NORWEGIAN AIRLINES DECLARES BANKRUPTCY FOR TWO SUBSIDIARIES

Another low-cost airline was forced to declare the insolvency for its subsidiaries, becoming another victim of COVID-19. This is the Norwegian airline Norwegian Air Shuttle, the main assets of which are concentrated in Ireland.

The company is reportedly going to restructure two of its units: Norwegian Air International Limited (NAI) and Arctic Aviation Assets DAC (AAA). This may allow the company to remain in the market despite the changing market conditions.

Operations within Europe can be maintained, and business in the field of long-distance flights will cease to generate losses.

Arctic Aviation Assets DAC is a 100% subsidiary of Norwegian Air, responsible for the maintenance of the aircraft fleet. Since the bankruptcy takes place in Ireland, the Norwegian low-cost airline will also be able to obtain protection as an affiliate. At the same time, the airline itself will continue to fulfill the program of approved routes, and its securities will continue to be traded on the Oslo stock exchange as before.

Founded in 1992, the company quickly became the main competitor to RyanAir and EasyJet, operating routes not only in Europe, but also in Asia and the USA. Although Norwegian Air has accumulated multibillion-dollar debt in its multi-year strategy to expand its air travel market, the company's shares went up in price up to 99% in 2020.

Experts note that the Norwegian carrier had experienced economic difficulties even before the pandemic began.

However, the closure of borders between states and the termination of the traditional program of tourist flights forced the company to cease flights of almost the entire fleet. The liners were pinned to the ground for a long time, and about 80% of employees (8 thousand people) were sent on unpaid leave.

The company hopes that in the next five months, while the reorganization takes place, it will be able to reduce its debt by selling part of its fleet and inviting new investors. Jakob Schram, the CEO of the company, said that Norwegian Air's goal would be to find new strategic solutions that would satisfy both investors and customers.

It is known that in recent months, Norwegian Air has tried to solve the problem by negotiating with creditors or receiving subsidies from the country's government.

During the first wave of the spread of COVID-19, the state has already allocated guaranteed loans and 3 billion Norwegian kroner (about € 280 million) to save the company. However, this time the authorities refused to support the company, pointing out that allocating money from the treasury to save the carrier is not the best way for public investment.