Norwegian Air suffers a physique blow as the federal government guidelines out extra Reuters assist
© Reuters. FILE PHOTO: Norwegian Air Sweden Boeing 737-800 aircraft SE-RRJ is approaching Riga International Airport in Riga
By Terje Solsvik and Gwladys Fouche
OSLO (Reuters) – Norwegian Air (OL :), hit by the pandemic, faces a fight for survival this winter, the country’s government said on Monday that it would not provide any additional financial support for the troubled airline.
Norwegian Air, which has been badly hit by the coronavirus crisis and has landed most of its fleet, announced in August that it would be out of cash in the first quarter of 2021 unless it can raise new funds and held talks with the government in 2021 hoping to gain support.
“The company and the board of directors will do everything possible to cope with this situation,” said CEO Jacob Schram on Monday morning at a press conference and added that the low-cost airline still has no money.
“But we need ventilator support to get through the winter.”
When asked if the company was bankrupt, Schram said he would not rule out possible outcomes.
Norwegian stocks fell 17% to 0958 GMT, extending this year’s price decline to 99%.
The Norwegian center-right coalition government advocated free enterprise and has long ruled out the nationalization of Norwegian or other aviation companies. In 2018, it sold the remaining 10% of the state to rival SAS (ST :).
“It’s a difficult message. We are responsible for the responsible use of public funds,” said Industry Minister Iselin Nyboe at an earlier press conference.
“Norwegian Air has a financial structure that makes it risky for us to provide assistance. It was not defensible.”
Norwegian Air, a pioneer in low-cost transatlantic air travel, had nearly $ 8 billion in debt by mid-2020 due to its rapid expansion, making it vulnerable to the aftermath of the COVID-19 pandemic. The results of the third quarter are to be published on Tuesday.
The airline has shown great ability to overcome financial difficulties in the past, said Transport Minister Knut Arild Hareide.
“I don’t want to speculate on their ability,” Hareide said when asked about Norway’s chances of staying in the field.
Creditors and lessors took control of the airline in May with a financial bailout that allowed it to access government-guaranteed credit of 3 billion kroner ($ 329 million) when the company tried to run a stripped-down service .
Norwegian only operated 21 of its aircraft last month and left more than 100 on the ground, including its entire fleet of 37 Boeing (NYSE 🙂 787 Dreamliners deployed on transatlantic voyages.
The aviation industry is likely to provide adequate services and continue to see healthy competition in the period ahead, Nyboe said.
The Scandinavian airline SAS is a major competitor in Norway and the Hungarian airline Wizz Air (L 🙂 recently launched several flights to Norwegian cities.
“Norwegian is assessing the impact of the current situation with the aim of safeguarding the interests of all parties involved,” said the airline.
The company said more funds could come from selling aircraft, converting more debt into equity, or from its owners and the Norwegian government, while refusing to disclose the amount it may seek.
The government also said it had turned down a start-up carrier’s application for public funding.
So far this year, the government has allocated an estimated 13 billion kronor to support the aviation industry, including loans, guarantees and tax cuts.