Embattled low-cost airline Norwegian will lay-off 3,134 cabin crew and 1,571 pilots in Sweden and Denmark, as well as Spain, the United Kingdom, Finland, Sweden and the United States, citing ‘force majeure‘ caused by the Coronavirus pandemic. The loss-making airline is currently fighting to secure the second and third phases of a NOK 3 billion bailout to stave off a potential collapse caused by the crisis.
Unlike many airlines, Norwegian employs its flight crew through third-party subsidiaries. Four of these companies that employ pilots and cabin crew in Denmark and Sweden filed for bankruptcy on Monday.
Norwegian has also told OSM Aviation, an airline crew management company that it partly owns, that it has cancelled the “crew provision agreements” it has with the company in Spain, the UK, Finland, Sweden and the United States. OSM Aviation also supplies crew to a number of other airlines, including internationally-based Finnair crew.
“The impact the Coronavirus has had on the airline industry is unprecedented. We have done everything we can to avoid making this last-resort decision and we have asked for access to government support in both Sweden and Denmark,” explained Norwegian chief executive Jacob Schram.
“It is heart-breaking that our Swedish and Danish pilot and cabin crew subsidiaries now are forced to file for bankruptcy,” he continued. “I’m truly sorry for the consequences this will have for our colleagues.”
“We are working around the clock to get through this crisis and to return as a stronger Norwegian with the goal of bringing as many colleagues back in the air as possible.”
Schram said that the company had been able to ‘furlough’ its crew in Norway, meaning that the government would pay salaries during the furlough period. Similar schemes, however, were not available in Denmark and Sweden.
Such schemes are, though, available in Spain and the United Kingdom. Last week, OSM Aviation told its British crew that the airline might not be able to afford their wages for April and that they would have to wait until a furlough came online. Norwegian denied the allegation despite staffers confirming that the email had been sent.
OSM employed cabin crew in the United Kingdom and Spain will remain on furlough but it’s not known whether a job will exist for them in the coming months. Cabin crew and pilots based in Norway, France and Italy won’t be affected by today’s decision.
Norwegian is in urgent talks with its bond holders, lessors and other creditors in an attempt to convert a “substantial” amount of its debt into equity. If Norwegian wins the support of its backers then it might be able to unlock a government bailout to secure its future, at least in the short term.
