Norwegian Air Discusses Potential Nationalization

posted on 2nd October 2020 by Eddie Saunders
Norwegian Air Discusses Potential Nationalization

By Daanyal Faruq, airwaysmag

Budget airline Norwegian Air (DY) is reportedly in talks with the government of Norway to discuss nationalization.

The Norwegian government is considering taking a stake in the struggling airline after Norwegian’s chief executive Jacob Schram stated that the carrier would need additional cash to see out the winter.

Norwegian received a £250m bailout back in March, as the pandemic forced airlines to ground their planes. However, Schram stated that the previous bailout “is not enough to get through this prolonged crisis.” Government officials suggested they would bail out DY over rival airline SAS, which is part-owned by Sweden and Denmark.

Jon Gunnes, a transport policy spokesman, stated that supporting the carrier is “very important.” Officials confirmed that any stake in Norwegian would be temporary, as is the case with other European airlines such as Lufthansa (LH).

offering long-haul flights at budget prices. With the TATL predicted to reduce by US$7bn this winter, DY has tough times ahead.

Pre-pandemic, Norwegian was one of the biggest airlines operating from Gatwick airport (LGW) behind easyJet (U2) and British Airways (BA). The budget carrier offered cut-price flights to several cities in North America as well as exotic destinations including Rio de Janeiro and Buenos Aires.

However, its rapid expansion has led to significant debt, which is a huge problem given the carriers’ loss of revenue.

Mounting Losses

Lack of demand due to the COVID-19 pandemic led to DY reporting a pre-tax loss of US$544m (4.79bn Norwegian krone or £409m) in the first half of the year.

Currently, the majority of Norwegian’s fleet remains grounded, with just 25 aircraft in service. The airline has 37 Boeing 787 Dreamliners and 103 737. The Boeing 737 MAX scandal has further added to Norwegian’s problems. The airline canceled its order of 92 additional 737 MAX aircraft in June.

The airline aims to ramp up services towards a normal level in 2022.