OSLO (Reuters) – Norwegian Air’s <NWC.OL> passenger volume fell by 60% year-on-year in March as it grounded planes amid efforts to halt the spread of the new coronavirus, and will book a hedging loss of $102 million as the cost of fuel has plunged.
A pioneer in low-fare transatlantic air travel, Norwegian’s rapid expansion has left it heavily in debt. It has repeatedly raised cash from shareholders in order to stay in business and its Oslo-listed shares have plunged 78% so far this year.
“The company experienced a dramatic drop in demand following government-imposed travel restrictions and a general travel decline,” the carrier said on Monday of its March numbers, adding its capacity had been 40% lower than originally planned.
Norwegian has said it will cancel 85% of its flights and furlough 90% of staff while seeking financial aid from Norway’s government.
The company last month also said it would start talks with creditors on postponing payments to qualify for a government rescue package requiring, among other things, that debt repayments must be put on hold for the time being.
The group said it estimated losses on fuel hedging positions of 1.07 billion Norwegian crowns ($102 million). Europe’s largest budget carrier Ryanair <RYA.I>, one of the few others to so far disclose its fuel hedging losses, last week said it would book a charge of 300 million euros ($324 million).
“We will provide further financial and business updates to the Oslo Bourse when it is appropriate to do so,” Chief Executive Jacob Schokram said in a statement.
Norwegian’s shares were down 4% at 1214 GMT.
Before the outbreak in Europe of COVID-19, the airline had set a goal of returning to profit this year after three years of losses. That goal was scrapped early last month, however, and Schram said on March 13 the company needed access to cash liquidity “within weeks, not months.”
In addition to flights in Norway and some other routes in the Nordic region, the company was also helping stranded Scandinavians in recent weeks return from Spain and other destinations.
“Norwegian operated multiple rescue flights on behalf of the government to ensure that thousands of Scandinavian passengers could safely return home,” Schram said.
Although limited in scope, other European airlines have seen similar business oportunities, including Hungary’s Wizz Air which said it was repatriating citizens and transporting medical equipment for governments.
Wideroe, which mostly flies local routes in rural Norway, has also been asked to operate a flight from London on Tuesday.
“It is the only flight directly between London and Oslo in a while,” tweeted Norway’s ambassador to Britain, Wegger Chr. Stroemmen.
(Reporting by Terje Solsvik and Victoria Klesty; Editing by Kirsten Donovan/David Holmes/Jane Merriman)