Ireland's High Court on Monday granted Norwegian Air and its Irish subsidiaries protection from creditors, allowing the airline more time to restructure its massive debts.
Norwegian asked the court last month to allow an examinership, a legal process akin to Chapter 11 bankruptcy in the United States that can last up to 100 days, seeking to stave off collapse in the Covid-19 pandemic.
Justice Michael Quinn told the court on Monday he had agreed protection for both Oslo-based Norwegian Air and its Irish subsidiaries, which own or lease most of its aircraft, as the entities were dependent on each other for survival.
Major creditors did not oppose the petition. They include aircraft lessors Aercap and BOC Aviation, planemaker Airbus and the United States Export-Import Bank, which helps to finance purchases of Boeing jets.
After growing rapidly to become Europe's third-largest low-cost airline and the biggest foreign carrier serving New York, Norwegian's debt and liabilities stood at 66.8 billion crowns ($7.7 billion) at the end of September.
Only six of its 140 aircraft are in use. The remaining 134 are grounded due to the pandemic, including its entire fleet of Boeing 787 Dreamliners used for its suspended transatlantic flight programme.
The judge scheduled the court's next hearing for December 18, the day after Norwegian's shareholders are due to meet to vote on its restructuring plan.
If successful in convincing creditors and owners of its future potential, Norwegian could, with the help of the court, emerge as a smaller but more viable carrier with fewer aircraft, less debt and more equity.
The airline last week set out a rescue plan to convert debt to equity, offload planes, and raise up to 4bn Norwegian crowns from the sale of new shares or hybrid instruments.
It will also seek to only pay lessors for the use of the aircraft when they are actually in use, by the hour, until 2022.
Before the pandemic, Norwegian helped transform transatlantic travel, expanding the European budget airline business model to longer-haul destinations, but also ran up losses each year from 2017 to 2019.