Disruptive Norwegian Air exits long-haul travel

14 January, 2021

2 min read

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Steve Creedy

Steve Creedy

14 January, 2021

The low-cost carrier that disrupted the trans-Atlantic market, Norwegian Air, is axing its long-haul operations and withdrawing to its home turf. Norwegian’s expansion across the Atlantic and bargain-basement fares prompted airlines to launch competing and mostly unsuccessful low-cost carriers as well as introduce cut-price basic economy seats into the market. At its zenith, the Nordic carrier boasted more than 50 non-stop routes between the US and Europe. READ: Qatar chief dismisses predictions airfares will soar. It was already struggling financially before the pandemic and its glory days as a long-haul market disruptor are now over as the COVID pandemic continues to cast a pall of uncertainty over international demand. The company’s board on Thursday outlined a simplified business structure that will see it exit its Boeing 787 fleet, which has been grounded since March, and focus on its core Nordic market and key European destinations. It did not, it said, expect to see customer demand in the long-haul sector to recover in the near future. The plan will see it bring in insolvency experts for its operations in Italy, France, the UK and the US.  Media reports suggest about 1100 staff are affected at the airline’s London Gatwick operations alone. Norwegian's strategy is to serve the core markets with about 50 narrow-body aircraft in 2021 and to increase the fleet to 70 aircraft in 2020. “Our short-haul network has always been the backbone of Norwegian and will form the basis of a future resilient business model,” said Norwegian CEO Jacob Schram. The carrier also hopes to significantly reduce its debt to around  2 billion Norwegian Krona ($US240m) and to raise 4-5 billion krona through a combination of a rights issue to current shareholders, a private placement and hybrid instruments. It says it has received “concrete interest’ in the private placement. “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, adding that the company hoped to “safeguard as many jobs as possible”. The airline said customers with bookings affected by the changes would be contacted directly.  

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