The Norwegian government has ruled out further support for Norwegian Air, leading the airline to say it is now facing “a very uncertain future”.
Minister of trade and industry Iselin Nybø said, “The government has considered that in this situation it is not a good use of taxpayer’s money. Such support could also distort competition. The players in Norwegian aviation can already benefit from many of the other general schemes we have presented.”
The ministry said that the sector had already benefitted from as much as NOK 14 billion (£1.2 billion) in support in the shape of exemption from certain fees, the state purchase of some air routes to ensure a minimum level of service, additional support for other routes and government support for non-state-owned airports and a guarantee scheme.
The ministry said in a statement: “Aviation is in a deep crisis, both nationally and globally, and there are many indications that it will remain so for some time to come. Since the closure in March, the government has been in close dialogue with the industry and has, together with the Storting [Norwegian parliament], put in place a number of measures to remedy the situation.”
Minister of transport Knut Arild Hareide said, “Aircraft are a key part of the transport offer in an elongated country like Norway, and we want to help ensure a competitive aviation industry even after the corona pandemic. In the short term, the state's goal is that there is a necessary minimum offer of aviation services. In the longer term, when the markets are normalised, the goal is healthy competition in the Norwegian aviation market.”
Norwegian Air’s CEO Jacob Schram said, “The fact that our government has decided to refrain from providing Norwegian with further financial support is very disappointing and feels like a slap in the face for everybody at Norwegian who is fighting for the company when our competitors are receiving billions in funding from their respective governments.
“We offer routes from Kristiansand in the south to Svalbard in the north, routes that cannot be replaced overnight. It will take time and it will have consequences for the competitive situation in Norway, like we have seen before. We also notice that airlines across the world that are also dependent on support to survive, are receiving billions from their respective authorities.”
The airline said it had already undergone a substantial financial restructuring, shifting NOK 18 billion (£1.5 billion) from debt to equity.
Schram added, “We could clearly see the results of our hard work to go from growth to profitability, which was initiated in 2018. With further support to get Norwegian through this unprecedented crisis for the aviation industry, we would come out as a more sustainable and competitive airline, with a new structure and improved operation. Without support, the way forward has become much more uncertain. However, we will do whatever we can get through this crisis.”
Norwegian has 2,300 employees in Norway and several thousand in other countries and, in August, announced a first half loss of NOK 5.3 billion (£450 million).
The government also ruled out support for a start-up airline conceived by industry veteran Erik Braathen.