Norwegian Air is to gain a state lifeline as part of state efforts to stave off collapses in the Scandinavian airline sector as a resut of the coronavirus pandemic.

The government in Norway has agreed to back airlines with credit guarantees worth up to Nok6 billion (£460 million), half of it to Europe’s third largest low cost carrier.

Norwegian Air, which runs a major hub at Gatwick including a network of low-fare transatlantic routes, has grounded most of its fleet and is temporarily laying off 90% of staff, amounting to 7,300 people.

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However, the carrier could obtain up to Nok3 billion but must boost its equity to get the full amount, Norway’s industry minster Iselin Nyboe reportedly said last night.

Scandinavian rival SAS could get guarantees of Nok1.5 billion, while domestic airline Wideroe and other small airlines will be offered the rest.

Norwegian Air could initially gain access to Nok300 million but must convince commercial lenders to provide 10% of the amount.

A further Nok1.2 billion would be made available if creditors agreed to forego interest rates and instalments, while the remaining Nok1.5 billion hinges on the carrier’s ability to boost its equity capital.

Nyboe said: “Norwegian had financial challenges also before the coronavirus crisis, and with this plan we make it clear that both owners and lenders must contribute to improving the company’s financial situation if the state is to provide guarantees.

SAS, which is also laying off 90% of staff, secured guarantees from the Swedish and Danish governments worth $300 million on Tuesday and a pledge from Denmark to what it takes to keep the carrier flying.