LONDON – Norwegian Air Shuttle’s (DY) Board of Directors has today outlined a simplified business structure and dedicated short-haul route network. With this plan, DY says it is set to create a robust airline to attract investors. The first order of business is to drop its long-haul operations, which will in turn affect 1,1000 UK workers.
The company is known for low-cost travel and for winning numerous awards in that category. As such, DY will build on this foundation, it says, and focus on its core Nordics business, operating a European short-haul network with narrow body aircraft.
The airline says it will continue to meet its customers’ needs by offering competitive fares across a broad range of domestic routes in Norway, across the Nordics and to key European destinations.
Norwegian’s current plan is to serve these short-haul markets with around 50 narrow body aircraft in operation in 2021 and to increase that number to around 70 aircraft in 2022.
Furthermore, the airline aims to reduce its debt significantly to around NOK20bn (US$2.35bn) and to raise NOK4-5bn (US$587m) in new capital through a combination of a rights issue to current shareholders, a private placement and a hybrid instrument.
The airline has received concrete interest in participation in the private placement. Norwegian has recently reinitiated a dialogue with the Norwegian government about possible state participation based on the new business plan.
Low Demand for Long-haul
The COVID-19 pandemic caused travel restrictions and changing government advice continues to negatively influence demand for long haul-travel. As a result, Dy’s entire Boeing 787 Dreamliner fleet has been grounded since March 2020.
As for all long-haul airlines, future demand remains highly uncertain. Under these circumstances a long-haul operation is not viable for Dy and will therefore 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. And so, 1,100 UK jobs are to be lost as the airline said it would not be restarting long-haul services at London Gatwick (LGW) after the pandemic.
Norwegian will continue to assess profitable opportunities as the world adapts and recovers from the impact of COVID-19.
Statement from Norwegian Air
Jacob Schram, CEO of Norwegian, said, “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.”
“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.”
Featured image: Norwegian Air Boeing 787-9 Leaving off from Rome Fiumicino Intl Airport (FCO). Photo: Andrea Ongaro
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