Responding to the escalating coronavirus outbreak, Norwegian has decided to ground 40% of its long-haul operation and cancel some 4,000 flights. The low-cost airline also says that it will be making cuts to its short-haul network and temporarily suspending 50% or more of its staff.
Suspending aircraft in response to coronavirus
At the tail end of last year, we were asking ourselves: did Norwegian do enough to survive the year? It’s clear that its financials have put it in a compromising situation and it struggled last year to regain profitability. Now, the airline has been hit with another debilitating blow. Will it be able to survive 2020 despite the coronavirus?
The coronavirus pandemic is causing many airlines to think drastically about their operations and has caused some unprecedented decisions. Airlines are axing staff and cutting routes in order to stem a decline in passenger demand. Unfortunately, Norwegian is also in that mix and recent events have meant that it’s now struggling even more than it once thought.
On 10th March, the air carrier said that it had cut around 3,000 routes and was eying up letting some of its staff go. At that time, the CEO of Norwegian made somewhat of an emotional plea for a resolution to the coronavirus woes. Jacob Schram said in a press release:
“This is a critical time for the aviation industry, including us at Norwegian. We encourage the authorities to immediately implement measures to imminently reduce the financial burden on the airlines in order to protect crucial infrastructure and jobs.”
However, the cards were not dealt in Norwegian’s favor. The “financial burden” has not yet been relieved and, what’s more, Norwegian was forced to take more drastic action. Just two days later, the airline has now suspended a further 1,000 flights and decided to ground 14 Boeing 787 Dreamliners (40% of its long haul fleet).
How will this affect Norwegian’s future?
Unfortunately, the escalation of the coronavirus pandemic does not bode well for Norwegian. Whilst it may have hoped that there were no more flight cancelations, it’s now having to respond to an EU travel ban that came from The White House.
As a result, Norwegian has enforced the following travel suspensions. It says:
“From March 13th to March 29th, Norwegian will cancel the majority of our long-haul flights to the U.S. from Amsterdam, Madrid, Oslo, Stockholm, Barcelona, and Paris. From March 13th to the end of May, all flights between Rome and the U.S. will be canceled. From March 29th until the end of April, all flights from Paris, Barcelona, Madrid, Amsterdam, Athens and Oslo to the U.S. will be canceled.”
Unfortunately, Norwegian is pitted to be one airline that collapses under the strain of the coronavirus. A history of debt and struggling financials means that flight cancelations can only negatively affect its future.
That said, the airline is looking to mitigate collapse by making staff cuts. It’s perhaps not the kindest of solutions but it is a solution nonetheless. The airline expects to temporarily suspend work for 50% of its employees and has warned that this figure could rise.
Much of the debt that Norwegian has accrued recently has been as a result of the Boeing 737 MAX grounding. It’s awaiting orders from Boeing but its existing fleet has also had to remain inoperative.
More recently, the airline has looked to route network changes to trim unprofitable routes. It temporarily suspended flights on the service from New York and Amsterdam in February as a cost-cutting measure. Saving money, evidently, has been on Norwegian’s radar.
It’s unlikely that Norwegian will come out of the coronavirus outbreak without some scars. However, the effect that the virus is having on the majority of airlines throughout the world could be its saving grace. Could Norwegian profit from financial support in the future as compensation for damages from coronavirus?
The good thing is, at least that Norwegian still has flights running. Hopefully, it will be able to collect some kind of revenue from those operations. Will it be enough to give the airline what it needs?
What do you make of this situation? Let us know your thoughts in the comments.