Norwegian will abandon long-haul flights and operate only regional, short and medium-haul flights in Europe as part of an insolvency plan. The airline also plans to lay off another 2.100 employees.
For example, Norwegian will temporarily suspend bases at Paris CDG and London Gatwick, leading to redundancies in a total of about 1300 jobs.
The new recovery plan of the Norwegian company, drawn up for 2021, includes flights to Nordic and European destinations, which can be stopped with about 50 single-aisle planes. In 2022, Norwegian plans to reach a fleet of 70 aircraft and an expanded operational network.
Currently, the Norwegian fleet measures 70 x 737-800 and 18 of the 110 x 737 MAX 8 originally expected (plus the 10 x 787-8 and 29 x 787-9 Dreamliner). Some of these planes were resold or sold to leasing companies.
Norwegian temporarily abandons long-haul flights.
Norwegian long-haul flights to destinations in the US, Latin America and Asia were operated with fuel-efficient Boeing 787 Dreamliner aircraft, but currently unprofitable. The withdrawal of Norwegian from the market will ease the pressure on rivals British Airways and Virgin Atlantic.
Low-cost long-haul flights have suffered as a result of travel restrictions imposed by the COVID-19 pandemic. IAG, which at one point made an offer for Norwegian, has closed its Paris-based OpenSkies unit, while AirAsia X - AirAsia's long-haul flight division - is in the process of restructuring.
The Norwegian carrier applied for creditor protection in November and obtained court approval in December to try a restructuring.
Norwegian (Norwegian Air Shuttle), which is fighting insolvency before the pandemic, is part of a list of over 40 airlines that were forced to declare insolvency since the Covid-19 pandemic led to declining demand for flights.
Government position
The latest plan is the participation of the Norwegian government. He rejected a previous aid, partly because part of the aid would have been used to finance long-haul flights from London Gatwick Airport, and this would not bring any financial benefit to Norway.
Approximately 2.100 employees will be laid off. 1.100 redundancies will take place in the UK alone, where about 300 pilots will be laid off.
Excess debt
The rapid growth of the carrier fueled an increase in debt as the carrier ordered new aircraft and opened several routes. Norwegian is now trying to reduce its loans to around 20 billion kroner (2 billion euros), the statement said.
The Norwegian airline will try to raise EUR 590 million through a share issue, a private placement and the use of hybrid economic instruments.
Shares of the airline fell by up to 12% in total and by 5,2% in Oslo alone. The carrier has lost 98% of the company's total value in the last year alone.
Under the restructuring plan, the current shareholders would own approximately 5% of the company's equity. They could also participate in an offer of rights of up to 400 million crowns.
Affected creditors would receive about 25% of the shares, while new investors would have 70% of the company by issuing new shares.