Norwegian Receives A Loan Guarantee Extension From Norway’s Government

Last week, the heads of Norway’s largest airlines met with the country’s Ministry of Trade and Industry to ask for direct cash support. Included was Jacob Schram, CEO of Norwegian Air. It looks like that request has been granted as the government on Sunday extended loan guarantees for the country’s airlines – including Norwegian Air.

norwegian
This news from the Norwegian government comes a month after the Swedish National Debt Office announced it had rejected the airline’s request for a state credit guarantee. Photo: Getty Images

Loan guarantees issued by Norway’s Industry Ministry

According to Reuters, on Sunday, September 20th, Norway’s government extended loan guarantees for Norwegian Air in addition to loan guarantees for other carriers based in the country. The Industry Ministry says this extension is for two months, stretching to the end of 2020. Unfortunately, not many more details have been provided with regards to the extension.

“The changes we now propose are designed for the scheme to help more airlines than those who have already used it,” -Iselin Nyboe, Industry Minister of Norway

Earlier this year, Norwegian Air secured a state aid package equivalent to $330 million after it underwent debt restructuring. However, last month the airline said that it needed to secure additional funding to get through the current global health crisis.

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Norwegian aircraft with sunset
Norwegian Air’s fleet is comprised of Boeing 737s and 787s.

Norwegian on the slow and challenging path to recovery

On July 1st, the airline resumed its first non-Norwegian flights since lockdown by flying from Copenhagen to Aalborg in Denmark as well as select short-haul operations from London Gatwick Airport. Before July, the airline was operating just seven of its 160 aircraft on its domestic network.

Three weeks ago, Norwegian revealed that 140 of its aircraft remained grounded. 

Although the airline has resumed some of its operations compared to March and April, it’s clear that this activity is still not enough to fulfill its financial obligations.

“We are continuously adapting our network to adjust to these changes as necessary to ensure that we keep vital air routes open and concentrate supply in line with demand. The prolonged crisis that has impacted every part of the aviation industry continues to create uncertainty in all markets making the need for a long-term liquidity support package even more critical to protect tourism, jobs and international trade.” -Jacob Schram, CEO of Norwegian

NAI 787 departue
Norwegian hopes to resume long-haul operations by December. Photo: Norwegian

The airline hit a setback in August as the Swedish National Debt Office announced it had rejected the airline’s request for a state credit guarantee. The government agency didn’t consider the airline worthy of support as it was not deemed to be financially viable at the end of 2019- a condition for airlines being granted aid through the Swedish financial support program.

There have been resurgences in coronavirus cases, both big and small, in many countries around the world, including those throughout Europe. This has continued to create uncertainty for Norwegian and other airlines along the challenging path to recovery.

As it continues to go through more funding, do you think Norwegian Air will be able to make it through this crisis?

Simple Flying has contacted Norwegian Air requesting comment on the news. However, at the time of publication, no response has been received. This article will be updated should any new information be made available.

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