Norwegian Air says they may run out of cash in a matter of weeks. Their long haul business is between several European countries and the U.S., but Europeans largely cannot travel to the U.S. for the next month. Bookings are down anyway in the current environment, and this was a troubled airline to begin with.
A week ago I wrote that coronavirus could bring down Norwegian and that we may see other airline failures as well. And that was before the Trump administrations edict against arrivals by non-U.S. residents who have been to European Schengen Area countries within the past 14 days.
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Low cost airline Norwegian has struggled, in part because of the brutally competitive low cost transaltantic market, in part because of high costs at the airline, and in part by bad luck – the grounding of hte 737 MAX, the long-term stranding of a plane in Iran, major engine retrofit work that was required for many of their aircraft.
They looked like they were in a perilous position a year ago. They brought in new financing and were well-positioned to make it through the winter. I had advised travelers not to worry about booking them over the summer. That’s when they should be making money. The question was whether it would be enough money to last them through early 2021.
Coronavirus changes everything. And there aren’t many places left for them to go for support besides the government of Norway.
“What is important is to provide liquidity within weeks, not months,” CEO Jacob Schram told a news conference.
The airline was already suffering big losses and haemorrhaging cash in recent years and on Thursday announced it would temporarily lay off up to half its 11,000 employees as thousands of flights were scrapped.
Norwegian, a pioneer of low-cost transatlantic routes, has repeatedly called on governments to help the airline industry.
“I am optimistic the government will help us with the liquidity crisis,” Schram said.
We’ll see if Norwegian begins service to Paris from my home airport of Austin this spring after all.