Norwegian Air’s days of low cost transatlantic travel are over. The airline will cut all long-haul flights from its route network as part of a wide range of measures designed to save the company from bankruptcy and secure a sustainable future.
Norwegian is currently under bankruptcy protection in Ireland as its management works to develop a workable plan to continue operations.
Long-haul is “not viable”
In an announcement on the Oslo Stock Exchange, Norwegian blamed travel restrictions for COVID-19 and the “change in government advice” for the drop in demand that prompted the decision: “Under these circumstances, a long operation -mail is not viable for Norwegian and these operations will not be. continue. “
Legal entities employing long-haul staff in Italy, France, the United Kingdom and the United States have contacted insolvency practitioners. “It is with a heavy heart that we must accept that this will impact the dedicated colleagues across the company,” said Jacob Schram, CEO of Norwegian, in a press release accompanying the announcement.
In 2021 and beyond, the airline will focus on flights to Norway and the Nordic countries, and to / from other parts of Europe, using a fleet of up to 50 fuselage planes narrow of medium distance.
“Our short-haul network has always been the backbone of Norwegian and will form the basis of a future resilient business model,” added Schram.
Get rid of debt
One of the most problematic parts of the business is Norwegian’s long-haul business. While all airlines endured a tough 2020, the debt associated with this business made the company particularly vulnerable to declining revenues.
Much of Norwegian’s $ 5.6 billion debt is tied to past aircraft purchases, including the ailing Boeing 787 Dreamliners and the ailing Boeing 737 MAX.
The end of long-haul operations is just one part of the plan that Norway hopes will be accepted by the review and reconstruction processes. It will also involve the second drastic restructuring of the company in less than 12 months.
The plan stipulates that the current shareholders “will own around 5% of the shares in the company after the reconstruction” and will be offered the opportunity to participate in a rights offering of up to NKr 400 million ($ 47.2 million).
Ask the government for more money
Along with SAS and Widerøe, Norwegian received government support in 2020 in the form of a state support program for the Norwegian aviation industry. However, Norwegian’s subsequent request for direct financial support was denied two months ago.
Despite this, the airline contacted the Norwegian government again. Norwegian Trade and Industry Minister Iselin Nybø told NRK the request would be considered: “What Norwegian is now describing is something other than the request we reviewed in November of last year. We are currently conducting a thorough assessment of this new investigation. “