Norwegian Air gets a lifeline, secures $27 million in government aid amid coronavirus crisis
Low-cost carrier Norwegian Air has secured the cash needed to save it during the coronavirus crisis — at least for the time being. The airline announced on Tuesday that it had fulfilled its first condition in getting a government-led rescue package, securing an initial cash infusion of 300 million Norwegian kroner (about $27 million).
Last week, the Norwegian government proposed a guarantee of six billion kroner for the country's airline industry, of which Norwegian Air would get three billion kroner if it could meet a series of conditions.
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After meeting its first condition to get commercial lenders to supply 10% of the first 300 million kroner, the government is providing the remaining 90%.
"Norwegian is pleased to announce that two Nordic banks have obtained credit committee approval to provide a guarantee for the required 10 percent for the first tranche of NOK 300 million," the airline said in a statement. "Norwegian will secure the necessary headroom to pursue further guarantees from the Norwegian Government."
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Norway said last week that it would issue credit guarantees of up to three billion kroner in order to help the struggling airline survive the ongoing coronavirus crisis. In a series of drastic measures beginning on March 13, Norwegian announced that it was laying off approximately 90% of its workforce, while also slashing a number of its routes and grounding its aircraft.
According to a press release on Tuesday, the airline said that most of its fleet was currently grounded, as it's reduced its operations to a minimum. It's now operating primarily domestically in Norway and Sweden and between the Nordic capitals. Norwegian said that limited schedule would remain in place "until further notice."
While it's secured 300 million kroner now, the airline said that it will continue to seek additional guarantees from financial institutions in order to open up remaining tranches.
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For now, Norwegian has secured funding that will keep it in business — at least for the short-term. It's likely that as a result of the ongoing coronavirus crisis, more governments will have to step in to save struggling airlines.
The U.K. government announced last week that it would step in to provide funding to the airline industry, though it hasn't detailed what those plans look like. Airlines in the U.S. have asked the government for at least $50 billion in aid, though nothing has been made official.
Related: US airlines seek at least $50 billion in aid to combat coronavirus crisis