Norwegian Air has put its Irish-based subsidiary Norwegian Air International and associated businesses into bankruptcy protection in Ireland.
Jacob Schram, Norwegian Air chief executive, said the carrier had decided to use the examinership process in Ireland, which provides protection from creditors, after failing to secure additional financial aid from the Norwegian government.
Schram insisted the move would “secure the future of Norwegian”.
He said: “Our aim is to find solutions with our stakeholders that will allow us to emerge as a financially stronger and secure airline.”
In a statement, Norwegian said it had chosen to use the insolvency process in Ireland since this is where its “aircraft assets are held”.
The carrier ceded majority control to its creditors, principally aircraft leasing companies, in a financial restructure in May.
The former low-cost long-haul carrier grounded all but six of its remaining aircraft last week after being denied additional support in Norway.
The airline had already stripped back its network to operate only from Norway.
It said it would continue to operate a skeleton network and its shares would trade on the Oslo stock market during the insolvency process.
The Norwegian Air statement said: “The purpose of the process is to reduce debt, rightsize the fleet and secure new capital.
“This reorganisation process protects the assets of the Norwegian group. The process is estimated to take up to five months.”
It said the process of examinership would allow it “to address elements of the business which require restructuring with the aim of protecting jobs and preserving the core value of the business.
“This protection ultimately allows a company to secure new capital and implement a legally binding scheme for the settlement of debts.”
The company said it “believes it has sufficient liquidity to go through the process”.
Schram added: “Our intent is clear. We will emerge from this process as a more financially secure and competitive airline, with a new financial structure, a rightsized fleet and improved customer offering.”
However, Norwegian Air is, to all intents and purposes, already in the hands of its creditors.