An intermediary of the beleaguered low-cost long-haul airline Norwegian has apparently told British-based pilots and cabin crew that the airline has run out of cash to pay them the wages they are owed for April and that staffers may have to wait until a government-backed job retention scheme comes online. The allegation has been denied by Norwegian despite several sources and the BALPA pilots union confirming the news.
Unlike many airlines, pilots and cabin crew aren’t directly employed by Norwegian but are managed through an intermiderary called OSM Aviation. Several days ago, OSM Aviation sent an email to flight crew which said Norwegian had told them they did not have enough cash to pay April’s wages as agreed.
As the massive scale of the COVID-19 crisis became apparent, Norwegian grounded planes and almost went into complete hibernation to see out the pandemic. The airline worked out a deal with unions to pay British crew just 60 per cent of their usual salary but this was then replaced with a tax-payer funded furlough scheme in which the government pays 80 per cent of an employees wages.
But with the furlough job retention scheme likely to take a month or more to come fully online, employers will be expected to pay the initial wages for April out of their own pocket. A proposal that Norwegian allegedly told OSM Aviation simply wasn’t possible because the airline doesn’t have enough cash left.
The airline is currently working to meet requirements from the Norwegian government for a NOK 3 billion bailout. So far, Norwegian has only met the requirements for the first tranche of funding of NOK 300 million. The airline won’t get its hands on the rest of the money until it has managed to lower its debt threshold.
An extraordinary general meeting has been arranged for the end of April in an attempt to raise more cash from shareholders.
“Norwegian have indicated to OSM that they will not be in a position to fund the April salary, and also OSM do not have sufficient funds to cover the salary or redundancies,” a memo sent from the BALPA pilots unions told its members at the airline. A similar email was sent to cabin crew.
A spokesperson for Norwegian, however, denied these reports saying the airline had been in constant contact with unions to navigate through the COVID-19 crisis. The airline, the spokesperson said, is currently in talks to unlock the second and third trance of bailout funds and more details will be known in the next couple of weeks.
“The crew employer, OSM, has been in constant dialogue with the relevant unions to reach the best possible agreement for our crew colleagues based in the UK,” the spokesperson continued.
