Published on : Thursday, January 14, 2021
Low-cost carrier Norwegian recently outlined a simplified business structure and dedicated short haul route network as it plans a return from the COVID-19 shutdown. The airline mentioned that with the latest plan the carrier is hoping to build a robust and solid company that will attract investors and continue to serve new and existing customers. The company said it would focus on its core Nordics business, operating a European short haul network with narrow body aircraft.
The airline will continue to meet its customers’ needs by offering competitive fares across a broad range of domestic routes in Norway, across the Nordics and to key European destinations. The current plan is to serve these markets with around 50 narrow body aircraft in operation in 2021 and to increase that number to around 70 narrow body aircraft in 2022. The airline is also targeting to reduce its debt significantly to around NOK20 billion and to raise NOK4-5 billion in new capital through a combination of a rights issue to current shareholders, a private placement and a “hybrid instrument”.
The company mentioned that it has received concrete interest in participation in the private placement. It has also recently reinitiated a dialogue with the Norwegian government about possible state participation based on the new business plan. Norwegian also shared that the COVID-19 pandemic has profoundly affected the entire aviation industry and travel restrictions and changing government advice continue to negatively influence demand for long haul travel, and Norwegian’s entire Boeing 787 Dreamliner fleet has been grounded since March. It mentioned that under such circumstances a long-haul operation is not viable, and hence the operations will not continue.
The consequence of this decision is that the board of directors of the legal entities employing primarily long-haul staff in Italy, France, the UK and the US have contacted insolvency practitioners. Jacob Schram, Chief Executive, Norwegian said in a press statement that short-haul network has always been the backbone of Norwegian and will form the basis of a future resilient business model. He shared that he is pleased to present a robust business plan today, which will provide a new start for the company. He added that by focusing operation on a short haul network, the airline will attract existing and new investors, while serving customers and supporting the wider infrastructure and travel industry in Norway and across the Nordics and Europe.