Norwegian Air abandons long-haul services with the loss of 1,100 UK jobs


January 15, 2021

Norwegian Air has ended an era of cheap transatlantic flying by scrapping its popular long-haul services at Gatwick, with the loss of 1,100 British jobs.

The company said yesterday that it had abandoned plans to relaunch itself as a budget transatlantic carrier after the pandemic to concentrate instead on rebooting itself as a Scandinavian short-haul operation.

Norwegian reshaped the market when it began flying passengers between Gatwick and the United States for £150 one-way. It once boasted that it was flying more people to the New York area than British Airways.

It was the first carrier to offer budget transatlantic flights in a sustained way since Sir Freddie Laker’s Skytrain in the 1970s. Skytrain collapsed in the recession of the early 1980s after failing to break the stranglehold of big airlines — a similar fate to that of Norwegian.

Like other carriers, it has been battered by the pandemic while fighting back from near-insolvency over the past nine months. Before that it had faced multibillion-pounds of debt and difficult aircraft leasing liabilities.

It has been offering a skeleton service in Norway. Yesterday it said that its board of directors had “outlined a simplified business structure, a dedicated short-haul route network . . . focusing on its core Nordics business”.

That means that 1,100 pilots and cabin crew based at Gatwick who have been on furlough because of the pandemic are being made redundant as the subsidiary that employs them is to be wound up.

Although it aims to fly some routes to the UK, Norwegian has no plans to base any of an expected fleet of 50 aircraft at airports in Britain.

The plans are dependent on yet another recapitalisation of an airline that was brought to its knees by expansion under Bjorn Kjos, its founder and former chief executive, that left Norwegian flying too many unprofitable routes.

Last spring it went through a £1.07 billion swap of borrowings and leasing liabilities into new shares. Even after that, at the end of last year it was forced to apply for insolvency protection in Ireland, where ownership of its aircraft is registered. In its latest filings Norwegian reported that it had £4.2 billion of debt.

Yesterday it said that it was targeting a reduction of that to £1.75 billion and planned to raise up to £430 million with another rights issue with existing investors, a private placement of shares and the issue of convertible shares.

It has not given up hope that the government in Oslo will come back with state aid proposals after ministers had previously rebuffed Norwegian’s pleas for help.

Jacob Schram, the chief executive brought in to try to rescue Norwegian, called it “a robust business plan, which will provide a new start”.

He said that he had abandoned plans to restart long-haul operations because that was the segment likely to return the most slowly after the dislocation of Covid-19.

“Travel restrictions and changing government advice continue to negatively influence demand for long-haul travel and Norwegian’s entire Boeing 787 Dreamliner fleet has been grounded since March 2020,” the airline said.

The boards of the units that employ “long-haul staff in Italy, France, the UK and the US have contacted insolvency practitioners”, it said. That affects more than 2,100 people, more than half of whom are based at Gatwick.

At its height Norwegian was carrying 37 million passengers a year, employed 10,000 people and was a takeover target for International Consolidated Airlines Group, British Airways’ owner.