Norwegian abandons long haul as he fights for survival

Norwegian Air Shuttle will abandon its attempt to break into the long-haul air transport market as the low-cost carrier planned to exit bankruptcy protection, but wiping out existing shareholders, drastically reducing debt and raising new ones. capital.

The low-cost airline will focus on short-haul flights in Europe after concluding that its long-haul flights to the United States and Asia are no longer viable as “future demand remains highly uncertain.”

Around 2,000 employees will lose their jobs – 1,100 at Gatwick – as Norwegian subsidiaries employing long-haul staff in the UK, US, Italy and France face bankruptcy.

In November, Norwegian became the most publicized accident of the worst crisis in the aviation industry when it sought creditors’ protection in Ireland after a unfortunate and rapid expansion in the long run, the debt burden is one of the highest among all carriers.

“Our short-haul network has always been the backbone of Norwegian and will form the basis of a future resilient business model,” mentionned chief executive Jacob Schram on Thursday. He was speaking as he presented plans to step down as examiner in Ireland, a reorganization process similar to the Chapter 11 filing in the United States.

Mr. Schram warned that existing shareholders would only remain with about 5 percent of the new company, the second time in less than a year, it wiped out its current investor base. Norwegian debt would be reduced from around 48 billion Norwegian kroner ($ 6 billion) at the end of September to around 20 billion Norwegian kroner under the plans, leaving impaired creditors with about a quarter of the equity.

The remaining 70% of the shares would come from NKr 4-5 billion of capital raising through a rights issue to existing shareholders, a private placement and a hybrid instrument.

The airline will again ask the Norwegian government if it will back its bailout after the center-right Oslo administration approved a bailout last spring, but refused to put fresh money in the fall, putting the carrier into bankruptcy. The government appeared more open on Thursday to Norwegian’s new plans, acknowledging they were different from what the carrier offered in November.

Norwegian stressed that its operations will be carried out mainly in Norway and the Nordic countries, or between that region and the rest of Europe. It previously had bases in the UK and Spain for flights to elsewhere in Europe.

Norwegian said she hoped to exit creditor protection in Ireland by the end of March, and said she hoped to fly 50 narrow-body planes this year and 70 next. Its fleet in the third quarter was 140, of which only 25 flew.

“Our aim is to rebuild a strong and profitable Norwegian so that we can save as many jobs as possible,” said Mr Schram. “We do not foresee a pick-up in customer demand in the long-haul sector in the near future, and we will focus on developing our short-haul network upon exiting the reorganization process,” he said. warned that there would be job losses.

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