Tanya Powley in London
Norwegian Air Shuttle is grounding 40 per cent of its long-haul fleet and laying off up to 50 per cent of its staff after US President Donald Trump banned travel to the US from most European nations to limit the outbreak of coronavirus.
The struggling low-cost airline said it would also be cancelling up to 25 per cent of its short-haul flights until the end of May.
Jacob Schram, chief executive of Norwegian said: "The new restrictions imposed further pressure on an already difficult situation. We urge international governments to act now to ensure that the aviation industry can protect jobs and continue to be a vital part of the global economic recovery."
Europe’s third largest low-cost carrier said it had started the consultation process with unions over temporary lay offs that could affect up to 50 per cent of its staff. It added that the number could increase.
Norwegian said: “Due to the extraordinary market situation as a result of the coronavirus, and thus a dramatic drop in customers and subsequent production decline, we must look at all possible measures to reduce costs.”
From March 13 to 29, Norwegian will cancel the majority of its long-haul flights to the US from Amsterdam, Madrid, Oslo, Stockholm, Barcelona and Paris.
Meanwhile from March 13 to the end of May, all flights between Rome and the US will be cancelled. From March 29 until the end of April, all flights from Paris, Barcelona, Madrid, Amsterdam, Athens and Oslo to the US will be cancelled. It added that all routes between London Gatwick and the US will continue to operate as normal.
Norwegian has been hit hard by concerns over the rapid spread of coronavirus. Its shares plunged more than 30 per cent on Thursday morning following news of the US travel ban.
Analysts have warned that the airline will be forced to issue fresh capital as it fights to survive the current crisis engulfing the airline industry.
Norwegian has already raised equity three times in the past two years but its share price has fallen more than 90 per cent over the same period as investors fret over a balance sheet stretched by rapid growth into transatlantic travel and high debt.
The coronavirus outbreak has increased pressure further on Norwegian, leading the airline to abandon its guidance of making a profit this year and analysts to forecast a deep loss in the first quarter.
The airline dramatically changed strategy last year, moving from rapid growth to what it called a focus on profitability as it sold off aircraft, changed its chief executive and chairman, tapped shareholders for fresh capital, restructured two maturing bonds and cut costs by closing down some routes.
It was also hit by the grounding of Boeing’s 737 Max aircraft and problems with some of its Rolls-Royce engines. But the coronavirus outbreak has punctured its new-year optimism that had led to a forecast of net profit three weeks ago.
Source : https://www.ft.com/content/a0863674-67db-3b99-aeb5-d8bd6439aa33515