Its been a rough year for airlines. While we’ve seen Primera Air and Cobalt Air go bankrupt, we’ve also seen the likes of Flybe being put up for sale. There is also the poor financial performance of WOW to consider, and let’s not forget Jet Airways. There are a few factors which almost all of the airlines have quoted as reasons for financial difficulties. These include high oil prices and poor exchange rates. Now, the latest airline that looks like it could be facing financial difficulty is Norwegian Air.
Who Is Norwegian?
Over the past few years, Norwegian Air has boomed. This has largely been due to their rock-bottom prices on long-haul services. Something that departed rival Primera Air had also offered. The airline has recently launched a low-cost subsidiary in Argentina. Additionally, Norwegian is in the midst of a number of new aircraft deliveries. In fact, the carrier has even gone as far as trying to sell some of its new aircraft to raise funds. While this has been going on, the carrier has also suffered from a number of other inconveniences recently.
A large portion of Norwegian flights depart from London Gatwick. Now, it will come as no surprise that the airline has been affected by the recent disruption at the airport. All of the airline’s operations at the airport were suspended, prompting the airline to issue the following warning: “London Gatwick airport is currently closed and is affecting all flight operations in and out of the airport. We would advise our passengers not to travel to London Gatwick at this time.”
As the incident was considered an extraordinary circumstance, no compensation is due to customers under EU regulation 261. However, Norwegian should’ve provided hotel accommodation for stranded passengers according to the BBC.
There are a number of other circumstances which have affected Norwegian. Earlier this year, the airline was forced to wet-lease an A380 during the B787 engine crisis. This led to a huge number of delays, as Norwegian’s flights were initially scheduled for a time when New York had reached its capacity for A380 aircraft. While Norwegian didn’t want to cancel all of their flights, they were losing money on each A380 flight that was operated. This is due to the cost of hiring the aircraft and the crew, combined with the super cheap fares on offer. While Norwegian should have paid compensation for each of these flights, the airline is alleging that the A380 flights were also delayed due to extraordinary circumstances.
Additionally, the Norwegian Air fleet is currently down an aircraft. One of the airline’s B737-Max is currently stranded in Iran following a fault that required an immediate landing. According to sources, repairing the jet won’t be easy, as US sanctions against Iran are resulting in difficulty exporting the spare parts. As such, A Norwegian Spokesperson told a Norwegian newspaper “It’s correct that the aircraft is still in Iran and it’s not yet been clarified when technicians can start their work”.
9 Critical Days
The next 9 days are reportedly critical for Norwegian according to newspaper Dagens Næringsliv. The Norwegian newspaper reported on Thursday that the airline was just days away from a “full crisis” regarding its financial state. Due to large acquisitions of aircraft, the airline is currently in the midst of “heavy debt”. As such Martin Stenshall of Danske Bank believes that Norwegian’s loan terms will be violated by the new year. That means that lenders could demand immediate repayment. Mr Stenshall told DN “If the company has to report a violation of the conditions surrounding its debt, it can land in an evil spiral and the crisis will escalate.”
Do you think that Norwegian is in trouble? Let us know in the comments down below!