Norwegian Air to cut 4,000 flights, lay off half its employees

Coronavirus: travel restrictions and falling demand hurting airline industry

Norwegian Air will temporarily lay off half its employees. Photograph: Ints Kalnins/Reuters

Norwegian Air will temporarily lay off half its employees. Photograph: Ints Kalnins/Reuters

 

Norwegian Air will scrap another 4,000 flights and temporarily lay off up to half of its employees due to the coronavirus outbreak, the company said on Thursday.

Travel restrictions and falling demand due to the pandemic have hammered airlines around the world, with the situation for the sector worsening following US president Donald Trump’s ordering of sweeping restrictions on travel from Europe to the US for the next 30 days.

Air France KLM, Lufthansa and Aer Lingus-owner IAG all plunged between 11 and 15 per cent in wake of the travel restrictions, while Dublin-listed Ryanair dropped 7.2 per cent.

But the US restrictions are a particularly severe blow for Norwegian Air, a pioneer in transatlantic budget travel and the largest foreign airline serving the New York region and several other US cities.

About 40 per cent of its long-haul fleet will be grounded until the end of May, the company said. Flights to the US from Paris, Barcelona, Amsterdam, Madrid, Athens and Oslo will be cancelled, although routes from London’s Gatwick Airport will continue as normal as Britain is not affected by the US restrictions.

Up to a quarter of short-haul flights have also been axed, Norwegian added. The company said earlier this week it would cut about 3,000 flights between mid-March and mid-June.

Norwegian Air, which had already suffered big losses and haemorrhaged cash in recent years, blamed the “extraordinary market situation due to the coronavirus” for the layoffs.

“We must look at all possible measures to reduce costs. This unfortunately also includes temporary layoffs of up to 50 per cent of our employees, and the number may increase,” said the airline, which employs about 11,000 people according to its website.

“We urge international governments to act now to ensure that the aviation industry can protect jobs and continue to be a vital part of the global economic recovery,” chief executive Jacob Schram said.

Norway’s prime minister Erna Solberg said earlier this week that her government would offer financial assistance to hard-hit industries, including airlines, but did not provide details.

Cruise industry

Carnival’s Princess Cruises division, one of the hardest-hit cruise operators amid the spread of coronavirus, is suspending all of its sailings for 60 days as the pandemic’s global effects accelerate.

Carnival shares plunged 22 per cent to $17.01 in pre-market trading on Thursday after the announcement. The stock had already slumped 22 per cent in the preceding week. It was trading down almost 18 per cent in the final hour of the session in New York.

The line’s 18 vessels will stop operating until May 10th, the company said in a statement. Current voyages scheduled to end in the next five days will continue to their planned destinations, while those set to end after Tuesday will stop instead at the most convenient earlier location.

Customers whose cruises are cancelled can transfer 100 per cent of the amount they’ve paid to a future cruise of their choice, Princess said.

The Diamond Princess was under a lengthy quarantine in Yokohama, Japan, with more than 700 people aboard testing positive for the virus, while the Grand Princess docked Monday in Oakland, California, carrying 21 confirmed cases. – Reuters / Bloomberg