Norwegian Air to end transatlantic flights, seeks state help
OSLO, Jan 14: Norwegian Air, which challenged British Airways and other long-established rivals by launching transatlantic flights, said on Thursday it will end those services, causing 2,000 job losses, and seek government help.
The budget airline, founded in 1993, has been forced to ground all but six of its 138 aircraft due to the pandemic.
"We have decided that long-haul is no longer in our business plan," CEO Jacob Schram told an online news conference.
The plan also involves the closure of Norwegian Air units in the United States, Britain, France and Italy.
"The brutal reality is that (they) will be declared bankrupt ... 2,000 employees are affected," said Schram.
The airline aims to cut its fleet to about 50 aircraft before expanding to around 70 in 2022, it said.
The plan is subject to approval by an Irish bankruptcy court.
"Overall, this seems like a sensible plan," said Dublin-based brokerage Davy in a note to clients.
"The long-haul business was volatile and generally loss making since its launch in 2013 - in this environment, withdrawal is the only viable option."
The company had previously hoped it could keep some of its long-haul business.
Norwegian risks running out of cash by the end of March if it fails to restructure debt and liabilities of 66.8 billion crowns ($7.89 billion), including 48.5 billion in interest-bearing debt, it warned late last year.
It hopes to cut its debt to around 20 billion crowns and raise 4-5 billion through a mix of new shares and hybrid capital.
The new plan aligns with "signals" from Norwegian politicians about what would be required for the state to provide further help and possible state participation, Schram told Reuters.
The ministries of transport and industry were not immediately available for comment.
The plan could return Norwegian to profit before interest, tax, depreciation and amortisation (EBITDA) later this year "based on conservative assumptions both in relation to the length of the COVID-19 pandemic and relating to revenue, costs and load factors", it said. -Reuters