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26 May 2022

Opinion from Adrian Leopard & Co

News impacting business from Adrian Leopard & Company - Insolvency Practioners & Mediators

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Norwegian Air facing big trouble following refusal of Norwegian government to help out financially. No holidays with them.
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Norwegian Air facing big trouble following refusal of Norwegian government to help out financially. No holidays with them.

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Yet another airline on the brink.

We have been keeping an eye on Norwegian Air this year because it has looked like tottering quite a lot. Norwegian Air in fact became Europe’s third largest low cost airline, carrying out many of its flights from the UK and one of its main bases has been at Gatwick.

We were particularly alerted to trouble ahead in February and March 2020 when firstly it scaled back its transatlantic flights and then cancelled 85% of its flights and laid off 7300 employees due to coronavirus.

Somewhat to general surprise at the time the company received a grant from the Norwegian government of about $29 million and in May achieved a cut-price share sale and support from its bondholders allowing it to continue with a slimmed down schedule.

Then in August the company said it would need to secure additional funding to get it through the coronavirus crisis after reporting first half losses of $610 million.

Now the government has ruled out further investment and the airline has grounded all but 6 of its 154 fleet and reduce its activities to just 12 domestic routes within Norway. Just 600 employees remain active at present.

The company has said that it will run out of cash in the first quarter of 2021 unless funding becomes available. The hoped for government funding will not so whether the company will be able to find other sources of funding at this very difficult time is unknown.

The knock-on effect of all of this is of course huge; thousands of employees now redundant or on furlough and of course aircraft owners receiving no funds against the lease obligations and no one wanting surplus aircraft at this time.

For those interested in finding out more there is a long and detailed article in the Daily Mail which includes a schedule of key events in the company’s 27 year history which makes interesting reading. The article can be found here:

https://www.dailymail.co.uk/news/article-8928413/Norway-government-says-not-support-Norwegian-Air.html

This news supplements the already poor news for aviation across the globe at the moment and even with a vaccine hovering in the distance, no one really knows how long it will take for the aviation industry to recover but there will probably be no more cheap flights for Brits to go on holiday with this airline. Whilst Brits will still wish to go abroad, it is quite amazing how many have discovered the delights of staycation!

Adrian Leopard 11-11-20

Photo John Cameron

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