As Airline Shares Soar, Norwegian Beats the Trend

International budget airline now limited to local routes

Airlines across the globe saw their shares soar on news that a Covid-19 vaccine would soon be available. Such a move could mean the return of international air travel, and rescue airlines from plummeting sales and what looked like an almost certain death for many of them.

But despite the news, not all airlines are optimistic — especially Norwegian.

Norwegian Air Shuttle, the 27-year-old private discount airline, which trades as Norwegian, had already been rescued once by its government earlier this year, says that it has had to take extreme measures in the absence of more government aid.

“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,” said Norwegian CEO Jacob Schram, in a statement.

Norwegian says that it has been “forced to furlough employees and reduce capacity considerably following the government’s decision to not support the company financially to get through the corona crisis while simultaneously imposing travel restrictions that actively discourage passengers from travelling. “

The travel restrictions are a major problem for the airline, it says. While worldwide airline shares increased this week, Norwegian saw its shares plunge by 20 percent on Monday.

In its heyday the airline was one of Europe’s top discount airlines, and flew to destinations like New York, Miami and Austin in the US as well as locations like Rio de Janeiro in Brazil, Buenos Aires in Argentina and Bangkok in Thailand.

At its peak, the airline had some 500 routes in more than 150 destinations. It carried more than 37 million passengers in 2018.

But now the airline will be limited to only about 12 local Norwegian routes.

“The consequences of the government-imposed travel restrictions are critical and Norwegian needs to keep its running costs to a minimum, while the company continues to work on solutions to survive,” Norwegian said.

“Recently government-imposed travel restrictions have effectively stifled any hope of a stable and progressive recovery,” the airline said.

The airline said that if has no choice but to furlough an additional 1,600 colleagues and park 15 of the 21 aircraft that it has operated over the past months.

Norwegian was founded in 1993 but only began operating as a low-cost carrier with bigger Boeing 737 aircraft in 2002. Norwegian expanded across the globe as the airline launched short-haul services across Europe and then entered the long-haul sector serving the US, Asia and South America. The airline operates a modern and fuel-efficient fleet consisting of Boeing 787 Dreamliners and Boeing 737s.

“Norwegian has been hit from all sides by factors outside of our control. This is a sad day for everyone at Norwegian and I sincerely apologise to all our colleagues that are now affected, but there is no other alternative,” said CEO Jacob Schram of Norwegian in a statement.

The situation is quite dire.

“Prior to Covid-19, Norwegian employed more than 10,000 people, but the coming months there will be only 600 colleagues employed,’ Schram said.

“Our goal is to keep six aircraft on domestic routes in Norway, and I expect that Norwegian will also receive route support from the Ministry of Transportation, as previously announced,” he said.

The route reduction will hit customers who have already booked a flight with Norwegian.

“We will do everything we can to offer affected customers alternative travel option and I sincerely apologize for the inconvenience caused by this situation. All affected customers will be notified by us directly,” said Schram.

Only domestic routes between the capital of Oslo and other local destinations will now be operated. Those include flights from Oslo to Alta, Bergen, Bodø, Evenes, Haugesund, Kirkenes, Molde, Stavanger, Tromsø, Trondheim and Ålesund. There will also be a flight between Tromsø and Longyearbyen.

ABOUT NORWEGIAN

Norwegian was the first airline in the world to join the UN Climate Secretariat’s climate action-initiative in 2019, pledging to work systematically to become carbon neutral by 2050.

The airline has won several awards, from being voted for six consecutive years as Europe’s Best Low Cost airline and for five consecutive years as the World’s Best Low Cost Long Haul Airline by Skytrax to winning Airline Program of the Year Europe & Africa for the fourth consecutive year at the 2020 Freddie Awards.

In total Norwegian has won more than 55 awards for its service, product and innovation in the industry since 2012.