Long-haul low cost carrier Norwegian is set to ditch the long-haul side of its business to simplify its business structure and operate “a dedicated short-haul route network”.
The airline said yesterday that it is in talks with the government about possible aid, and will return to its roots as a short-haul European carrier.
According to a statement from the airline, it will only operate around 50 narrowbody aircraft in 2021, with a plan to increase this to 70 in 2022.
“The Covid-19 pandemic has profoundly affected the entire aviation industry. Travel restrictions and changing government advice continue to negatively influence demand for long haul travel, and Norwegian’s entire Boeing 787 Dreamliner fleet has been grounded since March 2020. Future demand remains highly uncertain. Under these circumstances a long haul operation is not viable for Norwegian and these operations will not continue. The consequence of this decision is that the board of directors of the legal entities employing primarily long haul staff in Italy, France, the UK and the US have contacted insolvency practitioners. Norwegian will continue to assess profitable opportunities as the world adapts and recovers from the impact of Covid-19.”
said the airline in a statement.
Norwegian is seeking around $590 million through a new rights issue, a hybrid instrument and a private placement. This is the latest development in its restructuring process, being conducted under Irish examinership.
“Our short-haul network has always been the backbone of Norwegian and will form the basis of a future resilient business model. I am pleased to present a robust business plan today, which will provide a new start for the company. By focusing our operation on a short-haul network, we aim to attract existing and new investors, serve our customers and support the wider infrastructure and travel industry in Norway and across the Nordics and Europe.”
said Jacob Schram, CEO, Norwegian.
Thousands of Jobs to be lost
The airline will be making cuts to its staff in the United Kingdom, France, Italy, Spain and the United States. The Independent has assessed that some 1,100 UK crew will be made redundant, and that similar levels of jobs are at risk in the other countries too.
“Our focus is to rebuild a strong, profitable Norwegian so that we can safeguard as many jobs as possible. We do not expect customer demand in the long haul sector to recover in the near future, and our focus will be on developing our short haul network as we emerge from the reorganisation process. It is with a heavy heart that we must accept that this will impact dedicated colleagues from across the company. I would like to thank each one of our affected colleagues for their tireless dedication and contribution to Norwegian over the years.”
Schram further added.
Norwegian had expanded its long-haul operations rapidly between 2010 and 2017, adding numerous routes to the US and Asia. But the carrier has been loss-making long before Covid-19, and in recent years had been forced to drop several routes.
What do you think of Norwegian’s decision to drop long-haul? Do you think it is a good idea? Let us know in the comments section below.