Norwegian Air has warned it needs “more help” to survive the winter as changing travel restrictions stall the carrier’s restart and major card companies continue to withhold payments.
Jacob Schram, Norwegian Air chief executive, said: “We will need more cash to come through the winter. We still need more help.”
Schram blamed changing travel restrictions, with only Nordic domestic traffic showing signs of recovery. He said: “Travel restrictions have a huge effect on bookings.”
Norwegian Air chief financial officer Geir Karlsen said: “We built leeway but we still need more support and liquidity to get through the winter. The focus now is to find a solution. We will need more liquidity before Easter next year.”
He noted: “We have been able to negotiate deferrals on our bank debt, but we are flying less aircraft now than the plan two months ago.”
Karlsen declined to give details on the cash required or to provide booking figures, insisting: “It is linked to travel restrictions.
“When Spain became a ‘green’ country, overnight we saw many bookings. When Spain turned ‘red’ we saw many cancellations.”
But he acknowledged Norwegian Air continues to face issues with card providers withholding cash payments even where the carrier has refunded customers for cancelled flights.
Karlsen said: “We refunded customers more than NOK 5 billion [€480 million, £430 million] in the second quarter. We also offered customers to transfer funds into points [for future flights].
“[But] Visa and Mastercard developed new principles. Visa said ‘We can refund this liquidity [to Norwegian] but not for five to six months’. Mastercard said ‘We hold the refunds till the customers use the cash points’. That is a huge issue for us.”
On refunds to customers, he said: “It has been very painful for us and for our customers and still is, but we are getting there on refunds.”
Karlsen added: “We are not flying any long-haul routes. We negotiated with the aircraft lessor that we pay only when we fly.
“We are flying 25 [short-haul] aircraft and we will probably be at 20-30 aircraft for the next six months.
“Domestic traffic in Norway is relatively good, the same in Sweden and Denmark. But Nordic to Europe traffic is fluctuating [and] it’s a very short booking line.”
Schram and Karlsen were speaking at a half-year results presentation. They reported Norwegian Air lost NOK 5.4 billion (£460 million) in the six months to June.
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