Beleaguered low-cost carrier Norwegian Air Shuttle on Monday unveiled a rescue plan involving a debt to equity swap that would erase most shareholders' stakes, as it vies for state aid to survive.

If approved, the plan would dilute existing shareholders' stakes to just 5.2 percent.

A pioneer in no-frills long-haul flights, Norwegian, Europe's third-biggest low-cost airline, has racked up losses in the past three years, as its debt ballooned under an ambitious expansion policy.

Added to that, the current coronavirus pandemic, which has dealt a heavy blow to the entire airline industry, has left the company teetering on the brink of bankruptcy.

Currently, 95 percent of Norwegian's fleet is grounded, and only seven aircraft are still in use on domestic routes in Norway. Some 7,650 employees, or 80 percent of its staff, are furloughed.

The company has already received 300 million kroner in state aid, but in order to qualify for a bailout of 2.7 billion kroner (236 million euros, $256 million) -- which Oslo has offered on the condition the airline reduces its debt ratio -- the company is in talks with its creditors about a debt conversion and restructuring.

Chief executive Jacob Schram said up to $1.2 billion worth of debt could be converted into shares, which would enable the company to meet, or even exceed, the government's equity requirement.

If shareholders approve it, "they'll help save the company," he added.

Norwegian also plans to raise 400 million kroner in new capital.

The rescue plan must be approved by bondholders who are due to meet on April 30, leasing companies who meet on May 3, and shareholders who will gather for an extraordinary general assembly on May 4.

If it survives the crisis, Norwegian said it hopes to return to its normal activities in 2022, albeit in a more restricted format and concentrating on its most profitable routes.

Its fleet will be reduced to between 110 and 120 aircraft, compared to 168 before the coronavirus crisis erupted.

Last week, Norwegian announced four of its subsidiaries in Sweden and Denmark had filed for bankruptcy, affecting 4,700 pilots and crew.

Norwegian's share price closed down by 5.17 percent in late afternoon trading on the Oslo stock exchange.

It has shed 85.43 percent of its value since the start of the year.