Why Norwegian Air matters to Norway

While governments across the world are trying to shore up national airlines, Norwegian Air is particularly valuable to its home country because of Norway’s vast geography, which stretches more than 2,200 kilometres across fjords and mountains, with few train lines to transport locals and tourists.

Its capital Oslo is closer to Munich than to its own northernmost mainland town, Hammerfest. The journey would take 24 hours by car.

As a result, domestic flights by Norwegian and its rivals Wideroe and SAS, play a more important role in Norway’s infrastructure than airlines in many other countries.

Norwegian Air ran daily flights to 18 locations domestically before the novel coronavirus outbreak. The frequency of flights has been cut since then, with some routes suspended, and the government is paying the airline, as it does SAS, to run some key domestic routes.

Norwegian Air’s domestic route network roughly matches SAS’s, helping keeping fare prices down.

Wideroe, with its fleet of smaller Embraer and De Haviland planes, serves the smallest communities, with multiple route stops and links to the bigger cities.

Brand Norway would also take a knock from the collapse of Norwegian, whose red and white, reindeer-nosed planes have become an internationally recognised symbol of the country’s open and independent culture.

The political debate has centred on whether the state should rescue the airline at all, given its financial problems even before the pandemic struck.

At the end of 2019, it had debts of almost $8 billion built up during a decade of rapid expansion into Europe’s third-largest budget carrier.

Still, the government threw a lifeline to Norwegian Air last month, with credit guarantees worth up to 3 billion crowns ($282 million) – half the value of the total package offered to the airline industry.

Stringent conditions forcing the company to issue more shares attached to that aid reflect the state’s reluctance to get drawn into a more costly bailout. More…