Norwegian Air confirmed on Thursday that it’s dropping its intercontinental long-haul routes and will instead concentrate on flights in the Nordic region. Around 2,000 employees are losing their jobs.
The airline, which began with shuttle service on Norway’s West Coast and then evolved into first a domestic- and then European carrier, is already in the process of unloading its fleet of the Boeing 787 Dreamliners that became a nightmare for Norwegian. Many were plagued by technical problems and Norwegian lacked back-up aircraft or alliances with other airlines when they couldn’t fly. The airline’s huge acquisition of the new Dreamliners also left it saddled with massive debt, and the airline had to recapitalize on several occasions, while also facing labour unrest and a debilitating pilots’ strike. Its ambitious founder finally withdrew last year.
Then came the Corona crisis, which forced the grounding of airlines all over the world and then only a fraction of the traffic they’d had before the Corona pandemic began. It’s all led to Norwegian being forced to end its pioneering low-fare intercontinental expansion and return to its roots.
Back to ‘core operations’
“Under these circumstances,” state the airline in a message to the Oslo Stock Exchange, it’s no longer fruitful for Norwegian to continue its long-distance flights. The decision comes as no surprise, and the airline will scale down its fleet of aircraft to just 50 from the 140 it has today. Its route system will be reduced to “core operations” in the Nordic area for short- and medium-distance routes using narrow-body aircraft.
The drastic reduction in service is aimed at saving the airline, which is currently trying to reorganize under the protection of bankruptcy courts in Norway and Ireland. It is also expected to reduce Norwegian’s debt by around 60 percent, to roughtly NOK 20 billion.
Airline officials are also asking the Norwegian government once again for more state financial support. The government has assisted both Norwegian and its rivals SAS and Widerøe with funding for routes to maintain critical airline service in Norway, but has been reluctant to provide more capital or become an owner in the airline. The airline’s heavy debt simply presented too much of a risk for Norwegian taxpayers.
State re-evaluating aid
Now the government may be more willing to help save Norwegian. Business and Trade Minister Iselin Nybø issued a statement of her own on Thursday, noting that Norwegian’s new request differs from the one rejected in November.
“We are now underway with a thorough evaluation of this new request,” Nybø wrote in an email to state broadcaster NRK. She stressed that Norwegian Air is now making a considerable effort to emerge from its crisis, which began long before Corona.
“We are aware of the time limits under which Norwegian is working, and will work as fast as we responsibly can with our evaluation,” Nybø wrote.