The days of Norwegian's budget long-haul flights between Europe and the USA could be over, regardless of whether the airline survives its financial crisis.
Norwegian Air is currently operating under bankruptcy protection, awaiting its second dramatic corporate restructure in a matter of months. Just six Norwegian planes remain in the air on a handful of domestic routes because of support from the Norwegian government.
Known internationally for its low-cost concept of long-haul travel, notably between the US and Europe, the future airline is going to look very different—if it survives.
Instead of bringing budget-conscious American travellers to Europe, the new Norwegian seems likely to return to its roots serving mainly Norwegian customers.
A much smaller airline in 2021
According to a report in Norwegian newspaper Dagens Næringsliv, some of Norwegian's board members want to permanently close long-haul operations. The newspaper claims a relaunched Norwegian would focus only on Norway, Scandinavia and select routes within Europe.
Sparebank1 Markets analyst Lars-Daniel Westby has followed Norwegian Air closely and thinks the company knows that its long-haul operation can’t continue. “Norwegian must put a credible business plan to the court in Ireland, and it must convince the court that the plan is profitable,” he told Dagens Næringsliv.
Read more: Wizz Air in Norway
Despite the intense speculation, CEO Jacob Schram insists the company has not yet decided on the fate of the unprofitable long-haul operations:
“I have noticed that there has been a lot of speculation about it. No decision has been made on that, but it is an important topic that it is natural for the board to discuss. It is also not appropriate that we take a position on it now, but it is a given that we must take a position on it during the examinership process and it also depends on the investor interest.”
Schram made the comments following the shareholder's meeting that approved Norwegian's restructuring plan. It is the Irish courts through the examinership process that will now decide if Norwegian can undertake those plans or not—and they will only do that with evidence of a profitable business plan.
A dramatic time for Norwegian continues
Norwegian has already been through a controversial refinancing earlier this year, but that only bought the airline a couple of months against the backdrop of the ongoing travel restrictions.
For much of the year, Norwegian has only operated a handful of domestic routes within Norway. They have been subsidised by the Norwegian government, although the state refused direct cash support.
Norwegian pioneered low-cost transatlantic air travel, but their aggressive growth strategy saddled them with debt. They also struggled with financial issues related to engine troubles on their long-haul fleet.
This left the airline in a much worse financial position than its competitors when this year's global health crisis struck. “It was only a matter of time for this once high-flying low-cost carrier. The pandemic is unforgiving but Norwegian was on wobbly ground long before coronavirus,” said Skift’s Tom Lowry.
In November, the airline has sought Irish protection for its subsidiaries Norwegian Air International and Arctic Aviation Assets, under the examinership process. This is similar to Chapter 11 in the U.S.
The international subsidiary was Norwegian’s first foreign subsidiary and is technically a different airline. It operates many routes outside of Norway under a different air operator certificate, despite using the same branding. However, Norwegian said the entire group will be protected as a related party by the Irish process.
We have over $2K we paid for seats to Paris. They did not return money but said we could postpone a flight till 2021. We can’t lose this money because we want to fly to Barcelona in Sept 2921 instead of Paris, if the world is vaccinated by then.
I loved Norwegian flights between US and Europe. We always took the lowest level of transport, checked one bag, and had comfortable seating. Made travel to EU almost the same as to California. We will miss it if it goes under.
Me too. I rated the service and the Dreamliner they operated very highly. They were a competitive thorn in the side to other carriers and will be missed if they pull out. I was loyal to them flying to JFK about 30 times. On one return trip they had to change the equipment and wet leased a 380 and put me in a first class seat. That was a great experience.
I need to get back to New York as soon as I can for my work and some R&R and really hope Norwegian will take me there again.
The only less than ideal experience I had was with the check in at Austin but that was an isolated incident.
M
I am wondering what is going to happen to CashPoints for people in the United States with no routes.
I would be disappointed to see the transatlantic flights stop. In the last 3 years I have travelled to the USA from london about 30 times. Mostly in their premium cabin. For me the experience was exceptionally good value. The seat and cabin is streets ahead of other airlines premium economy cabins and the inflight service was great. So what if you had to pay a bit extra for drinking spirits. Beer, wine and soft drinks all included. 2 in the hold cases and a cabin bag made it perfect for longer business trips.
Ok so they were not perfect and were sometimes let down by the ground crew especially at Austin but on the whole I rate them highly.
I hope they can salvage the JFK service. I’m sure with some work they can make some money out of that.
Norwegian was a big thorn in the side of BA and Virgin and undoubtedly it caused other airlines (American in particular) to up their game.
I had booked a flight from Seattle to London and return for last April. It was cancelled because of the pandemic and I took the cash point option because we will make the trip when travel returns to normal. When the news came out the Norwegian is unlikely to reinstate long haul flying even after the pandemic goes, I called them today to request cash back since I won’t be able to use the cash points in 2021 and they will expire. The only answer I got with two calls was cash points can’t be converted to cash. Not much help. I will just have to write off the $3000, I guess.
Warren