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Norwegian Air cuts 1,100 jobs at Gatwick as UK scales up COVID-19 airport testing

Kumutha Ramanathan
·Contributor
·3-min read
Norwegian Air said it will simplify its business structure and dedicate itself to a short haul route network. Photo: Sean Gallup/Getty Images
Norwegian Air said it will simplify its business structure and dedicate itself to a short haul route network. Photo: Sean Gallup/Getty Images

Budget airline Norwegian (NAS.OL) announced on Thursday that it is cutting around 1,100 pilot and cabin crew jobs based at Gatwick Airport. The cuts as part of its “simplified business structure” that moves it away from long-haul flights following the "profound" impact of the coronavirus pandemic on the business and the wider the aviation industry, it said.

The news comes as the UK government announced travellers coming from abroad will need to have proof of a negative COVID-19 test from 4am on 18 January 2021.

Transport secretary Grant Shapps said on Twitter the rules will take effect on Monday in order to “give international arrivals time to prepare.”

Shares in Norwegian were down 8.3% on Thursday at around 2pm in London.

Norwegian shares fell in trading on Thursday after the news was announced that it was cutting 1,100 jobs in the UK. Chart: Yahoo Finance
Norwegian shares fell in trading on Thursday after the news was announced that it was cutting 1,100 jobs in the UK. Chart: Yahoo Finance

The airline said its restructuring efforts will now see it focus on its European short-haul network, using smaller aircraft, which chief executive Jacob Schram said “has always been the backbone of Norwegian and will form the basis of a future resilient business model.”

The business gained a reputation for offering customers very affordable deals, some of its most popular ones being £99 ($134.93) trips to New York.

The new business model will also focus on reducing the air carrier’s debt and raise new capital through a combination of rights issuances to current shareholders, a private placement and a hybrid instrument. Norwegian said it has already received “concrete interest” for these investment vehicles, including collaborating with the Norwegian government on the new business plan.

READ MORE: Travellers warned of no entry in England without negative COVID-19 test

In August 2020, the airline announced it needed financial support in wake of COVID-19 pandemic. As less people were interested in travel, the business reported a loss of £442m for the first six months of the year.

"Our focus is to rebuild a strong, profitable Norwegian so that we can safeguard as many jobs as possible," Schram said on Thursday.

The business will serve its reduced market with 50 narrow body aircraft in operation in 2021, increasing it to around 70 narrow body aircraft by 2022.

Norwegian joins its peers in the aviation industry who are struggling to stay afloat as COVID-19 restrictions prompt less people to leave their homes.

In late May, EasyJet (EZJ.L) also began consultations to cut up to 30% of its 15,000 employees across Europe as it planned to reduce its fleet size. The business has since introduced measures, including part-time working, unpaid leave and enhanced voluntary redundancy packages, that have helped reduce the need for compulsory cuts.

The prospect of the global airline industry returning to positive cash flow “might not arrive before the end of the year,” according to the International Air Transport Association’s chief economist Brian Pearce on Wednesday.

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