Norwegian to abandon long-haul as it fights for survival

Norwegian Air Shuttle will abandon its attempt to crack the long-haul air market as the low-cost carrier laid out plans to exit bankruptcy protection by all but wiping out its existing shareholders, reducing debt significantly, and raising fresh capital. The low-cost airline will focus on short-haul flights in Europe after concluding that its long-haul flights to the US and Asia were no longer viable as “future demand remains highly uncertain”. About 2,000 employees will lose their jobs - 1,100 at Gatwick - as Norwegian’s subsidiaries employing long-haul staff in the UK, US, Italy and France face bankruptcy. In November, Norwegian became the highest-profile casualty of the worst crisis in the aviation industry when it filed for protection from creditors in Ireland after an ill-fated and rapid expansion into long haul left it with one of the highest debt burdens among all carriers. “Our short-haul network has always been the backbone of Norwegian and will form the basis of a future resilient business model,” said CE Jacob Schram on Thursday. Schram warned that existing shareholders would only be left with about 5% of the new company, the second time in under a year that it has wiped out its current investor base. Norwegian’s debt load would be reduced from about NKr48b ($6b) at the end of September to about NKr20b under the plans, leaving impaired creditors with about a quarter of the equity. <br/>