The long-haul low-cost carrier Norwegian will drop the long-haul from its business model, as the company looks into the future past its current restructuring process.
Norwegian, in an announcement on the Oslo Stock Exchange, indicated that it “will henceforth focus on its core Nordics business, operating a European short-haul network with narrow-body aircraft. Under these circumstances, a long haul operation is not viable for Norwegian and these operations will therefore not continue.”
The Norway-based airline has already phased out two of its Boeing 787 Dreamliner aircraft, as the pair officially exited its fleet in March 2020, planespotters.net data shows. In early-January 2021, Norwegian flew at least six of its Dreamliners to Ireland’s Shannon Airport (SNN) in order for lessors to re-possess them.
The company itself has entered an examinership process in Ireland in November 2020, as it sought protection from its creditors in order to continue operations. At the time, Norwegian warned that it would need a fresh injection of capital in Q1 2021 if it were to continue flying after the examinership process.
Now, the airline looks to “reduce its total debt to around NOK 20 billion ($2.3 billion). Norwegian also plans to raise NOK 4 – 5 billion in new capital through a combination of (i) a rights issue to current shareholders, (ii) a private placement and (iii) a hybrid instrument,” read the announcement on the Oslo Stock Exchange on January 14, 2021.
While in early-November 2020, the low-cost carrier’s chief executive officer (CEO) Jacob Schram stated that “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,” the airline still seems hopeful, as it “has recently reinitiated a dialogue with the Norwegian Government about possible state participation based on the current business plan.”
If all goes according to plan, going forward, Norwegian would operate 50 Boeing 737 aircraft. Thus, its fleet would shrink by 38 Boeing 737 and 35 Boeing 787 aircraft.
“Based on conservative assumptions both in relations to the length of the Covid-19 pandemic and relating to revenues, costs and load factors the Company expects positive EBITDA post-reconstruction in 2021,” read the announcement. After the examinership process, Norwegian expects to have a debt of NOK20 billion ($2.3 billion) with a free cash flow of between NOK4 to NOK5 billion ($472.6 million to $590.8 million).