Norwegian Air Shuttle, the long-haul low-cost carrier based in Oslo, Norway, has been offered a state loan guarantee by the Norwegian Government, as announced by the latter on March 19, 2020. The guarantee amounts to $276 million (NOK3 billion) and is aimed to help the company to gain access to funds in the market, allowing the airline to ensure its liquidity.

Norwegian Air Shuttle received the biggest offer of state aid, with a further $276 million (NOK3 billion) shared equally among Scandinavian Airlines System (SAS), the Norway-based regional airline Widerøe, and other airlines that have a Norwegian Air Operators Certificate (AOC).

While the funds are immediately available to SAS and Widerøe, as they both meet an 8% equity requirement, Norwegian Air Shuttle still has to improve its financial situation if the government is to provide the full $276 million (NOK3 billion) loan. 

Initially, the long-haul low-cost carrier will receive $27 million (NOK300 million) to reduce its interest and repayments to creditors, stated the government, upon which the airline would receive a further $110 million (NOK1.2 billion). The rest of the sum ($138 million (NOK1.5 billion) would be available once the company improves its solvency to a “satisfactory level,” indicated the statement by the Norwegian government.

The three airlines, namely Norwegian, SAS and Widerøe, in return, would have to ensure a minimum level of connectivity in Norway and would be assigned routes by the Norwegian Ministry of Transport.

The state aid package is a part of the government’s effort to relieve the financial pressure on the aviation industry in Norway. Other measures include an exemption from the air passenger charge, reduced VAT on transport and employer tax and changes to the layoff regulations. 

Norwegian Air Shuttle canceled 85% of its routes and temporarily laid off 7,300 employees on March 16, 2020.

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