Norwegian, the Scandinavian discounter that grew too big too fast for its finances has announced it will leave nearly all of its grounded fleet parked for the next year, with a plan to resume serious flying in April 2021.
The drastic plan for what it called a “hibernation phase” is intended to keep the money-troubled airline alive by not trying to compete during the difficult recovery times ahead, and to avoid the money-losing winter season ahead. It plans a slow 2021 restart, focusing first on its domestic network and then its most profitable long-haul cities, such as London, New York and Los Angeles.
The carrier’s prediction is to be back to normal operations by about January 2022, but it is unlikely even then, or ever, that it will build as wide a network as it has in the past or expand very quickly. That’s a big change from 2012, when it first went on an aggressive expansion, placing what was then Europe’s biggest-ever order for airplanes.
For the past year, while seeking new financing and taking on new managers, the airline has been shedding ownership of many of those planes, selling them to aircraft leasing companies for cash, while continuing to rent them back. At this point, it is likely that it will return numbers of its leased planes, and might try to find airlines to buy or rent others.
The hibernation plan comes as the airline has acknowledged that it will be out of cash by mid-May, which could threaten even the limited Scandinavian routes it is flying with seven planes.
It has been begging the Scandinavian companies for bailout money, and also plans a big debt-for-equity swap that would allow it to pay loans to major investors in company stock. The effect of that would be that the current shareowners would end up owning 5.2% of the airline, with 94.8% being transferred to the banks and institutions that it owes money to.
If Norwegian’s plan goes through, it will amount to selling the airline to its creditors. It’s not the only airline in that kind of condition; Sir Richard Branson, who only a week ago was scrambling to find new capital for Virgin Atlantic and looking for €570 million in UK assistance has now said the airline is up for sale and has sent offers to fifty possible investors.
