The Norwegian government has signaled its preparedness to contribute financially towards a reconstruction plan aimed at saving embattled international budget airline Norwegian Air Shuttle, providing “private investors also contribute”, said a press release from the government on Thursday.
Norwegian Air Shuttle, or Norwegian, is Europe’s third-biggest low-cost airline headquartered at Fornebu in Norway, just outside the capital of Oslo.
The airline has been on the brink of collapse due to the paralyzing effects of the COVID-19 pandemic on global air traffic and crippled by an accumulated debt, standing at 58.3 billion Norwegian krone (6.9 billion U.S. dollars) at the start of 2020.
“Norwegian’s new business plan involves strong interventions in the company’s debt structure and the inflow of 4 to 5 billion Norwegian krone in fresh capital,” Minister of Trade and Industry Iselin Nybo said in the press release.
“The plan appears more robust than the one we said no to in October 2020. That is why we are now positive about contributing,” added the minister.
The government’s stance comes after Norwegian Air Shuttle presented an acceptable new business plan on Jan. 14 which included the airline promising to reduce its debt to 20 billion Norwegian krone.
“Norwegian has been faced with a very challenging and demanding situation due to the pandemic, and the government’s support significantly increases our chances of raising new capital and getting us through the reconstruction process we are currently in,” said Jacob Schram, CEO of the airline in a press release from the company Thursday.
“Furthermore, the government’s support will contribute to helping secure jobs and maintain healthy competition within the aviation sector,” Schram said.
In addition, the new plan revealed Norwegian will also cease operating their long-haul routes and in the future fly in Europe from a Nordic starting point.
According to the government’s press release, the state’s participation in Norwegian’s restructuring is further subject to Storting, the Parliament of Norway, for final approval. (1 U.S. dollar = 8.44 Norwegian krone)