Cookie Consent by Free Privacy Policy Generator
10.8 C
Oslo
Friday, October 4, 2024

Norwegian Air lands in more trouble

The run-up to the Christmas holidays seems anything but merry for Norwegian Air. On Thursday it had to deal with severe flight disruption because of the closure of London Gatwick airport, while a brand-new Boeing 737 is stranded in Iran and the company itself faces what analysts are calling “acute” financial problems.

Norwegian Air has been using its hub at London Gatwick for many of its new intercontinental routes, plus routes from Norway. All flights were grounded along with those of all other airlines on Thursday because of illegal drone traffic near Gatwick’s runways. PHOTO: Norwegian Air

Norwegian was far from alone in its troubles at London Gatwick, where tens of thousands of passengers including hundreds of Norwegians were caught in chaos. The airport closed Wednesday night after observations of illegal drones flying near the airport’s runways. It remained closed on Thursday in what British police believe is a deliberate attempt to disrupt flights.

Around 110,000 passengers were due to travel to and from Gatwick in the course of the day, many of them heading home for the holidays. Instead around 760 flights either had to be diverted to other airports or were grounded, cancelled or severely delayed. Police reportedly were reluctant to try shooting down the drones because wayward bullets could damage other airport facilities and create new safety problems.

RELATED: Norwegian buys itself some time

Gatwick is the London airport used by Norwegian for flights to and from Oslo, Bergen, Stavanger, Trondheim and Tromsø, while Norwegian also runs flights to the US and beyond from Gatwick. Passengers on cancelled flights were either being offered refunds or re-bookings, but with most all flights already sold-out through the weekend, the chances of traveling were slim indeed.

‘Full crisis,’ financially
Meanwhile, newspaper Dagens Næringsliv (DN) reported on Thursday that Norwegian Air’s parent company is facing “full crisis” in 11 days if it fails to acquire fresh capital to satisfy lenders. Norwegian is saddled with heavy debt because of its aircraft acquisitions to serve its massive route expansion in recent years.

Analyst Martin Stenshall at Danske Bank thinks Norwegian will violate the terms of its loans by New Year, if it fails to sell off many of its new aircraft. That in turn can cause suppliers to demand cash to pay for fuel of aircraft landing fees. “If the company has to report a violation of the conditions surrounding its debt, it can land in an evil spiral and the crisis will escalate,” Stenshall told DN.

The financial and liquidity problems caused by heavy debt (NOK 30 billion at the end of the third quarter) have been exacerbated by weaker earnings on airline tickets and heavy losses on its purchase of jet fuel at a fixed price. Norwegian has suffered losses on operating problems surrounding its long-distance routes.

This brand-new Boeing 737 jet was stuck in Iran this week, after engine trouble forced it to land at the nearest airport. US sanctions against Iran were making it difficult to get the spare parts the aircraft needs to fly out of Iran. PHOTO: Norwegian Air/Martin Engås

Norwegian told DN it had “nothing new to report” on Thursday regarding its debt and liquidity challenges or potential sales of aircraft. Nor did it want to comment on Danske Bank’s analysis. Earlier in the week, Kise sent a message to DN that the airline’s board had “full confidence” in the airline’s management.

It’s widely expected that Norwegian’s two major shareholders, 72-year-old founder Bjørn Kjos and 68-year-old Bjørn Kise, will need to inject new capital into the company. The company did report discussions to sell up to 140 aircraft into a new company that would be owned with an unidentified financial player. Finance director Geir Karlsen reported that he and his colleagues were still working to establish a “joint venture” to own aircraft.

Speculation was also rising that Norwegian’s troubles may revive merger talks with IAG, which owns British Airways among other airlines. IAG has not reported that it has lost interest in buying Norwegian, even after two offers were rejected by Kjos and Kise last spring.

Long Iranian layover
In the midst of its financial drama, Norwegian Air also had a serious problems last weekend with one of its new Boeing 737 aircraft, which developed engine trouble after taking off from Dubai. Its pilots chose to shut down the engine and make a controlled landing at the nearest airport, which was Shiraz in Iran.

Newspaper Aftenposten reported that passengers were sent home the next day on another flight, but problems have persisted for Norwegian. DN reported that’s because sanctions imposed on Iran by US President Donald Trump hinder Seattle-based Boeing from sending reserve parts to enable the aircraft to fly again.

“It’s correct that the aircraft is still in Iran and it’s not yet been clarified when technicians can start their work,” Lasse Sandaker-Nielsen, communications chief for Norwegian, told DN. The aircraft, delivered just two months ago, cost around NOK 550 million.

newsinenglish.no/Nina Berglund

LATEST STORIES

FOR THE RECORD

For more news on Arctic developments.

MOST READ THIS WEEK

Donate

If you like what we are doing, please consider a donation. It is easy using PayPal, or our Norway bank account. READ MORE