Seconds after we sent our news update today, Norwegian sent what amounts to a cry for help for government assistance. Although the airline welcomed the decision of the Norwegian government to remove aviation taxes in the country, Norwegian has called for further “powerful and extraordinary measures from the government in order to strengthen the company’s liquidity in a critical phase”.
Norwegian CEO Jacob Schram essentially pleaded for more help: “We welcome the fact that the government has decided to remove aviation taxes in Norway, but sadly, this is not enough as we’re in a very demanding situation at the moment. We need exact measures to strengthen our liquidity in the short term immediately. At the same time, it is crucial for us that the government will work on solutions for a phase two. We are asking for these solutions to come quickly. At the same time, we will take all measures necessary to reduce the financial losses this situation is causing us, no matter how painful they are. At the same time, we will also take care of our colleagues and customers in the best possible way.”
Norwegian’s restructuring efforts were admirable and had been starting to bear fruit at the turn of the year. In February, the company had notified the market that it expected positive results for 2020 after succeeding in 2019 to meet cost reduction targets of NOK 2.3 billion. In 2020, the company introduced further measures to improve its results by an additional NOK 1.5 billion.
However, the capital markets are now essentially closed, which has cut off lifeline support for the airline. The coronavirus crash has created what Norwegian calls “an extraordinary situation”.
Weak airlines like Norwegian badly need assistance to survive, but even stronger airlines, like British Airways are speaking out on their current issues caused by the crisis.
In an internal message to staff, reported in the Financial Times, BA CEO Alex Cruz, explains how the ailrine was under immense pressure: “Some of us have worked in aviation through the global financial crisis, the Sars outbreak and 9/11. What is happening right now as a result of Covid-19 is more serious than any of these events. It is a crisis of global proportions like no other we have known.”
BA has suspended routes, grounded aircraft and may need to make job cuts for a short period.
This crisis is only just beginning to play out. Join us for our webinar on the coronavirus crash and its impact on aviation on 27th March 2020.