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Hurtigruten Richard With says slowly to an empty dock in Tromsø with nine passengers on board. The tour buses are gone, the guides are smiling in their absence. Four passengers get off the boat, five are on board. Usually there are 350 on board.
– On the previous trip from Kirkenes and the south we had no passengers. Zero. In my 32 years in Hurtigruten, I’ve never experienced it before, says the ship’s hotel manager, Mats Pettersen.
It started as a 16-year-old city boy, while Captain Geir Arne Johannessen has been with the shipping company for 30 years.
– I’ve never experienced anything like this before. It’s almost unreal, says the captain.
The head of quarantine
Hurtigruten is experiencing one of its biggest crises since the company was founded 125 years ago. Last year, the shipping company received record revenue of NOK 6 billion. Then came the explosion.
It is March 12. Hurtigruten has 3,500 passengers on 11 ships along the coast. Most are foreigners who are in quarantine and must be transferred outside the country. The ports are closed and several crew members of 800 people are also at risk of quarantine.
“This puts us in a completely insoluble and urgent situation,” COO Stein Lillebo in Hurtigruten writes in an email Thursday, March 12 to top bureaucrats in the Transport Ministry.
He requests an emergency meeting, but is told that the ministry’s chief commander, Deputy Chief Fredrik Birkheim, was quarantined after a trip abroad. The Ministry cancels the meeting.
Requires full state support for minimal operation
At stake are Hurtigruten’s income, operations and state aid. This year, Hurtigruten will receive NOK 720 million from the state to operate the coastal goods and passenger route along the coast.
The company’s director of communications, Anne Marit Bjørnflaten, will communicate directly with Transport Minister Knut Arild Hareide on March 12 and request a meeting. The next day at 09:45, Hurtigruten will be notified that there will be a Skype meeting in three quarters, at 10:30, with senior management at the ministry.
SENDING EMAIL: Hurtigruten Communications Director Anne Marit Bjørnflaten requested a crisis meeting. Photo: Private
The company requires that cash support be maintained, even though the company cuts operations from 11 ships with 34 calls per day between Bergen and Kirkenes, to two reduced-operation ships between Bodø and Kirkenes.
On Saturday March 14, Bjørnflaten sends a new email to Hareide with a list and writes: – It is precarious for us to clarify these questions, especially regarding Hurtigruten’s financial situation.
Hurtigruten has sent a list of four points to those who want answers. In paragraphs three and four it says:
– “State remuneration must be paid in full throughout the period despite interruptions due to CoVid 19.”
– The state accepts very small operations without reducing remuneration or imposing fines.
commentary
The state must help people get something back
It is easy to laugh at those who have dared, who have built large hotels, huge ships and sleek new planes on billions of dollars on loan. But this also applies to thousands of jobs, and to some infrastructure.
Answers in red
The answer comes the next day. Expedition leader Arnesen confirms, in writing in red, point by point that the state accepts Hurtigruten’s requirements. Changes in schedules due to corona virus are not breach of contract. The state accepts very small operations “without making any deduction from remuneration.”
“This is considered force majeure, see section 8 of the contract,” writes Arnesen.
In this way, the company can decommission 9 of the 11 ships and leave nearly 3,000 employees without losing NOK 720 million in state aid.
But Hurtigruten’s profits are declining. The state purchase of the coastal route represents only 10 percent of revenue. Now cancellations of foreign tourists are coming. In early May, orders for NOK 800 million were canceled.
Initial influence
On March 15, Prime Minister Erna Solberg will hold a press conference. She is reliving the Government Bond Fund from the financial crisis. The state provides NOK 50 billion in loan guarantees to crown-affected companies. The National Insurance Plan must administer the plan. Then the alarm sounds at the Hurtigruten.
Now the lobbying campaign is beginning in earnest. As early as Monday, March 16, the company’s chief financial officer, Torleif Ernstsen, requests that public relations adviser Anne Solsvik, hired by First House, contact the Ministry of Finance.
Ernstsen knows the Folketrygdfondet and knows they have strict credit rating requirements. Credit bureaus evaluate the financial capacity of companies, where A is solid and C is risky. Companies with a credit rating of CCC + or worse may be denied participation in the scheme. Hurtigruten has a B score, but Ernstsen knew that the company’s credit score could drop rapidly.
– We saw very early that this could be a problem. When he cuts 80 to 100 percent of revenue, everyone realizes that the entire sector is going down, says Ernstsen.
TO AFFECT: Hurtigruten CFO Torleif Ernstsen realized two months ago that the company could lose the support of the crown.
Get rotten evaluation
He does not want to elaborate on communication with the government, and generally answers questions.
– We came up with a contribution just after Erna Solberg’s speech. Our contribution was that solid companies before the crisis should be included in the scheme, and that the credit rating used to be based on the companies’ status before March 1, Ernstsen says.
On March 20, the credit agency downgrades Moody Hurtigruten’s rating to B3, a level higher than CCC +. Three days later, the S&P agency downgrades the company to CCC +.
It’s a crisis. Folketrygdfondet always uses the worst credit score. They never audit external agencies. Hurtigruten is now out of the scheme and cannot apply for a loan guarantee. These are loans that the company needs to be able to pay current expenses and pay a debt of NOK 10 billion.
Ernstsen is sending an email to Finance Minister Jan Tore Sanner again asking that a bad credit rating from the crown crisis mean nothing.
– We convey this message to the political leadership in the Ministry of Finance and to the main political stakeholders in the government and the Storting, says Ernstsen.
Comply with the mercy of the client
The company now has NOK 1.3 trillion in the bank account that they received in advance from their customers. They need the least amount possible to claim the money back, but rather to re-book the tickets for 2021. Or for the state to guarantee the canceled tickets.
Hurtigruten proposes that the government create a travel guarantee fund through which the state guarantees cancellations in 2020, 2021 and 2022. Hurtigruten’s ticket revenue for these three years will be normal NOK 20 billion under normal operation.
RENTED: First House’s public relations consultant Anne Solsvik was hired by Hurtigruten. Photo: First house
Anne Solsvik contacts the Ministry of Industry. She was former leader of the Young Left and personal advisor to the leader of the left, Trine Skei Grande, before joining First House. In a few days, Solsvik will organize a meeting for Hurtigruten with the Minister of Commerce Iselin Nybø de Venstre (see separate case).
Nybø has a meeting on March 20 with Hurtigruten CEO Daniel Skjeldam and Ernstsen. There they tell Nybø that Hurtigruten may lose the rest of the NOK 5 billion year revenue and therefore needs a really good travel package.
– In the period from March to December 2020, we have a turnover of approximately NOK 5 billion, which will now disappear because it will not travel before the situation has stabilized, says the executive of the note “Hurtigruten’s contribution to the package tourist “, which the Minister of Industry receives in an email address. Next day mail, Saturday, March 21.
So far, there have been none of the tour packages.
MILLIARDTAP: CEO Daniel Skjeldam and CFO Torleif Ernstsen met with Business Minister Iselin Nybø and told the company that it could lose NOK 5 billion before Christmas. Photo: Tom Benjaminsen
Puts hard against hard
On March 27, the government presents the final mandate for the loan guarantee. It says blank that the fund cannot provide guarantees to companies with a credit rating of CCC + or worse. Ernstsen sends a new email to Secretary of State Kari Moen and Deputy Chief of Staff Espen Erlandsen at the Ministry of Finance.
“Hi Kari and Espen. I have input for some minor tweaks. If you don’t change the wording, there is a high risk that companies that have struggled due to the crown crisis will be out of office, even if they were solid companies before of the crisis, he writes.
The mandate has not yet changed.
On April 21, Skjeldam and Ernstsen met with case managers at Folketrygdfondet, to find out if Hurtigruten qualified for a loan guarantee. The answer was no. The company informs the ministry and gets a response that the government will gradually evaluate the scheme.
Now Hurtigruten is pressing hard against strong. On April 30, Hurtigruten sends a letter to three ministers, the Storting, LO and NHO, stating that Hurtigruten’s ships will not be operational again before politicians tell the company whether or not the requirements of the scheme will change.
Hurtigruten’s letter has been sent to so many that it is only a matter of time before the media is informed of the matter. On May 5, iTromsø publishes as the first newspaper that Hurtigruten is too affected by the crown crisis to gain support, a case that is being debated on the cover of E24 and VG.
The government is spinning
The next day, the iTromsø Industry Ministry says they will consider possible changes. Hurtigruten meets the same day with the financial faction of the Labor Party in Storting. After the meeting, the Labor Party sent a letter to Finance Minister Jan Tore Sanner requesting that Hurtigruten be included in the plan. The Party Center also asks the government to turn around.
RETURN Finance Minister Jan Tore Sanner turns and says Hurtigruten will receive the support of the crown. Photo: Vidar Ruud
May 8 the government turns. Business Minister Jan Tore Sanner tells E24 and iTromsø that Hurtigruten may still be covered under the scheme. The threshold for assistance is set just below a CCC + credit score.
But Hurtigruten is still not sure if this is good enough. Credit bureaus Moody and S&P have warned that Hurtigruten’s credit rating may be further lowered. On May 11, Hurtigruten decided that the company would extend the closure until mid-June. 14 of the 16 ships remain in storage.
– We hope to see our boats sail again this summer. But we need more clarification, says CEO Daniel Skjeldam.
