Home AviationAirlines Norwegian Staff Furloughed Amidst Coronavirus Crisis

Norwegian Staff Furloughed Amidst Coronavirus Crisis

by Luke Will

The worldwide Coronavirus pandemic has sent shockwaves through the Aviation Industry, and one such airline affected is Norway’s flag carrier – Norwegian. Today it was announced by the carrier that all UK based staff would be furloughed under the new ’employment package’ offered by the UK Government.

How will staff be affected?

The news comes as the carrier previously announced to the 1000 based UK employees that they would “have to accept significant pay-cuts” due to struggles with cash-flow. It was then announced to pilots and flight-crew today, 15 April 2020, that they would be furloughed under the new UK ‘Employment Package’ (Which guarantees employees 80% of their standard wage up-to the amount of £2500 per month) but in the meanwhile would not be paid. In a letter circulated to the UK based employees, the carrier said there is:

“no readily available funds to pay any employees on this coming payday”

“[because] Norwegian has not been able to secure the Norwegian government support package as of yet [we] hence have had to take drastic measures to survive up until May”

Norwegian Crew based in the UK will be furloughed, not receiving their April pay until May | (c) Norwegian

The move comes after the Norwegian Government blocked state-aid to the carrier unless it adopts a ‘rescue plan’ which is set to see 44.5bn kroner (£3.3bn) of debt turned into equity, alongside issuing new shares, a move which will almost completely wipe out the value of the company’s existing shareholding base.

It has been confirmed to the media that Norwegian employees will be paid their full April salary, but due to complications of registering and receiving payment through the Employment Package, “an optimistic pay date would be 1 May.” Norwegian’s UK employees are employed through agency OSM Aviation UK HR, an agency half owned by the carrier. It is reported OSM are in:

“Constant dialogue with the relevant unions to reach the best possible agreement for our crew colleagues based in the UK.”

Continued troubles for Norwegian

Today’s news comes as the carriers situation worsens. It was announced in December that some routes to the US would be scrapped and the 2020 summer schedule would be “reduced by 40%” due to growing troubles for the carrier including the grounding of the 737 MAX, decline in seasonal demand and now – Coronavirus.

The carrier has been shook with decline in demand, cashflow issues and now Coronavirus | (c) Flickr Commons

With troubles mounting, the carrier sought emergency cash injections prior to the Coronavirus outbreak, and now is seeking additional refuge in the Norwegian Government – Such refuge which has subsequently been withheld temporarily, unless the carrier adopts strict conditions. The 3bn krone (£240m) loan to airlines (Including Norwegian) stipulates a requirement to reduce its ratio of debt to equity in order to progress through the tranches of help available; With Norwegian currently qualifying for only 10%. Analysts at City broker Bernstein has ruled that “existing shares are all but worthless” as the creation of additional shares – approximated at £175m in equity – will dilute the existing shareholding base. Bernstein concluded:

“Norwegian is at the end of the line. Yet there is hope for the airline and, pending creditor agreement, it may continue to fly, but focused on the Scandinavian Market”

This situation presents a very unfortunate time for crews at Norwegian. Are you affected by the Furlough scheme – We’d love to hear from you. Get in touch via: hello@travelradar.aero

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