LONDON – Low-cost carrier Norwegian Air (DY) has announced significant low numbers in its traffic figures due to the ongoing COVID-19 pandemic.
In September, the airline handled 319,370 passengers, which represents a 90% decrease compared to the same period last year. Capacity, as measured in available seat kilometers (ASK) also decreased by a staggering 93% with total passenger traffic being 96% lower.
Additionally, Load factors at the airline dropped by 37 percentage points down to 52.8%. The only layer of positives came from the on-time departure flights, of which 97.6% of all scheduled flights were on-time.
Norwegian CEO Acknowledges the Issues
Commenting on the news was DY’s CEO Jacob Schram, who seemed to acknowledge the issues quite easily, citing the need for restrictions to be lifted.
“In September several European countries were classified as ‘red’ by the authorities. We have seen that as soon as the authorities impose new travel restrictions demand is immediately impacted.”
“We are continuously adapting our route network in line with changing demand, but the frequent changes in travel restrictions make forward planning difficult, both for us and our customers. Looking ahead, this continues to be a prolonged crisis that is far from over.”
A Hard Year
The hard year for Norwegian began on March 7, earlier this year, with the carrier’s stocks plummeting by over 25% due to the pandemic the disruption that came with it. Days after, the airline was forced to cut its capacity by around 15%, which amounted to around 3,000 flights in total.
By the middle of March, the airline had made the decision to cut capacity once again, this time by an additional 85% and laying off around 7,300 workers. A month later, the Danish and Swedish subsidiaries at the airline went belly up, meaning that staffing contracts for 4,700 more people had to be axed.
By the end of April, the airline had made the decision to keep its fleet grounded until 2021, with initial forecasts for full recovery by 2022. This comes despite other companies predicting a 2024 recovery for the industry overall. By May, the airline’s dangerous financial situation was saved when the Norwegian government provided a $271m bailout to keep the firm afloat.
Whilst the conditions of the financial aid were not publicly known, one element of the bailout was always to do with restructuring, which was evidently seen when DY terminated its outstanding orders with Boeing for 787 Dreamliners and 737 MAX aircraft.
Taking A Different Position
With the airline heavily impacted by COVID-19 in the first half of 2020, recording a net loss of NOK5.3bn and a decrease in passenger numbers by 71%, it looks as if the airline may be taking a different position. Back at the end of the last month, the airline announced it was reportedly in talks with the Government of Norway to discuss nationalization.
It remains clear that DY will need the government to take over and manage the airline, especially during this volatile time. With the likes of Wizz Air (W6) entering the Norwegian market now, it is going to exert more pressure on the debt-laden carrier, especially with the use of price wars.
In time, it will be interesting to see what DY chooses to do, especially with cheaper competitors beginning to penetrate those markets. The decision has to be made, and it has to be made quickly.
Featured Image: Norwegian Boeing 787-9 Dreamliner. Photo Credit: Luca Flores