Norway’s Industry Ministry and the Ministry of Transportation said in a statement on Monday that there would be no further funds made available to Norwegian Air (Norwegian) as the stricken airline struggles to cope with crippling debt and financial problems exacerbated by the COVID-19 pandemic.
The low-cost carrier has been a pioneer of cheap transatlantic flights, but a rapid expansion policy left it struggling with a debt of approximately US$8 billion by June this year. Creditors and lessors took over control of the airline in May with a financial rescue package that enabled the carrier to access state-guaranteed loans of 3 billion Norwegian crowns (US$441 million) as the company sought to operate a pared-back service.
“That the government has decided to reject the request for funds is disappointing and feels like a punch in the gut for everyone at Norwegian,” Norwegian Chief Executive Jacob Schram said.
“Norwegian Air has asked for billions of crowns in additional support and the government has concluded that this would not be a responsible use of public funds,” said Industry Minister Iselin Nyboe.
“Norwegian is evaluating the effects of the current situation with the aim of safeguarding the interest of all stakeholders,” the company said, according to Reuters news agency. The company has indicated that further funding could come from the sale of aircraft, conversion of more debt to equity or from its owners and the Norwegian government, while declining to specify the amount it might seek.
