By Terje Solsvik
OSLO (Reuters) – Norwegian Air <NWC.OL> on Monday reported that four Swedish and Danish subsidiaries had filed for bankruptcy and that it had ended staffing contracts in Europe and the United States, putting some 4,700 jobs at risk.
The airline is seeking to convert debt to equity, money from shareholders and Norwegian state guarantees in a bid to survive the coronavirus crisis.
Earlier on Monday Virgin Atlantic said it would only survive the pandemic if it got financial support from the British government, while Virgin Australia <VAH.AX> is set to enter voluntary administration, according to sources close to the matter.
Norwegian Air said the four subsidiaries in Sweden and Denmark were companies that employed pilots and cabin crew. The cancelled agreements involve firms which provide crews based in Spain, Britain, Finland, Sweden and the United States.
Combined, it said some 4,700 pilots and cabin crew members would be affected while about 700 pilots and 1,300 cabin crew based in Norway, France and Italy remained unaffected.
“We have done everything we can to avoid making this last-resort decision and we have asked for access to government support in both Sweden and Denmark,” CEO Jacob Schram said in a statement.
“We are working around the clock to get through this crisis and to return as a stronger Norwegian with the goal of bringing as many colleagues back in the air as possible,” he added.
The company’s shares fell on the news and were down 3.6% at 1230 GMT. The stock has shed 86% of its value year to date.
Norwegian has grown rapidly in the last decade to become Europe’s third-largest low-cost airline and the biggest foreign carrier serving New York and other major U.S. cities but it also accumulated debt and liabilities of close to $8 billion.
Last month it announced it would halt 85% of it flights and planned to furlough 90% of the staff to preserve its dwindling cash reserves, but it faced obstacles in carrying out the cuts.
“Despite the measures that the company has already taken, coupled with the lack of significant financial support from the Swedish and Danish governments, we are left with no choice,” it said.
“In Norway, there are efficient furlough opportunities which means that the government pays for all salary-related costs throughout the duration of the furlough period.
“Unfortunately, there is not the equivalent coverage in Sweden or Denmark schemes,” the company said.
(Editing by Gwladys Fouche and Jason Neely)