Norway is considering entering Norwegian Air capital to close down its long-distance business
The airline is asking the Norwegian state for entry into the capital of the Norwegian Air Company and has carried out long-haul flights has identified much of the strategy in recent years, according to a restructuring plan presented on Thursday. The plan, which is awaiting approval by the Irish Chamber of Commerce, seeks to prevent the already bankrupt company from running out of funds.
The Ministry of Trade and Industry has confirmed that it is in negotiations to buy a stake in the company. It is committed to focusing on travel in Europe to ensure survival, especially with a focus on domestic flights in Norway and the Nordic countries, and plans to work with a fleet of 50 aircraft this year, connecting them with major destinations on the continent. About 70 in 2022.
– Domestic travel in Norway and flights between the Nordic market and the rest of Europe will always be our backbone, and this will be the basis for the Norwegian of the future, said CEO Jacob Shram in a statement.
The company needs legal approval for the plan to continue restructuring the unpaid debt (approximately 7,000 million euros) under the current circumstances. The Norwegian to reduce its obligations to around 2 billion euros and raise around 500 million euros through a new share issue and other types of equity.
As a result of the removal of long-haul flights, subsidiaries in Italy, France, the United Kingdom and the United States, as well as employees working primarily on these routes, have been notified of the closure of bases. Ten years ago, the airline challenged major players in the sector such as British Airways by operating low-cost flights between Europe and the United States.
In terms of employment, the airline manages without 2,000 workers and the Boeing 787 Dreamline aircraft, 35 aircraft (almost all leased) are no longer needed and are ready to sell or rent. “Long-distance business is volatile and has suffered losses since 2013,” said the chief financial officer.
The Norwegian justified the decision due to his financial problems and travel restrictions imposed by the coronavirus epidemic and falling demand, which made long-distance routes unprofitable in the short and medium term. It operates only six of the 138 aircraft currently on the route. Of these, 70 holdings fall to fifty.
The Norwegian is facing a critical economic situation for many years in 2019 due to a temporary ban on the Boeing 737 MAX and problems with Rolls-Royce engines and exacerbated by the corona crisis.
Following the approval of the Irish and Norwegian courts for a double restructuring process to ensure their survival, the airline received support from its shareholders in mid-December for its restructuring plan, which includes issuing new shares and exchanging loans.
The Norwegian had already avoided bankruptcy in May after receiving support from creditors and shareholders for a plan to convert $ 1.404 billion into shares. This enabled him to receive 275 million euros in state aid. To finally reach the public means to take a stake in the company.
“The company has a special interest in participating in the broadcast. Norwegian recently sent a new message to the Norwegian government about a state partnership based on a new business plan, “said Shram.