LONDON – As is well known in the industry, Norwegian has had plenty of struggles over the last few years. With COVID-19 and other factors placing significant strain on the carrier post-bailout, this article looks at whether the fight ahead is something that is sustainable.
Even with a government bailout being handed to the airline following the execution of its long-haul network in January, maintaining competitiveness may prove to be difficult from both the domestic and intra-European perspective.
However, as will be explored later on in this piece, the very positive working culture that has been experienced by the workforce in the airline, fighting long and hard may prove to work in its favour.
A Look at the Last Two Years
One of the main problems that had arisen with the airline is that it “does not have the financial characteristics of large low-cost carriers, like Ryanair and easyJet. In fact, its liquidity and solvency are merely in line with those of large European network carriers… [It suffers] from considerable losses, which likely affects its competitive strength” (Zuidberg, 2019).
Even before the COVID-19 pandemic had time to kick in, CEO Jacob Schram stated that 2019 “was an eventful year that presented renewed challenges in the aviation industry as tough competition and the global trading environment intensified” (Norwegian, 2020).
2019 was a particularly difficult due to “ongoing issues with Rolls Royce Trent engines affected the full utilization of [their] Boeing 787 fleet and the global grounding of the Boeing 737 MAX” (ibid).
As a result, the airline had its losses increase by over 150 million NOK, meaning that such financial performance was worsening (ibid).
Then, of course, 2020 came and hit Norwegian far more harder than it did in 2019, forcing the airline to “ground all but six of its 138 aircraft due to the health crisis”, and is looking to reduce its fleet to 50 aircraft from that number, with the plan of growing to 70 by 2022, dependent on such market conditions (Reuters, 2021).
Through such a government lifeline and its restructuring plans, the airline will look to reduce debt to around 20 billion NOK, and hopes to raise around four to five billion more NOK from potential investors (Key.Aero, 2021).