Low-cost carrier Norwegian has said a government loan
guarantee for up to NOK 3billion (€285 million) it received in March will not
be enough to sustain it through the ongoing coronavirus crisis after it
reported a net loss of NOK 5.3 billion (€504 million) for the first half of
2020.
The airline said it had been looking forward to turning a
profit in 2020 following years of making losses, but the coronavirus pandemic
caused a 71 per cent drop in passenger numbers to 5.31 million during the
period, with the vast majority of flights grounded from March until July. Since
then, the carrier has reopened 76 routes and put an additional 15 aircraft back
into service, bringing more than 600 employees back to work from furlough. However, in
the second quarter the Norwegian government mandated that airlines block the
middle seats on all domestic flights to enable social distancing, forcing the
airline to adjust its capacity.
To mitigate the financial impact of the crisis, Norwegian
has furloughed or laid off around 8,000 employees since March, but it now says continuing
travel restrictions across Europe will severely impact passenger demand.
CEO Jacob Schram commented: “The Covid-19 crisis has
impacted aviation and the travel industry particularly hard, and most companies
need government support to survive. We see that many of our main competitors
receive considerable liquidity support from their governments, as aviation
represents the backbone of infrastructure. We are thankful for the loan
guarantee made available to us by the Norwegian government, which we worked
hard to obtain. However, given the current market conditions it is not enough
to get through this prolonged crisis.”