Norwegian Air Files for Bankruptcy in Ireland

Norwegian Air has filed for the Irish equivalent of bankruptcy after struggling to make its low-cost business model viable even before the coronavirus pandemic.

Norwegian’s filing for examinership in Ireland, where its aircraft assets are held, makes it Europe’s biggest airline casualty yet from the pandemic and follows the decision of Norway’s government last week not to provide it with further financial aid.

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Oslo had agreed in May to plow 3 billion kroner ($332 million) into Norwegian.

Ireland’s examinership process — the rough equivalent of Chapter 11 bankruptcy in the U.S. — allows companies to seek a court’s protection from creditors for up to 100 days.

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“We will emerge from this process as a more financially secure and competitive airline, with a new financial structure, a rightsized fleet and improved customer offering,” Norwegian CEO Jacob Schram said in a news release.

As The Wall Street Journal reports, the airline “upended the European budget market as it pursued an ambitious plan to offer low-cost long-haul flights across the Atlantic.” Transatlantic fares ran as low as $91 and in 2018 Norwegian overtook BA to become the biggest non-U.S. airline linking Europe and New York.

But Norwegian, which expanded rapidly through borrowing, entered the pandemic in a weaker financial state than some of its rivals.

“Norwegian’s problems were of its own making, with its ambition and expansion into low-cost long-haul flights,” John Strickland, an analyst with JLS Consulting, told The Guardian. “They have turned over every stone over a long period of time to stem losses, cut debt and raise equity, and then have had to deal with the pandemic on top of that.”

Norwegian will continue to operate its flight schedule, which is reduced owing to Covid-19, during the examinership process and its shares will still be traded on the Oslo stock exchange.

“The purpose of the process is to reduce debt, rightsize the fleet and secure new capital,” the company said. “This reorganization process protects the assets of the Norwegian group while allowing the company to focus on the rightsizing of the group.”

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