It seems that Norwegian Air Shuttle cannot sustain it’s long haul network, as it chooses to focus on short-haul operations again
Norwegian UK Boeing 787-9 arrivng at Chicago O’Hare – Image, Economy Class and Beyond
According to the airline, the current plan is to serve these markets with around 50 narrow-body aircraft in operation in 2021 and to increase that number to around 70 narrow-body aircraft in 2022.
However, the pandemic has hit the industry and the airline hard, with travel restrictions and changing government advice continue to negatively influence demand for long haul travel. That’s not good for Norwegian – with their entire Boeing 787 Dreamliner fleet has been grounded since March 2020.
As such, demand is uncertain for the airline. The airline states
Under these circumstances a long haul operation is not viable for Norwegian and these operations will not continue.
The consequence of this decision is that the board of directors of the legal entities employing primarily long haul staff in Italy, France, the UK and the US have contacted insolvency practitioners. Norwegian will continue to assess profitable opportunities as the world adapts and recovers from the impact of COVID-19.
Whilst the airline is trying to reduce its debt further (to around NOK 20 billion and to raise NOK 4 – 5 billion in new capital), it is in talks again with the Norwegian government about possible state participation based on the new business plan.
In Quotes
Jacob Schram, CEO of Norwegian said:
“Our short haul network has always been the backbone of Norwegian and will form the basis of a future resilient business model,” said
“I am pleased to present a robust business plan today, which will provide a new start for the company. By focusing our operation on a short haul network, we aim to attract existing and new investors, serve our customers and support the wider infrastructure and travel industry in Norway and across the Nordics and Europe,”
On the long haul network, he added
“Our focus is to rebuild a strong, profitable Norwegian so that we can safeguard as many jobs as possible. We do not expect customer demand in the long haul sector to recover in the near future, and our focus will be on developing our short haul network as we emerge from the reorganisation process,
“It is with a heavy heart that we must accept that this will impact dedicated colleagues from across the company. I would like to thank each one of our affected colleagues for their tireless dedication and contribution to Norwegian over the years.”
Refunds
If you’ve got bookings affected by the changes that Norwegian are making, the airline will be contacting you directly and refunds will be issued.
A pause in long-haul Low-cost carriers for now
It seems a pandemic has done what legacy airlines couldn’t – put a stop to Long Haul Low-Cost Carriers. However, the impact of Norweigan and the long haul model will remain – with densified layouts and airfares unbundled, so that luggage and other things are an extra cost.
And with that sweet added revenue, you can bet legacy airlines won’t be willing to part with that flow of cash – especially with their cashflows restricted at this time.
Will we see Norweigan return to the long haul market? It’s a tough one to call and the market will need to improve a lot.
And I don’t see that for a few years.
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