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Scaled-down Norwegian Air exits bankruptcy protection

Low-cost carrier Norwegian Air Shuttle emerged from bankruptcy protection on Wednesday following a massive restructuring that included a vast fleet reduction and dropping its long-haul business.

Scaled-down Norwegian Air exits bankruptcy protection
A Norwegian Air Shuttle Boeing 737. Alan Wilson Flickr

In financial difficulty even before the arrival of the Covid-19 pandemic – which aggravated its problems further by paralysing global air traffic – Norwegian was in December placed under bankruptcy protection in Ireland, where several of its subsidiaries are based, and in Norway.

With its creditors and aircraft leasing companies, the company has negotiated a reduction of its debt and financial obligations by between 63 and 65 billion kroner (6.2-6.4 billion euros, $7.5-7.8 billion), to between 16 and 18 billion kroner.

READ ALSO: Norway taps oil wealth to cushion Covid impact

In addition, Norwegian, once Europe’s third-biggest low-cost airline, has also dropped its loss-making long-haul business, cancelled many of its aircraft orders, slashed its fleet from 156 to 51 planes, and raised six billion kroner in a new share issue.

It is also expected to have reduced its number of employees from around 10,200 at the end of 2018 to some 3,300 by the end of the restructuring, according to financial news site e24.no.

With its restructuring plan approved by Norwegian and Irish courts, the company can now emerge from bankruptcy protection.

“It’s a relief to be a normal airline again,” chief executive Jacob Schramvtold reporters at a press conference.

Norwegian said Wednesday in a statement it has liquidity of seven billion kroner.

“This war chest can keep us afloat long after summer next year,” Schram said.

“We are strong enough to cope with a total reopening of society,” he told news channel TV2 Nyhetskanalen.

But the company, which has had just nine aircraft in operation since December 2020, continues to operate at a loss.

In the first quarter, when it transported just 210,000 passengers, the company posted a pre-tax loss of 1.19 billion kroner, compared to a loss of 3.29 billion a year earlier.

Now focused on Europe and in particular the Nordic countries, Norwegian plans to have 70 aircraft in operation next year, when travel is expected to resume as the pandemic wanes.

The company’s share price, which has been highly volatile of late, was up by almost 30 percent on Oslo’s stock exchange in midday trading.

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TRAVEL

Could Oslo-Copenhagen overnight train be set for return?

A direct overnight rail service between the Norwegian and Danish capitals has not operated since 2001, but authorities in Oslo are considering its return.

Norway’s transport minister Knut Arild Hareide has asked the country’s railway authority Jernbanedirektoratet to investigate the options for opening a night rail connection between Oslo and Copenhagen.

An answer is expected by November 1st, after which the Norwegian government will decide whether to go forward with the proposal to directly link the two Nordic capitals by rail.

Jernbanedirektoratet is expected to assess a timeline for introducing the service along with costs, market and potential conflicts with other commercial services covering the route.

“I hope we’ll secure a deal. Cross-border trains are exciting, including taking a train to Malmö, Copenhagen and onwards to Europe,” Hareide told Norwegian broadcaster NRK.

The minister said he envisaged either a state-funded project or a competition awarding a contract for the route’s operation to the best bidder.

A future Oslo-Copenhagen night train rests on the forthcoming Jernbanedirektoratet report and its chances of becoming a reality are therefore unclear. But the Norwegian rail authority earlier this year published a separate report on ways in which passenger train service options from Norway to Denmark via Sweden can be improved.

“We see an increasing interest in travelling out of Norway by train,” Jernbanedirektoratet project manager  Hanne Juul said in a statement when the report was published in January.

“A customer study confirmed this impression and we therefore wish to make it simpler to take the train to destinations abroad,” Juul added.

Participants in the study said that lower prices, fewer connections and better information were among the factors that would encourage them to choose the train for a journey abroad.

Norway’s rail authority also concluded that better international cooperation would optimise cross-border rail journeys, for example by making journey and departure times fit together more efficiently.

The Femahrn connection between Denmark and Germany, currently under construction, was cited as a factor which could also boost the potential for an overland rail connection from Norway to mainland Europe.

Night trains connected Oslo to Europe via Copenhagen with several departures daily as recently as the late 1990s, but the last such night train between the two cities ran in 2001 amid dwindling demand.

That trend has begun to reverse in recent years due in part to an increasing desire among travellers to select a greener option for their journey than flying.

Earlier this summer, a new overnight train from Stockholm to Berlin began operating. That service can be boarded by Danish passengers at Høje Taastrup near Copenhagen.

READ ALSO: What you need to know about the new night train from Copenhagen to Germany

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