. “

He said: “With a new business plan and participation from the government, we are confident we can attract investors.”

The carrier announced the end of long-haul operations and closure of its London Gatwick base last week as it seeks to pull off a second debt-for-equity swap in nine months.

This would reduce the airline’s debt to about €2 billion (NOK20 billion), and see the company raise up to NOK5 billion in new capital.

However, the Norwegian government’s statement on the potential loan was more cautious. It declared: “The government is positive about contributing money to a reconstructed Norwegian, but assumes that private investors show up.”

“But it is a demanding process and Norwegian is dependent on bringing in long-term and strategic owners. The state has no ambitions to become an owner of Norwegian.”

For the loan to go ahead, the government requires Norwegian to raise “at least” NOK4.5 billion in new capital and to win approval of the plan from existing shareholders and creditors who stand to lose out substantially.

Norwegian’s previous shareholders were wiped out by a £1-billion debt-for-equity swap last May which left them holding 5% of the airline.

Now Schram proposes doing the same to the current shareholders, leaving them just 5% of equity and creditors another 25% while seeking investors to purchase the remaining 70%.

Norwegian entered bankruptcy protection in Ireland in November and in Norway in December. The Irish process, known as ‘examinership’, provides protection from creditors for only up to 100 days.

The plan means the loss of 1,100 jobs at London Gatwick and more than 2,000 across the airline. The Unite trade union reported Norwegian workers are owed wages as well as redundancy pay.