Norwegian Abandons Long-haul Flying – Several Thousands Cabin & Cockpit Crew Members Made Redundant

Norwegian, with a number of its subsidiaries, is currently in the form of bankruptcy protection in Ireland and other countries.

The airline was heavily unprofitable before the pandemic hit due to the rapid expanse into long-haul transatlantic flying from several countries in Europe.

The airline has now scrapped all long-haul plans and made employees working on the long-haul fleet redundant, resulting in several thousand layoffs.

Norwegian plans to concentrate on flying in Norway and around Nordics.

Here’s the announcement from Norwegian:

The Board of Directors of Norwegian Air Shuttle ASA (“Norwegian” or the “Company”) is today announcing an indicative plan (the “Plan”) and set of actions that creates a framework that will potentially enable the Company to exit its Irish Examinership and Norwegian Reconstruction processes during the first quarter of 2021.

Core to the Plan is that Norwegian will henceforth focus on its core Nordics business, operating a European short haul network with narrow body aircraft. Under these circumstances a long haul operation is not viable for Norwegian and these operations will therefore not continue. The Company targets to reduce its total debt to around NOK 20 billion Norwegian also plans to raise NOK 4 – 5 billion in new capital through a combination of (i) a rights issue to current shareholders, (ii) a private placement and (iii) a hybrid instrument. The Company has already received written interest in participation in a private placement. The Company has recently reinitiated a dialogue with the Norwegian Government about possible state participation based on the current business plan.

Should the Plan be successful and accepted by the Examinership and Reconstruction Negotiation processes, Norwegian is expected to initially hold up to 50 Boeing 737 aircraft (owned and leased) primarily operating in Norway and the Nordics or from Norway/ Nordics to Continental Europe. It is estimated the Company will emerge having a total debt of around NOK 20 billion and free cash position of approximately NOK 4 to 5 billion following the reconstruction. Based on conservative assumptions both in relations to the length of the Covid-19 pandemic and relating to revenues, costs and load factors the Company expects positive EBITDA post reconstruction in 2021.

According to the presented Plan, current shareholders will hold approximately 5% of the shares in the Company post-reconstruction. In addition, shareholders are offered to participate in a rights offering of up to NOK 400 million. Norwegian´s impaired creditors are estimated to hold approximately 25% of the shares in the Company post reconstruction, as compensation for their participation in the debt reduction, while new investors (in both the equity issue and the new hybrid instrument) will hold, directly or indirectly, approximately 70% of the shares in the Company.

Conclusion

Norwegian still has a challenging road to come through this pandemic as a Nordic airline offering regional and European flights.

Transatlantic low coast flights have bankrupted many airlines in the past, and this pandemic has made the environment extremely challenging for all airlines.

I truly hope that Norwegian survives and continues to offer flights to/from/within Norway, Sweden, Finland, and Denmark, keeping SAS and Finnair pricing in check.