Norwegian Air (NAS.OL) suffered a huge hit on Monday as the Norwegian government said it will not provide extra financial support.
In a statement, the Ministry of Transportation rejected proposals for cash to support the business, which has been badly affected by widespread COVID-19 lockdowns.
The airline had said in August that it would run out of money in Q1 2021 unless it received a fresh cash injection.
Its shares fell more than 21% in early trade in Oslo.
In September, Norway’s industry ministry said it would extended loan guarantees for Norwegian Air by two months, until the end of 2020.
Earlier this year, the country’s airline secured a state aid package worth $330m (£256m), after a debt restructuring, but it said it would need to raise more funds to get through the impact of the coronavirus crisis.
At the time, while Norway’s government didn’t disclose any details of the deal, it did say that the terms of the state guarantee scheme had changed.
Norwegian Air said in a statement: “The company is now facing a very uncertain future, but we will do everything in our power to get through this crisis and to continue doing what Norwegian has been doing for almost 20 years: Ensuring competition and providing affordable fares for all.”
The airline has been a trailblazer in creating low-cost routes over the Atlantic, and its rapid expansion left it with ballooning debt bills. By mid-2020 these totted up to close to $8bn.
Norwegian Air’s July passenger volume fell by 90.4% on the year, after the COVID-19 crisis and global lockdowns saw most of its fleet grounded. It flew only 356,093 passengers during July 2020, compared to 3.7 million in the previous year.
“The fact that our government has decided to refrain from providing Norwegian with further financial support is very disappointing and feels like a slap in the face for everybody at Norwegian who is fighting for the company when our competitors are receiving billions in funding from their respective governments,” said Norwegian’s CEO Jacob Schram.
The company said it would hold a news conference at 9.30am GMT. It is due to report Q3 results tomorrow.
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