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Norway Refuses a Second Bailout for Embattled Low-Cost Carrier Norwegian

Norway Refuses a Second Bailout for Embattled Low-Cost Carrier Norwegian

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The government of Norway has today confirmed that it has turned down a plea from the embattled low-cost airline Norwegian for more financial state aid saying the request for billions in Kroner was not a “sound use” of taxpayers money. But the loss-making budget carrier said the bailout was essential to keep the airline flying, leading to fears that Norwegian could plunge into insolvency.

Shortly after the government announcement, Norwegian said it was “now facing a very uncertain future” and chief executive Jacob Schram described the decision as a “slap in the face for everybody at Norwegian who is fighting for the company”.

Photo Credit: Norwegian
Photo Credit: Norwegian

Schram contrasted the decision of the Norwegian government with the bailouts offered by the likes of France, Germany and the Netherlands who have propped up their national flag carriers with billions in state aid.

“The fact that our government has decided to refrain from providing Norwegian with further financial support is very disappointing and feels like a slap in the face for everybody at Norwegian,” Schram said on Monday.

“We are called Norwegian, We are Norwegian. We are a part of Norway and Norway is a part of us. This is the way it has been for almost 20 years,” he continued. Scram said the demise of Norwegian would hit regional connectivity and undermine competition.

“How anyone could come to a different conclusion is impossible to understand,” he blasted.

Norway granted its namesake airline a $267 million bailout earlier this year and the government says its “extraordinary contribution” to the wider aviation industry to see it through the COVID-19 pandemic amounts to as much as 13 billion Kroner. These include waivering a number of fees and paying airlines to operate some regional routes.

As far back as August, Norwegian indicated that it would need a second bailout in order to survive the winter and last month, Schram suggested the airline was in talks with Oslo over possibly nationalising the airline. That idea now appears to be completely out of the question.

Norwegian grounded nearly its entire fleet at the height of the pandemic, keeping just a few planes in the air to serve domestic and regional routes. The airline resumed short-haul European routes in the summer but has since scaled back its network as a second wave of COVID-19 pummels the continent. Long-haul routes have been suspended until April 2021 at the earliest.

This isn’t the first time Norwegian has faced speculation over its future. In late 2018, there was widespread media speculation that the airline was facing insolvency as losses mounted following its rush to build a long-haul route network that was beset with problems. Months earlier, the airline had rejected a takeover bid from European airline group IAG saying it had undervalued the carrier.

“The government has put in place a number of measures to remedy the situation in Norwegian aviation,” commented Transport Minister Knut Arild Hareide on Monday. “We will return soon with information on the continuation and strengthening of these measures.”

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