Norwegian is facing “a very uncertain future” after Norway rejected requests from the airline for further financial support.
Oslo notes that in respone to the coronavirus crisis the state’s extraordinary contribution to aviation in Norway so far in 2020 amounts to NKr13 billion ($1.4 billion).
But it says Norwegian has asked for several billion kroner in additional assistance.
”Norwegian has asked for financial support in the billions, and the government has considered that in this situation there is no sound use of community funds,” says Norwegian trade and industry minister Iselin Nybo. ”Such support could also distort competition. The players in Norwegian aviation can also benefit from many of the other general schemes we have presented.”
Transport minister Knut Arild Hariede adds: ”In the short term, the state’s goal is that there is a necessary minimum offer of aviation services. In the longer term, when the markets are normalised, the goal is healthy competition in the Norwegian aviation market. The government has put in place a number of measures to remedy the situation in Norwegian aviation. We will return soon with information on the continuation and strengthening of these measures.”
Norwegian, which has already had to carry out a major debt-for-equity financial restructuring to ensure it qualified for government rescue aid earlier in the crisis, has previously warned that it will require further financing next year to survive the winter as coronavirus-related restrictions hamper a recovery in air travel.
”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 who is fighting for the company when our competitors are receiving billions in funding from their respective governments,” says Norwegian chief executive Jacob Schram.
”We offer routes from Kristiansand in the south to Svalbard in the north, routes that cannot be replaced overnight. It will take time and it will have consequences for the competitive situation in Norway, like we have seen before. We also notice that airlines across the world that are also dependent on support to survive, are receiving billions from their respective authorities.”
Schram estimates that based on the number of tourists it flies to Norway, the airline boosts the local economy by around NKr18 billion annually. ”That alone clearly demonstrates that even moderate financial support, would constitute a profitable investment for Norway. How anyone could come to a different conclusion is impossible to understand,” says Schram.
After a period of rapid expansion, low-cost carrier Norwegian had already embarked on major restructuring as part of a profits drive under Schram’s leadership, even before the pandemic.
”With further support to get Norwegian through this unprecedented crisis for the aviation industry, we would come out as a more sustainable and competitive airline, with a new structure and improved operation. Without support, the way forward has become much more uncertain. However, we will do whatever we can get through this crisis,” he says.
The Norwegian governnment also rejected a requst for state support from Erik Braathen as part of the financing for the new Norwegian airline he detailed plans for in October.