Norwegian Air is to abandon its previous low-cost long-haul model as it seeks to revive its fortunes after being brought close to collapse due to the Covid crisis.
The carrier’s entire Boeing 787 Dreamliner fleet has been grounded since March 2020 as travel restrictions and changing government advice continue to negatively influence demand for long-haul travel.
More than 2,000 jobs will be lost included a reported 1,100 Gatwick-based pilots and cabin crew.
The airline said: “The pandemic has profoundly affected the entire aviation industry.
“Future demand remains highly uncertain. Under these circumstances a long-haul operation is not viable for Norwegian and these operations will not continue.
“The consequence of this decision is that the board of directors of the legal entities employing primarily long-haul staff in Italy, France, the UK and the US have contacted insolvency practitioners.
“Norwegian will continue to assess profitable opportunities as the world adapts and recovers from the impact of Covid-19.”
Chief executive Jacob Schram said: “We do not expect customer demand in the long-haul sector to recover in the near future, and our focus will be on developing our short-haul network as we emerge from the reorganisation process.
“It is with a heavy heart that we must accept that this will impact dedicated colleagues from across the company. I would like to thank each one of our affected colleagues for their tireless dedication and contribution to Norwegian over the years.”
The carrier today outlined a simplified business structure and dedicated short-haul European route network.
Norwegian Air believes the plan will enable it to build a “robust and solid company” that will attract investors and continue to serve new and existing customers.
The airline, which has been forced to retrench to running a handful of aircraft on domestic routes in Norway, plans to offer competitive fares across a broad range of domestic routes in Norway, across the Nordics and to key European destinations.
The current plan is to have 50 narrow body aircraft in operation this year, rising to around 70 in 2022.
The carrier aims to cut its debt significantly to around NOK 20 billion and to raise NOK 4-5 billion in new capital through a combination of a rights issue to current shareholders, a private placement and a “hybrid instrument”.
The airline has received “concrete interest” in participation in the private placement.
Norwegian recently reinitiated dialogue with the Norwegian government about possible state participation based on the new business plan.
Schram added: “Our short-haul network has always been the backbone of Norwegian and will form the basis of a future resilient business model.
“I am pleased to present a robust business plan today, which will provide a new start for the company.
“By focusing our operation on a short-haul network, we aim to attract existing and new investors, serve our customers and support the wider infrastructure and travel industry in Norway and across the Nordics and Europe.
“Our focus is to rebuild a strong, profitable Norwegian so that we can safeguard as many jobs as possible.
Customers with bookings affected by the future changes in our route network will be contacted directly and will be refunded.
The examinership and reconstruction processes undertaken in Ireland and Norway will continue as planned.
The new plan is subject to approval, support from the creditors and subsequent court approval.
British Airline Pilots Association general secretary Brian Strutton said: “This news will be personally devastating for all Gatwick-based crew.
“The airline has struggled in the face of the ongoing Covid crisis, despite the combined efforts of all the company’s recognised trade unions, who have worked tirelessly to remain flexible and accommodating.
“The airline has failed for several reasons but there can be no blame apportioned to the pilot, crew or other staff groups.
“This is further evidence that the jobs death spiral I’ve been highlighting for months sadly continues.
“Make no mistake – aviation remains in serious crisis.”
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