Norwegian is potentially in line for a state bailout worth upwards of £200 million as the embattled budget carrier continues to fight for survival amid the coronavirus crisis.
The Norwegian government late on Thursday (19 March) set out plans to back the nation’s airlines with credit guarantees worth up to NOK 6 billion (£462 million), half of which, Reuters reports, will be handed to Norwegian.
The level of support, though, will be conditional on the extent to which Norwegian can boost its equity by working with commercial lenders. Chief executive Jacob Schram said the carrier would do everything in its power to meet the demands.
Norwegian is Europe’s third-largest airline and has rapidly expanded across the continent in recent years, as well as into the transatlantic and Latin American markets.
But its efforts to crack low-cost transatlantic operations have been hit by a series of crises, including troubles with the engines on its 787 Dreamliner and the grounding of Boeing’s 737 Max aircraft.
Earlier this month, it announced plans to cancel thousands of flights, ground the majority of its fleet and temporarily lay off more than 7,000 employees.
SAS Scandinavian Airlines, meanwhile, also looks set to benefit from the Norwegian government’s pledge, with its slice potentially running to NOK 1.5 billion (£120 million). It has also made temporary lay-offs amounting to about 90% of its staff.
SAS, though, has been able to secure funding guarantees from the Swedish and Danish governments worth about £250 million.
Norway’s industry minister Iselin Nyboe also warned the facilities would not come without efforts by Norwegian and other carriers to source additional funding off their own back.
“Norwegian had financial challenges also before the coronavirus crisis,” said Nyboe. “With this plan, we make it clear both owners and lenders must contribute to improving the company’s financial situation if the state is to provide guarantees.”