Norwegian Air Faces Uncertain Future as Government Refuses Further Aid; Furloughs 1,600 Employees
The airline expressed profound disappointment on Monday as the Norwegian Government has ruled out further financial report. Norwegian will also furlough an additional 1,600 employees as they cut capacity due to ongoing COVID-19 related travel restrictions.
Today (November 9, 2020), Norwegian Air announced that the government of Norway has ruled out further financial support for the airline, thereby creating a very uncertain future. The company vows to continue to do everything possible to emerge from the crisis and continue to provide competition and affordable airfares for all. Since the onset of the global COVID-19 pandemic, Norwegian has undergone substantial financial restructuring and was successful at converting NOK 18 billion in debt to equity. At the start of the year, the airline had predicted the best summer 2020 season in the company’s history. The carrier has 2,300 employees in Norway and several thousand more in other markets. In Monday’s announcement, Norwegian Air’s CEO, Jacob Schram, said,
“First of all, I would like to thank our customers, colleagues, the Norwegian Parliament, shareholders, leasing companies, creditors, bondholders, the travel industry, and all others who have been supporting Norwegian in these challenging times. The fact that our government has decided to refrain from providing Norwegian with further financial support is very disappointing and feels like a slap in the face for everybody at Norwegian who is fighting for the company when our competitors are receiving billions in funding from their respective governments.
“We are called Norwegian, We are Norwegian. We are a part of Norway and Norway is a part of us. This is the way it has been for almost 20 years. The support that we have received from our customers throughout all these years has meant a lot to us, in particular now during the Covid-19 crisis. We offer routes from Kristiansand in the south to Svalbard in the north, routes that cannot be replaced overnight. It will take time and it will have consequences for the competitive situation in Norway, like we have seen before. We also notice that airlines across the world that are also dependent on support to survive, are receiving billions from their respective authorities. Based on the number of tourists we fly to Norway, we contribute to sustaining 24,000 people in our country and boost the local economy by approximately 18 billion NOK per year. That alone clearly demonstrates that even moderate financial support, would constitute a profitable investment for Norway. How anyone could come to a different conclusion is impossible to understand. The local travel industry and businesses have again and again emphasized the importance of Norwegian’s route network. I recently visited all of our four bases in Norway and also met with local politicians and businesses.”
“We could clearly see the results of our hard work to go from growth to profitability, which was initiated in 2018. With further support to get Norwegian through this unprecedented crisis for the aviation industry, we would come out as a more sustainable and competitive airline, with a new structure and improved operation. Without support, the way forward has become much more uncertain. However, we will do whatever we can get through this crisis, to the benefit of our hard-working colleagues, our «Red Nose Warriors», and our customers.”
Following the disappointing news regarding further state aid, Norwegian announced that they will furlough an additional 1,600 team members as they are force to cut capacity, due to the lack of financial support as well as ongoing COVID-19 related travel restrictions. The carrier will continue to operate domestic routes in Norway between Oslo and Alta, Bergen, Bodø, Evenes, Haugesund, Kirkenes, Molde, Stavanger, Tromsø, Trondheim and Ålesund as well as between Tromsø and Longyearbyen. Speaking on the additional furloughs, Mr. Schram, added,
“Following today’s disappointing announcement from the government, we have no choice but to furlough an additional 1,600 colleagues and park 15 of the 21 aircraft we’ve operated the past months. Recently government-imposed travel restrictions have effectively stifled any hope of a stable and progressive recovery, Norwegian has been hit from all sides by factors outside of our control. This is a sad day for everyone at Norwegian and I sincerely apologize to all our colleagues that are now affected, but there is no other alternative. Prior to Covid-19, Norwegian employed more than 10,000 people, but in the coming months, there will be only 600 colleagues employed. Our goal is to keep six aircraft on domestic routes in Norway, and I expect that Norwegian will also receive route support from the Ministry of Transportation, as previously announced. We will do everything we can to offer affected customers alternative travel options and I sincerely apologize for the inconvenience caused by this situation. All affected customers will be notified by us directly.”
Norwegian Air operates a modern fuel efficient fleet and offers guests value and choice throughout their journey including free ‘gate to gate’ Wi-Fi allowing customers to remain connected throughout their onboard experience. The carrier is the world’s fifth largest low-cost carrier (LCC) and carried over 36 million passengers in 2019. Norwegian also received awards for “Loyalty Program of the Year’ and ‘Best Customer Service’ at the 2020 Freddie Awards for their Norwegian Reward loyalty program. Additionally, the airline was voted ‘Europe’s Best Low-Cost Airline’ by passengers at the SkyTrax World Airline Awards from 2013-2019 as well as ‘World’s Best Low-Cost Long-Haul Airline’ for the past five years.
Source: Norwegian Air