News

A report from Denmark’s Danske Bank says that Norwegian Air, the low-cost transatlantic airline, could breach conditions of its’ large debt burden if it doesn’t raise fresh capital by the end of this year. That’s just days away!

Analyst Martin Stenshall at Danske Bank believes Norwegian will violate the terms of its loans by New Year: if it fails to sell off many of its new aircraft. Suppliers may then demand cash to pay to fuel the aircraft and for landing fees resulting in a stalemate where Norwegian will no longer be able to fly.

“If the company has to report a violation of the conditions surrounding its debt, it can land in an evil spiral and the crisis will escalate,” Stenshall told DN.

What can Norwegian do?

They could sell aircraft or ask for additional cash from shareholders.

What’s The Situation Right Now?

Rising fuel prices and weak bookings resulted in Norwegian having to sell 5 Airbus A320neos to raise cash back in September, so things are indeed looking rocky for them.

What Should I Do If I Have A Flight Booked?

That all depends on the faith you have about Norwegian pulling through. They currently remain an incredibly cheap way to fly transatlantic and offer an excellent Premium Economy product.

Will I Be protected If The Airline Collapses?

If you have booked Norwegian direct, you are unlikely to have been offered ATOL protection, so if you booked a flight directly you won’t be covered by ATOL.

If you booked your flight as part of a package holiday, you may have ATOL protection. Check your booking to see if you were sent an ATOL certificate at the time of booking. If this is the case and Norwegian collapses, your travel agent will provide an alternative flight or will refund you.

If you paid on a credit card and your flights cost 100GBP+, (and you are based in the UK), you will be able to try Section 75 of the Consumer Credit Act. Card companies should be liable and you may be able to claim from it.

Flights less than £100 or paid on a debit card? Try chargeback as you may be covered by the Visa, Mastercard or American Express protection schemes, and should be covered for the whole price of the flight.

Check your travel insurance. Does your policy cover the airline going into administration? Many insurers won’t cover this but it is worth checking.

I wanted to book Norwegian flight, what should I do?

I personally would not book a flight with Norwegian Air. It’s a gamble. That said, my parents have a flight booked on Norwegian in Premium Economy February and are now wondering what to do so even my family is not immune to the impact of a potential collapse. The problem is that Premium Economy on other airlines is so much more expensive!

The best plan is to book a flight via a legacy carrier like British Airways, American Airlines, Delta or United. This way you won’t be caught out, whatever happens to Norwegian…

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HT: ViewFromTheWing

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