Norwegian Airlines has announced that it will not continue its long-haul operations as it considers them no longer viable and has started insolvency proceedings in a number of markets including the UK and Italy.
The announcement comes as the airline’s board of directors outlined a simplified business structure and dedicated short-haul route network focusing on the Nordics. The carrier said the plan would enable it to “build a robust and solid company that will attract investors and continue to serve new and existing customers”.
“Our short-haul network has always been the backbone of Norwegian and will form the basis of a future resilient business model,” said Jacob Schram, CEO of Norwegian.
The airline says it will serve these markets with around 50 narrow body aircraft in operation in 2021 and to increase that number to around 70 narrow body aircraft in 2022.
It plans to reduce its debt significantly to around NOK 20 billion (£1.7 billion) and to raise NOK 4 to 5 billion (£350 to £430 million) in new capital through a combination of a rights issue to current shareholders, a private placement and a hybrid instrument.
The company says it has received “concrete interest” in participation in the private placement and has recently reinitiated a dialogue with the Norwegian government about possible state participation based on the new business plan. It had recently been denied a government bailout.
The airline says it has contacted insolvency practitioners in markets in Italy, France, the UK and the US.
“Our focus is to rebuild a strong, profitable Norwegian so that we can safeguard as many jobs as possible. We do not expect customer demand in the long-haul sector to recover in the near future, and our focus will be on developing our short-haul network as we emerge from the reorganisation process," said Schram.
“It is with a heavy heart that we must accept that this will impact dedicated colleagues from across the company. I would like to thank each one of our affected colleagues for their tireless dedication and contribution to Norwegian over the years.”
Customers with existing bookings affected by the changes will be refunded, the airline said.