Norwegian will keep majority of its operations suspended until April 2021

Apr 27, 2020

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Low-cost carrier Norwegian Air doesn’t expect to resume long-haul international flights until summer 2021. While 95% of the airline’s aircraft are currently grounded, the carrier is pleading with investors for a lifeline before it runs out of cash in mid-May.

In a presentation to bondholders released on Monday (PDF), Norwegian indicated that it plans to ramp up its operations in phases in the aftermath of the coronavirus crisis. Most notably, the airline doesn’t expect to resume its European short-haul and long-haul operations until April 2021 at the earliest.

Until then, both short-haul and long-haul sets of aircraft remain grounded and subject to travel restrictions. For long-haul flights, when the airline is set to gradually ramp up routes as of April 2021, it will focus on its most profitable “top tier” cities — such as London (LGW), New York (JFK) and Los Angeles (LAX).

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Currently, Norwegian is using seven aircraft to operate on short-haul Nordic routes while it focuses on minimising cash burn. The airline expects these minimal operations to continue until April 2021 — through the “hibernation phase” — when it will gradually resume its core routes throughout Europe and on a global scale.

The airline is predicting that it won’t be until January 2022 that it’s able to fully operate normal operations.

(Image courtesy of Norwegian)

Keeping operations grounded for the most part until April 2021 will allow the carrier to minimise losses during the low winter period, opening up again for peak summer travel in 2021.

The announcement of its delayed operation resumption came as part of the carrier’s proposed rescue plan, which sees the airline running out of cash by mid-May. In the airline’s attempt to secure a loan from the Norwegian government worth 2.7 billion crowns ($261 million), its planned debt-to-equity swap would see the majority ownership swap to investors and bondholders, with current shareholders left just with 5.2%.

It’s “critical to get access to the State Aid Package by mid May before the company runs out of cash”, the airline said in its presentation to investors.

Last week, Norwegian’s four Swedish and Danish subsidiaries filed for bankruptcy.

Norwegian isn’t the only carrier strapped for cash as it continues to battle the coronavirus crisis. Virgin Atlantic founder Richard Branson said last week that the airline would collapse without government support. Fellow European chief executive Ben Smith, CEO of Air France-KLM, said that it will take two years for air traffic level to reach the same point as 2019.

Featured photo by Nicolas Economou/Getty Images.

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