Norwegian Air, Scandinavian Airlines (SAS) and Norway’s short-haul airline Widerøe are all asking the Norwegian government to cover lost revenues for both this year and next year. Loan guarantees aren’t enough, they claim, to bail them out of the Corona virus crisis.
“With such a bad summer as we’ve had this year, we don’t have the financial muscle to get through the winter,” Norwegian Air’s chief executive, Jacob Schram, told newspaper Dagens Næringsliv (DN) after a meeting the airlines had with top officials at no less than three government ministries on Friday: Transport, Trade and Finance.
The head of the airlines’ national employers’ organization, NHO Reiseliv, has also demanded more financial aid for the deeply troubled airlines that collectively expect to lose NOK 27 billion (USD 3 billion) in 2020 and 2021. They think they can handle about half that, through massive cost-cutting, but not the other half, and therefore need financial relief of around NOK 13.5 billion.
It remains unclear whether that could come in the form of tax exemptions, more loan guarantees or cash from the government. The airlines intend to file a more detailed plan for restructuring and specific bailout requests with the government and have another meeting in a few more weeks.
“Then we’ll go through what we think we need and hopefully have a draft request ready,” Schram said.
Bonus party over
Norwegian’s part of the requested bailout comes just after DN reported on bonuses paid to top Norwegian Air executives last year, just before the long-troubled airline’s founder and former CEO Bjørn Kjos stepped down. Kjos’ massive intercontinental expansion plan ended up leaving the airline with troubled aircraft from Seattle-based Boeing and huge debt. Kjos reportedly nonetheless approved bonuses of between NOK 2 million and NOK 6 million to four members of management, while also paying sky-high fees to external consultants.
The bonuses were paid out several months before the Corona crisis hit, and new CEO Schram has stressed that the days of such high extraordinary pay are over, but it’s all provoked labour unions at a time of massive layoffs. Newspaper Dagsavisen editorialized on Monday that all the talk about “solidarity” among management and workers at Norwegian Air loses credibility in the face of such high pay for a few leaders. Kjos has said he can’t remember the bonuses doled out before Norwegian Air reported huge losses for 2019.
No promises from the ministers
The bonuses won’t make it any easier for Norwegian to win sympathy from government officials, and that’s what all three airlines need now. Trade Minister Iselin Nybø wouldn’t say what form any new aid might take, or whether she’d prefer direct cash assistance or for the state to become a shareholder.
“The state has been a shareholder in SAS and chose to sell off its stake before this situation came up,” Nybø told DN. “We haven’t had that type of discussions because we presented (loan guarantees) that were well-received. We’ll have more discussions. I don’t want to rule anything out, nor do I want to create any great expectations.”
SAS had hoped earlier this year that the Norwegian government would rejoin Sweden and Denmark as a shareholder, but that didn’t happen. Shareholders in Norwegian Air may likely be asked to come up with fresh capital once again.
Schram had one main message to Nybø, Transport Minister Knut Arild Hareide and representatives from the Finance Ministry: “We need all the help we can get.”