Norwegian Air's days of pioneering low-cost transatlantic travel are over. The airline will scrap all long-haul flights from its route network as part of a wide range of measures designed to save the company from bankruptcy and ensure a sustainable future.
Norwegian is currently under bankruptcy protection in Ireland while its management works to come up with a feasible plan to continue operations.
In an announcement to the Oslo Stock Exchange, Norwegian blamed COVID-19 travel restrictions and "changing government advice" for the drop in demand that prompted the decision: "Under these circumstances a long haul operation is not viable for Norwegian and these operations will not continue."
The legal entities employing long-haul staff in Italy, France, the U.K. and the U.S. have contacted insolvency practitioners. "It is with a heavy heart that we must accept that this will impact dedicated colleagues from across the company," said Jacob Schram, CEO of Norwegian in a press release to accompany the announcement.
In 2021 and beyond, the airline will focus on flights within Norway and the Nordic countries, and to/from other parts of Europe using a fleet of up to 50 medium-distance narrow-body aircraft.
Our short haul network has always been the backbone of Norwegian and will form the basis of a future resilient business model, added Schram.
Norwegian's long-haul activities are one of the most problematic parts of the business. While all airlines have endured a difficult 2020, the associated debt with this activity made the company especially vulnerable to reduced revenue.
A large proportion of Norwegian's $5.6 billion debt is related to previous aircraft purchases, including Boeing 787 Dreamliners and the troubled Boeing 737 MAX.
The end of long-haul operations is just one of the measures in the plan that Norwegian hopes will be accepted by the examinership and reconstruction processes. It will also involve the second drastic corporate restructuring in less than 12 months.
The plan states that current shareholders will "hold approximately 5% of the shares in the company post-reconstruction" and will be offered the opportunity to participate in a rights offering of up to 400 million Norwegian kroner ($47.2 million).
Along with SAS and Widere, Norwegian received government help during 2020 in the form of a state support package for the Norwegian aviation industry. However, Norwegian's subsequent request for direct financial support was declined two months ago.
Despite this, the airline has once again approached the Norwegian government. Norway's minister of trade and industry Iselin Nyb told NRK that the request will be considered: "What Norwegian is now outlining is something other than the request we considered in November last year. We are now in the process of a thorough assessment of this new inquiry."