Norwegian Air suffers body blow as government rules out more support
Skip to main content
  • Home
  • Economy
    • Aviation
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Fact Check
    • Family
    • Food
    • Game Reviews
    • Good Practices
    • Habitat
    • Humour
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wealth
    • Wellbeing
    • Wheels
  • Epaper
  • More
    • Subscribe
    • Videos
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Games
    • Long Read
    • Interviews
    • Offbeat
    • Podcast
    • Quiz
    • Tech
    • Trial By Trivia
    • Magazine
  • বাংলা
The Business Standard

Friday
January 27, 2023

Sign In
Subscribe
  • Home
  • Economy
    • Aviation
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Fact Check
    • Family
    • Food
    • Game Reviews
    • Good Practices
    • Habitat
    • Humour
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wealth
    • Wellbeing
    • Wheels
  • Epaper
  • More
    • Subscribe
    • Videos
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Games
    • Long Read
    • Interviews
    • Offbeat
    • Podcast
    • Quiz
    • Tech
    • Trial By Trivia
    • Magazine
  • বাংলা
FRIDAY, JANUARY 27, 2023
Norwegian Air suffers body blow as government rules out more support

World+Biz

Reuters
09 November, 2020, 05:30 pm
Last modified: 09 November, 2020, 05:36 pm

Related News

  • Jamaat, police clash in capital
  • National e-Government Procurement portal saves $600m per year
  • BNP adamant about Nayapaltan venue for 10 Dec rally
  • Govt cannot give permission to anyone to create chaos: Hasan
  • Govt to provide free fertilizer, seeds to 16.71 lakh farmers

Norwegian Air suffers body blow as government rules out more support

Norwegian’s shares were down 16.8% by 1027 GMT, extending this year’s price plunge to 99%

Reuters
09 November, 2020, 05:30 pm
Last modified: 09 November, 2020, 05:36 pm
Norwegian Air suffers body blow as government rules out more support

Pandemic-hit Norwegian Air faces a battle for survival this winter, it said on Monday after the country's government declared that it will not provide additional financial support for the cash-strapped carrier.

Norwegian Air, which has been hit hard by the coronavirus crisis and has grounded most of its fleet, said in August that it would run out of cash in the first quarter of 2021 unless it could secure fresh funds and has held talks with the government in the hope of winning support.

"That the government has decided to reject the request for funds is disappointing and feels like a punch in the gut for everyone at Norwegian," Chief Executive Jacob Schram said.

"The company and the board will turn every stone to get through this situation," Schram told a news conference on Monday morning, adding that the budget airline is not out of cash yet.

Asked whether the company was at risk of bankruptcy, Schram said he would not rule out any potential outcomes.

"But we need ventilator support to get through the winter," he added.

Norwegian's shares were down 16.8% by 1027 GMT, extending this year's price plunge to 99%.

Favouring free enterprise, Norway's centre-right coalition government has long ruled out any nationalisation of Norwegian or other carriers and in 2018 sold the state's remaining 10% stake in rival SAS.

'RISKY SUPPORT'

"It is a tough message to get. But we are answerable for the responsible use of public funds," Industry Minister Iselin Nyboe told an earlier news conference.

"Norwegian Air has a financial structure that makes it risky for us to go in with support. It was not defensible."

A pioneer in low-fare transatlantic air travel, Norwegian Air's rapid expansion left it with debt of close to $8 billion by mid-2020, making it vulnerable to the fallout from the COVID-19 pandemic. It is due to report third-quarter results on Tuesday.

The carrier has shown a great ability to overcome financial difficulties in the past, Transport Minister Knut Arild Hareide said.

"I don't want to speculate on their ability to do so," Hareide said when asked about Norwegian's chances of staying in operation.

Creditors and lessors took control of the airline in May with a financial rescue that allowed it to access state-guaranteed loans of 3 billion crowns ($329 million) as the company sought to operate a slimmed-down service.

Norwegian last month operated only 21 of its aircraft, leaving more than 100 grounded, including its entire fleet of 37 Boeing 787 Dreamliners used for transatlantic journeys.

The airline industry is likely to provide sufficient services and will still see healthy competition in the time ahead, Nyboe said.

It was not surprising Oslo had withdrawn support after the failure of Norwegian's bid to become a pan-European airline serving intercontinental markets, said Bertrand Grabowski, a former aviation banker who is now an independent adviser.

"You can perhaps use Norwegian taxpayers' money to support a regional airline, but not one serving Paris-New York or London-Buenos Aires (routes)," he said.

CRUCIAL INFRASTRUCTURE

Scandinavian carrier SAS is a major competitor in Norway, and Hungary's Wizz Air recently launched several services to Norwegian cities.

Airlines are particularly crucial infrastructure in Norway, the geography of which stretches more than 2,200 km (1,367 miles) across fjords and mountains with few train lineS to transport people. Its capital, Oslo, is closer to Munich than to its own northernmost mainland town, Hammerfest.

"Norwegian is evaluating the effects of the current situation with the aim of safeguarding the interest of all stakeholders," the airline said.

The company has said that more funding could come from the sale of aircraft, conversion of more debt to equity or from its owners and the Norwegian government, while declining to specify the amount it might seek.

The government also said it had rejected a request from a start-up carrier for public funds.

So far this year the government has provided an estimated 13 billion crowns in support for the airline industry including loans, guarantees and tax cuts, it said.

Norwegian Air / government

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Manufacturers feel the pinch as consumers tighten belt
    Manufacturers feel the pinch as consumers tighten belt
  • Sugar turning bitter!
    Sugar turning bitter!
  • Illustration: TBS
    HC verdict moves the needle on recognising single motherhood

MOST VIEWED

  • Road Transport and Highways Minister Nitin Gadkari. Photo: Collected.
    India aims high as hydrogen power alternatives get boost
  • U.S. Secretary of State Antony Blinken speaks during a visit to the Office of Director of National Intelligence in McLean, Virginia, July 18, 2022. Saul Loeb/Pool via REUTERS/File Photo
    Blinken to travel to Israel, West Bank, urge end to violence
  • Photo: Collected
    Toll from bombing in central Nigeria rises to 40: govt
  • Political activist Mongkhon Thirakot flashes the pro-democracy gesture of a three-finger salute ahead of going to a court in Thailand's northern province of Chiang Rai, Thailand, Thursday Jan. 26, 2023. Mongkhon has been sentenced to 28 years in prison for the crime of insulting the king in posts he uploaded to Facebook. (Thai Lawyers for Human Rights via AP)
    Thai activist sentenced to 28 years for online posts on king
  • FILE PHOTO: Police monitor traffic at the entrance of Malaysia's High Court before the arrival of Malaysia's opposition leader Anwar Ibrahim in Kuala Lumpur July 8, 2009. Anwar faces another gruelling trial for sodomy starting on Wednesday that could break his career and risks deepening political divisions in the Southeast Asian nation. REUTERS/Bazuki Muhammad/File Photo
    Malaysia says Luxembourg court sets aside request to enforce $15 billion arbitration award
  • Somalia soldiers and policemen look on as Hassan Hanafi, a former media officer for the Somali Islamist group al Shabaab, stands tied to a pole before his execution by shooting at close range on a field in General Kahiye Police Academy in Somalia's capital Mogadishu, on April 11, 2016. REUTERS/Ismail Taxta
    US military operation kills Islamic State leader in Somalia

Related News

  • Jamaat, police clash in capital
  • National e-Government Procurement portal saves $600m per year
  • BNP adamant about Nayapaltan venue for 10 Dec rally
  • Govt cannot give permission to anyone to create chaos: Hasan
  • Govt to provide free fertilizer, seeds to 16.71 lakh farmers

Features

Sketch:TBS

Why we need consumer education for consumer wellbeing

51m | Thoughts
Dr Ahsan H Mansur, Executive Director, Policy Research Institute. Illustration: TBS

Twin shocks call for stronger domestic policy response

1h | Thoughts
December-er shohor, taxi taken for airport and the Park Street bathed in lights. Photo: Jannatul Naym Pieal

Exploring Kolkata on foot, empowered by Google Maps

2h | Explorer
Island hopping in Bangladesh?

Island hopping in Bangladesh?

4h | Panorama

More Videos from TBS

Kajol’s road paintings bring change in Gafargaon

Kajol’s road paintings bring change in Gafargaon

16h | TBS Stories
Carew & Company witnessed a remarkable growth

Carew & Company witnessed a remarkable growth

17h | TBS Stories
PCB recalls cricketers from BPL ahead of PSL

PCB recalls cricketers from BPL ahead of PSL

19h | TBS SPORTS
Why Misha Sawdagar became villain instead of a Hero?

Why Misha Sawdagar became villain instead of a Hero?

18h | TBS Entertainment

Most Read

1
Picture: Collected
Bangladesh

US Embassy condemns recent incidents of visa fraud

2
Four top bankers arrested in DSA case filed by S Alam group 
Bangladesh

Four top bankers arrested in DSA case filed by S Alam group 

3
Illustration: TBS
Banking

16 banks at risk of capital shortfall if top 3 borrowers default

4
Photo: Collected
Splash

Hansal Mehta responds as Twitter user calls him 'shameless' for making Faraaz

5
A frozen Beyond Burger plant-based patty. Photographer: AKIRA for Bloomberg Businessweek
Bloomberg Special

Fake meat was supposed to save the world. It became just another fad

6
Representational Image
Banking

Cash-strapped Islami, Al-Arafah and National turn to Sonali Bank for costly fund

EMAIL US
[email protected]
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Privacy Policy
  • Comment Policy
Copyright © 2023
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - [email protected]

For advertisement- [email protected]