As Norwegian experiences the worst trading environment in its history, the budget airline is seeking protection from its creditors under Irish bankruptcy rules.
The move to “initiate an examinership process in Ireland”, where some of its fleet is registered, follows the refusal of the government in Oslo to pump in more cash to help Norwegian contend with the coronavirus pandemic.
According to research by The Independent, 24 Boeing 737-800 aircraft are registered in Ireland. The total fleet comprises 128 aircraft.
The arrangement buys the airline time to restructure. It corresponds to US “Chapter 11” bankruptcy – known as “the carwash” in aviation circles.
It allows a company to secure new capital and implement a legally binding scheme for the settlement of debts.
The airline is believed to owe more than £5bn.
Norwegian’s chief executive, Jacob Schram, said: “Seeking protection to reorganise under Irish law is a decision that we have taken to secure the future of Norwegian for the benefit of our employees, customers and investors.
“We will emerge from this process as a more financially secure and competitive airline, with a new financial structure, a rightsized fleet and improved customer offering.”
Norwegian became Europe’s third-largest budget airline after Ryanair and easyJet. Unlike its bigger rivals, it had an extensive long-haul operation, which briefly saw it become the largest foreign carrier serving New York.
In 2018, it rejected a £1bn bid from British Airways’ parent company, IAG. Since then, Norwegian has struggled. In 2019, before the coronavirus pandemic, it lost NOK1.61bn (£134m) – a loss of £3.70 for each of its 36 million passengers.