Norwegian Air Shuttle warned it was facing a “very uncertain” future after Norway’s government turned down the low-cost airline’s request for additional support to survive the coronavirus crisis.
Jacob Schram, Norwegian’s chief executive, on Monday lashed out at the centre-right government in Oslo, calling it “impossible to understand” why they failed to back the airline that employs thousands in the country and brings in tourists from across the world.
Iselin Nybo, Norway’s minister for trade and industry, said that Norwegian had asked for billions of krone of support and that the government considered it was not a “sound use” of taxpayers’ money.
“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,” said Mr Schram.
Norwegian entered the coronavirus crisis as one of the most vulnerable airlines in Europe due to its high debt levels. It managed, thanks to a previous support package from Norway’s government, to convert NKr18bn ($2bn) of debt into equity from leasing companies, bondholders and suppliers, leaving its former shareholders with almost nothing.
But as coronavirus has returned in a second wave in Europe and airlines have grounded most of their fleets and extended the timeline for an industry recovery, Norwegian has been forced to ask for additional help.
It has never had the Norwegian government as a shareholder — unlike SAS, the Scandinavian flag carrier that Oslo has now sold out of but which still has Sweden and Denmark as investors — and has sometimes clashed with the government and local unions as it sought to base its staff and aircraft in countries such as Ireland.
Still, Mr Schram on Monday insisted: “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.”
Norwegian is likely to find a second restructuring harder as its biggest creditors, the leasing companies for its aircraft, have stressed that it is highly unusual for them to take an ownership stake.
Norwegian’s shares are down 98 per cent this year alone, giving it a market capitalisation of just NKr2.4bn ($260m) at the end of Friday’s trading.
Mr Schram argued that without coronavirus, Norwegian was looking forward to its best ever summer season.
“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, with a new structure and improved operation. Without support, the way forward has become much more uncertain,” he said.