The situation is moving from severe to critical for Norwegian. Unless it gets significant government help, it won't survive the crisis.
Norway’s government took steps to safeguard its aviation industry and its budget carrier Norwegian Air Shuttle warned of its possible collapse without further aid, as the coronavirus did more damage to the global travel sector on Friday.
In the first major move by a national government to provide help to the industry as the pandemic curbs passenger travel, the country’s finance minister suspended fees and taxes on airlines and said it was in talks about further measures.
The news came as Norwegian Air, Europe’s third-largest budget carrier and a major customer of Boeing Co said it was a matter of weeks before it ran out of cash.
“What is important is to provide liquidity within weeks, not months,” CEO Jacob Schram told a news conference.
The airline was already suffering big losses and haemorrhaging cash in recent years and on Thursday announced it would temporarily lay off up to half its 11,000 employees as thousands of flights were scrapped.
Norwegian, a pioneer of low-cost transatlantic routes, has repeatedly called on governments to help the airline industry.
“I am optimistic the government will help us with the liquidity crisis,” Schram said.
The measures come after the U.S. government restricted travel from Europe, dealing a severe blow to Norwegian Air, the largest foreign airline serving the New York region and several other cities.
As a first step on Friday, Norway suspended all airport fees for the first six months of 2020 and the tax Norway charges for each passenger will be lifted for a period of 10 months, Finance Minister Jan Tore Sanner told a news conference.
The government also said it would pay a greater part of the bill for all companies seeking to make temporary layoffs, but stopped short of issuing any blanket guarantees.
Sanner said it was too early to say what other measures could be introduced and Prime Minister Erna Solberg cautioned that some companies may still collapse, highlighting the depth of the crisis for companies and limits to governments’ appetite for major state intervention.
“While it’s crucial to help viable companies at a difficult time, some might have to go bankrupt,” she said.
“Not all companies will make it,” she added.
The Nordic country invoked emergency powers on Thursday to close a wide range of public and private institutions to try to limit the spread of the virus, and asked people to refrain from leisure travel.
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Photo credit: A Norwegian 737-800 aircraft. The company is running out of cash. Skift