Norwegian is struggling to stay on top of its costs and yesterday, in what can only be seen as a panic move as it enters peak season, slashed key North America routes and re-jigged others.
The airline is facing over capacity and low fare issues right across Europe and has basically been priced out of some trans-Atlantic routes.
The situation has become so dangerous that the €350m it raised from its current owners and from banks – most of it underwritten because nobody wanted to invest, is fast running out. Analysts believe it will have to raise more money by the Autumn if it’s to get through the winter months.
That won’t be an easy task as without the underwriters last time that share issue would have been a flop. This time it’ll be hard to find anyone willing to underwrite it if it fails.
The airline cancelled the following routes with immediate effect: Stockholm-Orlando, and London Gatwick – Las Vegas. The later is a very competitive route dominated by Virgin Atlantic and British Airways.
It’s also rejigged many of its Oakland routes to San Francisco- locals wont go to Oakland to fly to Europe, (it’s a traffic filled drive that takes up to 90 minutes from the peninsula and Silicon Valley), but Europeans don’t mind flying in.
Ten more routes are being changed to summer only:
Boston-Paris CDG, Chicago-Gatwick, Denver-Gatwick, Fort Lauderdale-Copenhagen, Los Angeles-Copenhagen, LAX-Oslo, LAX-Rome Fiumicino, New York JFK-Copenhagen, New York JFK-Stockholm and Orlando-Oslo.
Barcelona and Paris to Oakland will move to San Francisco for the winter.
The other issue for the airline is having 18 737 Max 8’s out of service and no idea when they’ll be back.
The overall view of analysts is that Norwegian is doing what it should be to cut costs and losses but it’s simply running out of time. It can’t do enough fast enough to remain viable and it is as one described it “running out of runway”.
And when it gets to the end it’ll find a bunch of predators – probably with Willy Walsh and IAG sitting there ready to swallow it whole for next to nothing.