The government of Norway has moved to support the flatlining aviation sector in the country, offering more than US$550 million in bailout funds.
Some US$250 million will be directed at embattled budget operator Norwegian. The low-cost carrier said earlier this week it would be forced to layoff 90 per cent of its staff and cancel virtually all flights in response to the Covid-19 outbreak.
Flag-carrier SAS is also expected to receive around US$125, while the remaining cash will be split between Wideroe and other carriers. The funds are designed to secure a minimum level of flight operations in the country.
“Many countries are establishing major schemes to ensure liquidity for the airlines,” explained the Norwegian finance ministry.
The scheme will be arranged through the export credit institute GIEK, with the Norwegian government providing 90 per cent of the guarantee and external parties – such as banks and credit companies – the remaining ten per cent.
Conditions are being attached to the guarantees, including a minimum eight per cent equity requirement.
While SAS and Wideroe have already met this equity criterion. However, Norwegian will only be provided limited equity until its financial situation improves and it is able to achieve achieves a reduction in interest and repayments to creditors.
Norwegian chief executive Jacob Schram says the package of measures is “crucial” and the provision from the authorities is “very positive”.
“We have been clear that we need liquidity, and we are grateful that this is what we are now being offered,” he concluded.