Norwegian Air faces ‘very uncertain future’ after further aid denied

Norwegian Air said it is facing a “very uncertain future” after the government of Norway refused to grant further financial assistance to the airline.

The carrier was bailed out through state aid with stringent conditions attached in the spring, after the first wave of the coronavirus and the grounding of airline fleets.

However, with a further winter lockdown in many markets and a slower recovery than hoped, Norwegian had appealed for further aid.

On Monday, Norwegian said the Oslo government had announced the airline would not receive the further financial support that the carrier “had clearly communicated was necessary to maintain operations throughout the Covid-19 crisis”.

Although, until this year, the airline had operated entirely independently of the Norwegian state – and in the past had attracted the ire of unions in Oslo for its use of cheaper, foreign crews – its chief executive, Jacob Schram, said: “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 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.”

Norwegian has retrenched to flying in and out of Norway but was operating from a number of European bases before the pandemic. It pioneered low-cost, long-haul flights, offering cheap no-frills fares across the Atlantic in particular.

Before the coronavirus crisis it was also a significant player in the UK’s leisure and short-haul market, and one of the biggest airlines at London Gatwick.

However, it had long been tipped for failure by rivals, who saw its rapid expansion and borrowing as unsustainable.

Norwegian argued it had anticipated record profits in 2020 before the pandemic struck, after restructuring the company. Schram said: “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.”

The rescue deal agreed in May resulted in Oslo ploughing 3 billion kroner (£255m) into Norwegian, after aircraft lessors and other major creditors agreed to write off much of the airline’s debt.

By August, Norwegian indicated that the funding would not be sufficient to guarantee its survival, after reporting losses of 5.3bn kroner for the first half of 2020.