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Norwegian Air to axe long-haul operations in bid to survive

Jan. 14, 2021
4 min read
Norwegian Air to axe long-haul operations in bid to survive
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Low-cost carrier Norwegian Air will end its long-haul operations in a bid to survive. The airline announced on Thursday that it will give up the long-haul segment of its operations, returning solely to its short-haul network that allowed it to grow.

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Norwegian said that it plans to serve the Nordics and key European destinations by using around 50 of its narrow-body aircraft in 2021. It plans to increase that short-haul operation to 70 narrow-body aircraft in 2022.

“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 is targeting to reduce its debt to around 20 billion Norwegian crowns (about $2.3 billion) and raise four to five billion crowns through a combination of initiatives. Additionally, it said that it's reinitiated dialogue with the Norwegian government about "possible state participation based on the new business plan."

"By focusing our operation on a short-haul network, we aim to attract existing and new investors, serve our customers and support the wider infrastructure and travel industry in Norway and across the Nordics and Europe,” Schram said.

In November 2020, Norwegian filed for the equivalent of Chapter 11 bankruptcy protection in Ireland. The move to initiate an examinership process protected it from creditor action in Ireland for up to 100 days. We now know the carrier will cut its long-haul operations going forward.

In pre-coronavirus times, the airline's financial future was uncertain. The issue has only been exacerbated by the COVID-19 pandemic, which has largely grounded air travel around the world.

Related: Coronavirus crisis raises questions about the survival of already-struggling airlines

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Norwegian relaunched some short-haul service in 2020. However, at the time, it was planning to keep long-haul flights off the table until at least mid-2021. Those plans have been replaced by Monday's decision to do away with its long-haul operations completely.

In 2015, Norwegian made waves in the transatlantic market when its then-CEO Bjørn Kjos said that it planned to launch flights between the U.S. and Europe from just $69 one-way.

Since its launch in the transatlantic market, the low-cost carrier expanded its long-haul route network at a rapid pace. It opened bases at London Gatwick, Rome and in Spain. Additionally, it operated to new destinations in the U.S., including Las Vegas, Boston, New York, Miami and more.

It also added routes between Europe and smaller, East Coast U.S. cities, such as Newburgh, New York (SWF) and Hartford, Connecticut (BDL). However, those operations were suspended before the coronavirus pandemic.

The airline used a fleet of Boeing 787 Dreamliners as well as some Boeing 737 MAX aircraft. Its troubled fleet set back its expansion plans, as lingering Rolls-Royce engine problems grounded some of its Dreamliners. Additionally, the worldwide 737 MAX grounding meant that its single-aisle, long-haul aircraft remained on the ground.

Norwegian's not the first airline to struggle since the start of the coronavirus pandemic. In May 2020, LATAM and Avianca filed for bankruptcy protection in the U.S., and in Australia, Virgin Australia filed for voluntary administration — though it has since been purchased by Bain Capital.

The largest regional airline in the U.K. Flybe, which was set to be acquired by Virgin Atlantic, entered voluntary administration in March 2020.

Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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