Norwegian Air unsure of future as government refuses support
‘This would not be a responsible use of public funds’ says Norwegian industry minister
Turbulence: Norwegian Air has had its request for government assistance rejected.
Photo: Simon Dawson/Bloomberg
Terje Solsvik
November 10 2020 05:00 AM
THE Norwegian government will not provide additional financial support for Norwegian Air, which has been hit hard by the coronavirus pandemic, the industry ministry and the ministry of transportation said yesterday.
Norwegian Air, which has grounded most of its fleet, said in August it would run out of cash in the first quarter of 2021 unless it could secure fresh funds and has held talks with the government in the hope of winning support.
"That the government has decided to reject the request for funds is disappointing and feels like a punch in the gut for everyone at Norwegian," said CEO Jacob Schram. "The company and the board will turn every stone to get through this situation," he told a news conference yesterday, adding that the budget airline is not out of cash yet.
Asked whether the company was at risk of bankruptcy, Mr Schram said he would not rule out any potential outcomes.
"But we need ventilator support to get through the winter," he added.
Creditors and lessors took control of the airline in May with a financial rescue that allowed it to access state-guaranteed loans of three billion Norwegian crowns (€281m) and thus prevent a collapse.
"Norwegian Air has asked for billions of crowns in additional support, and the government has concluded that this would not be a responsible use of public funds," said Industry Minister Iselin Nyboe.
The airline industry is likely to provide sufficient services and will still see healthy competition in the time ahead, she said.
Scandinavian carrier SAS is a major competitor in Norway, and Hungary's Wizz Air recently launched several domestic routes.
Terje Solsvik
November 10 2020 05:00 AM
THE Norwegian government will not provide additional financial support for Norwegian Air, which has been hit hard by the coronavirus pandemic, the industry ministry and the ministry of transportation said yesterday.
Norwegian Air, which has grounded most of its fleet, said in August it would run out of cash in the first quarter of 2021 unless it could secure fresh funds and has held talks with the government in the hope of winning support.
"That the government has decided to reject the request for funds is disappointing and feels like a punch in the gut for everyone at Norwegian," said CEO Jacob Schram. "The company and the board will turn every stone to get through this situation," he told a news conference yesterday, adding that the budget airline is not out of cash yet.
Asked whether the company was at risk of bankruptcy, Mr Schram said he would not rule out any potential outcomes.
"But we need ventilator support to get through the winter," he added.
Creditors and lessors took control of the airline in May with a financial rescue that allowed it to access state-guaranteed loans of three billion Norwegian crowns (€281m) and thus prevent a collapse.
"Norwegian Air has asked for billions of crowns in additional support, and the government has concluded that this would not be a responsible use of public funds," said Industry Minister Iselin Nyboe.
The airline industry is likely to provide sufficient services and will still see healthy competition in the time ahead, she said.
Scandinavian carrier SAS is a major competitor in Norway, and Hungary's Wizz Air recently launched several domestic routes.
"Norwegian is currently evaluating the effects of the current situation with the aim of safeguarding the interest of all stakeholders," the company said.
More funding could come from the sale of aircraft, conversion of more debt to equity or from its owners and the Norwegian government, it said, while declining to specify the amount it might seek.
Reuters
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