Low-cost carrier Norwegian Air has officially filed for bankruptcy protection in Ireland, making it the biggest casualty of the COVID-19 pandemic in aviation so far.
The troubled carrier has asked an Irish court to carry out a process of examinership, which would protect the group’s assets while it tries to slash its debt pile, offload aircraft and raise new capital funding as part of a restructuring.
The process could take up to five months to complete.
Norwegian Air Shuttle’s subsidiary Arctic Aviation Assets, which handles all aircraft financing and airline ownership, is based in Dublin, making Ireland the obvious location for the airline’s reorganisation.
“Seeking protection to reorganise under Irish law is a decision that we have taken to secure the future of Norwegian for the benefit of our employees, customers and investors,” said Norwegian’s chief executive Jacob Schram.
“Our aim is to find solutions with our stakeholders that will allow us to emerge as a financially stronger and secure airline.”
Schram said the company wanted to work with its stakeholders to find solutions to its financial problems and intended to save as many jobs as possible, and believes the carrier has enough liquidity to get through the examinership process.
He added, “Our intent is clear. We will emerge from this process as a more financially secure and competitive airline, with a new financial structure, a right-sized fleet and improved customer offering.”
Norwegian will also reportedly continue to operate its current flight schedule, which is greatly reduced thanks to COVID-19, throughout the process and its shares will still be traded on the Oslo stock exchange.
Norwegian’s fate appeared to be sealed last week, when the Norwegian government refused to give it a second bailout this year.
Ministers in Oslo stated they did not think it was a “sound use” of taxpayers’ money to prop up the low-cost airline, which appeared to enter the pandemic already vulnerable thanks to its debt-fuelled rapid expansion into long-haul international flights.
Norwegian Air said the government’s decision has left the airline with a “very uncertain future”.
According to John Strickland, an analyst with JLS Consulting, “Some of Norwegian’s problems were of its own making, with its ambition and expansion into low-cost long-haul flights.
“They have turned over every stone over a long period of time to stem losses, cut debt and raise equity, and then have had to deal with the pandemic on top of that.”
Strickland added that Norwegian was facing increased competition in its domestic market, with low-cost rival Wizz Air planning to open two bases in Norway, while a new home-grown airline was also being planned.