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Did you know why Primera Air went bankrupt? The reasons behind the demise of this airline may well impact whether Norwegian is on it’s last legs or not.

Corrosion

You may not know but corrosion is a significant issue that airlines have to battle. In 2017, Primera Air lost one aircraft from operations due to severe corrosion and had to pay to rebuild it. This resulted in a loss of more than 10 million euros [US$11.6 million].

Severe Delays of Aircraft Deliveries

Primera Air planned to launch transatlantic operations between the US and Europe using brand-new fuel-efficient Airbus A321neo aircraft, but the planes weren’t delivered on time. So Primera Air launched its transatlantic service with a 26-year-old fuel-guzzling plane instead of a new one.

Financing Issues

Primera Air’s management was unable to secure bridge financing to enable them to take out a new long-term loan.

The result was the airline failed.

Will This Happen To Norwegian?

Norwegian has not suffered the extreme corrosion problems of Primera and it seems to be selling rather than taking on planes, to cover its’ loans. Financing could, however, be the straw that breaks the Norwegian camels back.

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.

But Norwegian say they are OK

Norwegian Air Shuttle ASA took pains to reassure investors yesterday on Bloomberg about the solidity of its cash position and plans to sell aircraft and cut costs. In addition, it has a number of suitors looking to buy the airline including IAG who own British Airways and are experts in transatlantic flights. So things aren’t looking quite as gloomy as Martin Stenshall suggested above.

Conclusion

Don’t panic Mr Mannering! Norwegian remains one of the cheapest ways to fly transatlantic in Premium Economy, and at least for now, looks like it is going to keep flying.

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HT: The Points Guy For Info On Primera Air

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