Budget airline Norwegian Air become the latest in an ever-growing list of airlines filing for bankruptcy in the wake of the pandemic.
Norwegian today filed for bankruptcy protection in Ireland, where they will allow the company to undergo the process of examinership. Examinership means that Norwegian will have a window of time to attempt to reduce its debt levels and look for further funding whilst its assets are protected. Norwegian believe it has enough money to make it through the examinership process, after which it hopes to be in a more secure financial footing.
The move comes just a week after Norway’s government refused to provide further aid to the struggling airline, which the company described as a “slap in the face.” With only 600 staff remaining of the 10,000 that were employed before the pandemic, and a fleet of only 6 in operation, it’s of little surprise that they find themselves in their current predicament.
In May, Norwegian received 10 billion kroner ($1.1 billion USD) in a debt-for-equity deal with the government after the grounding of the majority of its fleet cast the airline’s future into jeopardy. However, with the pandemic far from over, they have struggled to recover from their reduced flight schedule and lack of flyers, leading to today’s move towards bankruptcy.
Covid-19’s Impact on Norwegian Air
One of Europe’s largest airline, Norwegian has been decimated by the pandemic. In this year’s third quarter, Norwegian carried only 1 million passengers, whilst in the same period last year, they had just over 10 million. With a quarterly operating loss of $310 million, it’s clear to see why they hoped for another round of funding from the government.
However, Covid-19 isn’t the only issue that has affected operations at Norwegian. The grounding of Boeing 737 MAX airlines in March 2019 was one of many issues that impacted on the airline’s financials. Other issues, such as faults with airplanes causing further groundings and delays in the delivery of new airplanes, meant that the airline was never far away from strife. The rapid spread of the pandemic was the ultimately the tip of the iceberg, and a setback that it will struggle to recover from.
A Pioneering Airline
Today’s news will be heralded as a sad day for aviation fans, as Norwegian are considered to be pioneers in the sky. In 2013, Norwegian made headlines and won plaudits for making it possible to fly one-way from London to New York for as little as £149. They since added trips to the USA’s East coast, with travel from London Gatwick to Los Angeles also available for less than £200.
Their success is down to, in part, their use of Boeing 787 Dreamliner planes in their fleet. The 787 is, relatively speaking, an airplane that is economical fuel-wise and with a longer range that allows it to travel across the Atlantic, allowing the firm to offset their travel costs with the savings. They also endeavour to have a quick turn-around after landing, which allows their planes to be in the air for 18 hours – much longer than the industry average of 12 – maximising their routes and profitability.
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