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Sunday, June 16, 2024

Norwegian’s boss hit from all sides

Bjørn Kjos, the former fighter jet pilot who launched Norwegian Air, had to see his airline cancel 13 more flights on Tuesday and face mass cancellations on Wednesday, when another 600 pilots are poised to go on strike. Kjos is now fighting to keep the airline he launched just over a decade ago aloft, as the pilots’ strike dragged into its fourth day with no settlement in sight.

Norwegian CEO Bjørn Kjos and his fellow executives have consistently refused to compensate passengers for most of the delays on its Dreamliner service. Now Kjos, who continues to plan more route expansion with the Dreamliners, is being challenged in court. PHOTO: Berglund
Norwegian Air’s chief executive Bjørn Kjos is a pilot himself but he incurred the wrath of his airline’s pilots by seeking to cut the costs of their relatively high pay, pensions, benefits and insurance. Kjos has claimed he’s just trying to keep Norwegian competitive in a tough industry where passengers have grown accustomed to low fares. The pilots claim they’re striking to secure their jobs. PHOTO: Berglund

There has been no contact between representatives for Norwegian’s management and the Norwegian Pilot Union, part of trade union federation Parat, since state mediation broke down shortly after midnight on Friday. The union initially pulled 70 of its members out on strike from Saturday morning, only around 10 percent of its total membership, but plans to pull a total of 650 off the job from Wednesday. Flight attendants are planning a sympathy strike as well. The vast majority of Norwegian Air flights are likely to be grounded.

The airline so far has managed to keep most flights running through controversial use of lower-paid pilots from other foreign-based subsidiaries of the airline. Labour officials consider that strike-busting, though, and Norway’s largest trade union federation LO has announced a boycott of Norwegian.

Norwegian’s management remains determined to operate as many flights but cancellations started to rise Sunday after a sudden rise of flight crew members calling in sick. Norwegian responded on Monday by claiming it would no longer accept absence due to illness without a doctor’s confirmation. Union leaders insisted the sudden rise in illness among organized members was not part of any work slowdown.

Some Norwegian flights were also delayed on Sunday and Monday, but there were few delays Tuesday morning. Most of the cancelled flights were within Norway or between Oslo and Stockholm, and the airline tried to move passengers to the next available flight.

Ticket sales crash
Passengers on Norwegian are anxious, however, and newspaper Aftenposten reported how many were switching over to flights on Norwegian’s arch-rival Scandinavian Airlines (SAS). Ticket sales at Norwegian, also for future flights, have taken a dive, hitting Norwegian’s cash flow and even, according to newpaper Dagens Næringsliv (DN), eating into Norwegian’s capital reserves.

Norwegian Air’s board met for an emergency meeting on Monday. “The pilots say they’re striking to secure their jobs, but in reality, they’re putting all the jobs in the entire company at risk,” Bjørn H Kise, leader of Norwegian’s board, told reporters.

Kise said the company was trying to prevent the pilots’ planned expansion of their strike on Wednesday from grounding Norwegian’s flights in Scandinavia and Europe. At the end of the day, though, Kise admitted there was no labour settlement in sight since no meetings were planned between management and the union. Each side seems to be expecting the other to take the initiative to any more talks.

Bankruptcy ‘not a theme’ at board meeting
Kise said the much-discussed possibility that Norwegian would declare bankruptcy for the subsidiary that officially employs the pilots was not, however, on the board’s agenda. He stressed that the situation was serious for the entire company, not just the subsidiary Norwegian Air Norway (NAN).

The airline has already lost large sums on the strike, even though it doesn’t affect Norwegian’s long-haul routes nor, so far, has it directly affected routes around Europe. Airline analyst Kenneth Sivertsen at SEB told DN that an escalation of the strike “will create a serious financial situation for Norwegian.” The airline has more than NOK 10 billion in debt tied to aircraft purchases in recent years and capital that’s considered low compared to competitors. “If ticket sales continue to fall, it will be very serious for the company,” Sivertsen said. “The first three months of the year are the most important for summer travel.”

The airline’s employees seem split on the strike. While flight attendants have announced plans for a sympathy strike, one woman representing workers in the accounting office did not support the pilots. “Going on strike in a company that just reported a major loss is very unwise,” she told news bureau NTB. Berglund



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