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Low-cost airline Norwegian Air Shuttle, which was struggling even before the COVID-19 pandemic paralyzed the aviation industry, said on Friday, August 28, its losses quadrupled in the 1st half of 2020.
With a 71% drop in passengers, 8,000 employees either furloughed or cut, and 140 planes grounded, Norwegian has been hit hard by the coronavirus crisis which forced it into an unwanted “hibernation.”
“This is the biggest crisis in the history of aviation since World War II and that has of course affected us,” chief executive Jacob Schram said as he presented the earnings report.
Europe’s 3rd biggest no-frills airline posted a net loss of 5.4 billion kroner (515 million euros) for the first 6 months of the year, compared to a loss of 1.4 billion a year earlier. In the 2nd quarter alone, the company lost 1.5 billion kroner.
Norwegian has avoided bankruptcy thanks to a rescue package allowing it to convert part of its large debt into new shares, thereby meeting the Norwegian government’s condition for it to receive guarantees worth 3 billion kroner.
“There is no doubt that…we will need more help…to get through the winter,” Schram said.
Norwegian’s share price was down by 7% in midday trading. The share has lost 97% of its value since the beginning of the year.
The company has also launched a capital increase – for the 4th time in two years – cut costs, placed its Swedish and Danish subsidiaries in bankruptcy, sold off aircraft, and canceled an order for 97 Boeing airplanes – 92 737 MAXs and 5 787 Dreamliners.
Sales for the first half fell by 65%, to 7.14 billion kroner.
The company used only 7 or 8 planes for Norwegian domestic flights for several months during the height of the pandemic, but reopened 76 routes as of July 1 and 20 aircraft are now in use.
While the company said it plans to gradually increase traffic, it does not expect operations to return to normal until 2022. – Rappler.com