MIAMI – The Norwegian Government decided not to support Norwegian Air Shuttle (DY) any further. The low-cost carrier is once again on the brink of collapse.
Just after receiving Europe’s Leading Low-Cost Airline Award, bad news came. 2,300 DY and many other employees around the World can fear for the worst. The airline has five subsidiaries: D8, DH, LE, DI, and DU. These together have a fleet of 130+ aircraft operating in several countries.
The company went through a massive expansion in the past ten years and made a profit until 2016. Since then, they have lost NOK1.5bn each year. In 2015, they employed less than five thousand people, and in 2020, they employed more than 10,000.
In the following years, the founder and CEO Bjørn Kjos stepped down, and there were rumors about the airline group’s bankruptcy thereafter. In December 2019, DY was on the edge of collapse and investors needed to step in. At that time, the airline suffered from the Boeing 737 MAX groundings, the Boeing 787 Rolls-Royce issues and further debts.
After that, COVID-19 came and the drama started again. Two of DY’s companies went bankrupt in spite of the pandemic. The carrier promised to shrink to a small domestic airline in order to get government support. They got it but did not shrink its operations, resuming as many routes as possible.
A Loved Airline
Norwegian Air always focused on being a loved airline by its customers. The airline, during the pandemic, called its staff “Red Nose Warriors” to get support. They started a petition sent to the Norwegian Government explaining how important the airline was strategically.
A day after the NAX Group was saved, DY sent letters to its British “Warriors” about where they could return their uniforms. They still hope for the airline’s survival and that they can soon return to the “New Norwegian”
When Wizz Air (W6) entered the Norwegian market, the NAX Group employees initiated a boycott. Norwegians did not sympathize with W6 mostly because they feared bad working conditions. The airline has unique rules about trade unions.
However, NAX Group employees feared that the new competitor only opened the Oslo (OSL) base to push NAX to bankruptcy. DY asked people to avoid flying with W6 and spread both true and fake news about the airline.
Norwegian Air says that it is a low-cost carrier. On the contrary, it operates in fairly expensive countries, such as Norway, Sweden, Denmark and Finland. It offers free in-flight Wifi and until last year passengers could bring a carry-on and a personal item.
Due to the high operating prices, NAX could not offer low prices as competitors such as Ryanair (FR). Eventually, they lost money in highly profitable routes, such as the Spain-US route. Even traditional airlines such as Iberia (IB) and Lufthansa (LH) offered cheaper prices on these routes with better service.
Ultimately, DY did not shrink to the small domestic carrier it promised to become. The airline said that it provided crucial services to small Norwegian communities that no other airlines served. The Government may have thought that the airline misled it and just wanted the money to expand further.
Featured image: Andrea Ongaro