Norwegian has posted losses of over $2.6bn for 2020 after a staggering 92% drop in passengers during the fourth quarter. The airline has been under bankruptcy protection since November, with KPMG leading a restructuring plan under the supervision of the Irish High Court.

Norwegian suffers an 'exceptionally difficult year'

Low-cost carrier Norwegian Air published its fourth quarter results today, which detail the extent of its troubles. Losses were up by 1,300% to 23 billion Norwegian kroner ($2.68bn) for 2020, compared to 1.6 billion kroner ($186m) for the previous year. This includes losses of 16.63 billion kroner ($1.95bn) for the fourth quarter, including impairment costs of 12.8 billion kroner ($1.49bn).

Chief executive of Norwegian, Jacob Schram, said in a statement,

“2020 was an exceptionally difficult year for the aviation industry and for Norwegian. Consequently, the fourth quarter results are as expected.”

Norwegian received protection from its creditors in November under Irish law, as part of a process called 'examinership.' This was initially granted for 100 working days (expiring February 25th) before the airline successfully applied for a 50-day extension.

It also entered a restructuring process in Norway in the same period. The restructuring process aims to 'reduce debt, reduce the size of the fleet and make the company financially attractive to secure new capital.' According to Norwegian, 'both processes are progressing as planned and are on track.'

Stay informed: Sign up for our daily aviation news digest.

Other key points from financial results

The carrier revealed other important information in its fourth quarter results:

• It flew 574,000 passengers, down 92% compared to the same period in 2019.
• Revenues decreased to 9 billion kroner from 43.5 billion kroner (79% drop).
• Out of 131 aircraft, an average of 15 were operational, mostly on domestic routes.
• Load factor was 52.4%, down by 32.5 percentage points.
• Production capacity (ASK) was down 96% and passenger traffic (RPK) was down by 97%.
• Operating expenses before leasing and depreciation were down by 82%.

CEO Schram added,

"We are doing everything we can to emerge as a more financially secure and competitive airline with an improved customer offering, and as soon as Europe begins to reopen, we will be ready to welcome more customers onboard.”

New equity drive by early April

Norwegian will seek to raise fresh equity by late March or early April as it struggles with billions of debt. The airline plans to reduce its debt down to 20 billion kroner ($2.32bn) and raise up to 5 billion kroner ($580m) in capital. It also revealed it had reduced net interest-bearing debt by 18 billion kroner ($2.1bn) through 2020, primarily through conversion to equity.

The airline has already revealed much of its restructuring strategy, which includes abandoning its long-haul network. Norwegian will instead 'focus on a strong and profitable Nordic and European network.' The carrier will retire all of its Boeing 787 Dreamliners and trim its fleet in half (103 planes down to 53), although it plans to increase its fleet to 70 planes by 2022.

Do you see Norwegian surviving its restructuring process? Could it make a comeback if air travel rebounds over the summer? Let us know your thoughts and insights in the comments.