Norwegian requested between four and five billion in state aid – E24

On Monday, it became clear that the government will not give Norwegian and “Braathen Air” the support they have requested:

The government believes that giving extra and special support to two companies is not a responsible use of taxpayers’ money, that the risk is too high and that it would distort competition.

Neither Norwegian nor the government wanted to say exactly how much Norwegian asked in a capital injection, apart from the fact that Trade and Industry Minister Iselin Nybø (V) called it a “significant billion”.

Now E24 can say that the amount Norwegian is supposed to have requested from the government is between four and five billion crowns.

This is confirmed by E24 from two independent sources with information about the process.

Neither Norwegian nor the Ministry of Commerce and Industry want to comment on the specific sum on Monday.

– I think it’s an incredible shame for the Norwegian people, for Norwegian infrastructure, for Norwegian tourism, Norwegian companies, especially local companies, CEO Jacob Schram said on Monday about the government’s decision.

As a result of the government saying no, Norwegian decided on Monday lay off 1,600 more employees and put 15 of the 21 aircraft on the groundnorth.

At the beginning of the year, by comparison, the company had 11,000 employees and 156 operating aircraft.

This means that airlines are now reducing their level of activity to the level they were before the summer. With only six aircraft in operation, the company as of Tuesday will only fly domestically in Norway, the company reported Monday afternoon.

P.S! On Tuesday, Norwegian will release third-quarter results. The company canceled the quarterly filing itself in light of the government’s decision.

Norwegian and British Airways in the ‘support base’

After Norwegian management repeatedly made clear this summer that the company would need a new financing package to survive, there has been frenzy.

Both the airline, the unions and the NHO Luftfart trade association have worked to ensure that both Norwegian and the rest of Norwegian aviation receive more support from the government during the crisis.

At the same time that discussions are taking place in Norway, airlines after airlines around the world have received extensive crisis assistance in various ways.

This has led players like Ryanair to sue and appeal several of the crisis packages to the Court of Justice of the European Communities.

In their lobbying work with the authorities, Norwegian has prepared an overview in which they have analyzed the support that several different airlines have received and compared it to the turnover of the relevant airline in 2019, the year before arrival. of the crown.

That’s where British Airways stands out, with the lowest support rate of two percent. Norwegian ranks second at the bottom with a support rate of seven percent, if the loan guarantee is based on three billion.

If it invests 4.5 billion in state aid, Norwegian would have risen to 17 percent, just below the average for European companies in comparison, which is 22 percent.

Among the companies that finished in the “top of support” in the survey are Alitalia (with support for a total of 93 percent of sales in 2019), airBaltic with 61 percent and Tap Air Portugal with 37 percent .

Norwegian’s competitor SAS has a support level of 24 percent of sales, based on the fact that Sweden and Denmark have been heavily involved in the company’s rescue package. Sweden and Denmark, together with the Wallenberg family, are the largest owners of SAS.

The EU Commission has approved Sweden and Denmark to contribute up to 11 of the 12 billion SEK collected by SAS. That money replaces the government loan guarantees granted to SAS earlier this year.

In Finland, the Finnish authorities received a clear signal from the EU to contribute up to € 286 million, equivalent to NOK 3.1 billion, in the Finnair share issue.

High uncertainty

Earlier this year, Norwegian was assigned a cap of three out of a total of six billion in government loan guarantees to airlines.

The state made strict demands on Norwegian and, after the company implemented a comprehensive rescue package in May, the company made full use of the framework offered to them.

This time, however, it wasn’t just about loans. Norwegian wanted an injection of state capital for the company to survive until the summer of 2022, the time when the company and many in the industry expect the market to be near normal again.

Norwegian CEO Jacob Schram and CFO Geir Karlsen made it clear on Monday that they presented a plan to the government, with an amount they must manage by 2022 and a plan to repay state crisis loans.

There are several reasons why both the government and the Storting still refuse to support Norwegian.

One factor is the company’s debt, which even after extensive restructuring this spring is over $ 40 billion. This was pointed out by the Minister of Commerce and Industry himself on Monday.

Another factor is that there have been no clear signals from homeowners or creditors that they are willing to contribute to a new rescue package. Norwegian’s second-largest shareholder, leasing company BOC Aviation, recently completely rejected the idea of ​​putting in more money.

A final factor is the uncertainty about whether what Norwegian is asking for now will hold up or whether there is a risk that the company will need even more money in a year or two.

That the state views airline crisis assistance as a high-risk use of money is clearly stated in both oral and written statements. The Finance Ministry has already canceled the six billion that are offered to airlines in loan guarantees that lost money in the state budget.

Work with backup solutions

Norwegian ended the second quarter with NOK 5 billion on the books, largely thanks to government-guaranteed loans.

The company estimated in August that between 300 and 500 million kronor will be burned a month, depending on how high the traffic is and other factors.

Now that the state will not provide any additional help, the company is working on other alternatives.

– We are not unprepared, but it is surprising. But most extremely disappointing, Norwegian boss Jacob Schram told E24 on Monday.

– But we haven’t given up. We are working on solutions and I hope we can date a new Norwegian on the other side of winter, even though we have not received support from the government in particular, he continued.

How the company anticipates they will get by without state aid is uncertain, but the company’s management did not rule out bankruptcy when asked at Monday’s press conference if there is an alternative:

– I can’t rule out anything. Anything is possible in this setting, Schram said.

– We have been clear that we need help to get through the winter. We can stretch that elastic at both ends, depending on the measurements we take. That is what we are considering now, he continued.

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