Norwegian Air International 737-MAX-8.
Photo by: Lauren Jordan @Irelandspotter.
Norwegian Air are facing a lot of uncertainty at the moment with 4 of the Low Cost Carrier’s subsidiaries, Norwegian Pilot Services Sweden AB, Norwegian Pilot Services Denmark APS, Norwegian Cabin Services Denmark APS and Norwegian Air Resources Denmark LH APS, declaring bankruptcy.
Between the 4 subsidiaries, they employed 4,700 pilots and cabin crew. Following the bankruptcy of these 4 subsidiaries they now employ only 700 pilots and 1300 cabin crew within the entire Norwegian Air group. A large if not deciding factor in this was the lack of financial input or furlough schemes from either the Danish or Swedish government. A furlough scheme is where said governments would cover necessary expenses for the salaries of staff on leave of absence during these times. A cancelled contract with OSM Aviation has now also meant potential job loses for crew based in the UK, Spain, France and US who are employed by OSM.
The surviving divisions of Norwegian are also very much under threat,a situation heavily influenced but not entirely related to current events with Covid 19. Norwegian air have gone ahead with the first steps of a government loan, however it's apparent that the current fixed costs outweigh the money coming in. This was made apparent when news broke that Norwegian could not afford to pay April wages for its aircrew.
In a statement, the CEO of Norwegian Air, Jacob Schram, said: “The impact the coronavirus has had on the airline industry is unprecedented. We have done everything we can to avoid making this last resort decision and we have asked for access to government support in both Sweden and Denmark.’ ‘Our pilots and cabin crew are the core of our business and they have done a fantastic job for many years. It is heart-breaking that our Swedish and Danish pilot and cabin crew subsidiaries now are forced to file for bankruptcy and I’m truly sorry for the consequences this will have on our colleagues. We are working around the clock to get through this crisis and to return as a stronger Norwegian with the goal of bringing as many colleagues back in the air as possible.”
Norwegian haven't always been in such a precarious position, however. They were once a booming European Low Cost Carrier, who in later years also started transcontinental flights using the Boeing 787 Dreamliner, and 737 MAX 8. Norwegian were also known for picking up numerous awards for business model, service and reliability throughout the years, and in 2018 Norwegian had a whopping 165 aircraft in their fleet making them the largest Low Cost Carrier in Europe after Easyjet and Ryanair. Today they are the 9th largest Low Cost Carrier in the world with 156 aircraft and in 2018 transported more than 36 Million people!
Norwegian Air first hit troubled waters in 2018, when passenger numbers on their transatlantic routes started to decline, however it doesn't stop there. Later it was also discovered that the Rolls Royce Trent 1000 engines on their 787 aircraft were faulty along with the batteries on board the aircraft.This resulted in the aircraft being grounded for weeks and subsequently Norwegian having to lease an Airbus A380 of HiFly for use on their London Gatwick to New York JFK route. Well, it couldn't possibly get any worse for Norwegian right? Wrong! On March 12th 2019 Norwegian‘s entire fleet of 737 MAX 8 aircraft were grounded in light of the catastrophic Ethiopian Airlines MAX crash and in line with government regulations imposed after. Norwegian however did have a lot of capital stored in Boeing orders, as they received only 18 out of their 110 orders, as well as having had many investors giving them capital, but bad management was inevitably the cause of their bankruptcy.
What’s going to happen to Norwegian?
Well like with anything, it‘s pretty uncertain at the minute. In line with current Covid 19 restrictions, Norwegian‘s entire fleet has been grounded and demand has dropped by 98%. The Airline is going to hold a general meeting in May where they will restructure the airline and apply for support from the Norwegian government, as well as develop a long term strategy to rehire their previous staff.
Turbulent times ahead, yet there is still hope for the Norwegian group.
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