How to BANKRUPT an Airline! The Collapse of Norwegian Air Shuttle

Summary

The video explores the tumultuous history of Norwegian Air Shuttle, from its origins as a regional carrier to its ambitious transformation into a low-cost airline. Despite initial success and growth, the airline faced significant challenges due to a risky expansion strategy, operational hurdles, and external crises like the COVID-19 pandemic. The airline's decision to cut its fleet and end long-haul operations marked a dramatic shift. While Norwegian has since started to rebuild, the video raises questions about whether their aggressive growth strategy was too ambitious or simply unlucky, reflecting on the delicate balance in the aviation industry.

Takeaways

• ✈️ Norwegian Air Shuttle faced severe financial difficulties exacerbated by the COVID-19 pandemic.
• 📉 The airline's stock value dropped significantly, leading to diminished acquisition interest from other airline groups.
• 👥 In response to the pandemic, Norwegian laid off 7,300 employees, representing 90% of its workforce.
• 🇳🇴 The airline maintained separate operator certificates in various countries, complicating its operational structure.
• 💼 Norwegian's reliance on external staffing companies resulted in further job losses during the pandemic.
• 💔 The company's recovery efforts received mixed support from governments, with Norway offering some relief but Sweden rejecting initial plans.
• ✂️ Major cuts included reducing the fleet from 140 aircraft to just 50 and halting all long-haul operations.
• 🛩️ Norwegian has since rebuilt its fleet to 86 aircraft, including some newer models, but has not reinstated long-haul services.
• 🚀 New entrants like Norse Atlantic and Flyr emerged post-bankruptcy but faced their own challenges.
• 🤔 The speaker questions whether Norwegian's collapse was due to greed or bad luck, inviting audience opinions on the matter.

Q & A

What was the original purpose of Norwegian Air Shuttle when it was founded?

Norwegian Air Shuttle was initially established as a small regional carrier to act as a feeder for Braathens, which was a long-standing airline in Norway.

How did Norwegian Air Shuttle adapt after losing its partnership with Braathens?

After Braathens unilaterally canceled their contract, Norwegian Air Shuttle decided to compete directly with SAS by transitioning from a feeder airline to a low-cost carrier.

What operational changes did Norwegian Air Shuttle implement to become a low-cost carrier?

Norwegian replaced its older fleet of Fokker 50s with Boeing 737-300s and later 737-800s, focusing on minimizing operational costs and maximizing revenue through a more efficient fleet and shorter turnaround times.

What challenges did Norwegian face during its rapid expansion in the 2010s?

Norwegian faced challenges such as a weak balance sheet, reliance on leasing older aircraft, production delays of the Boeing 787, and issues with the Airbus A320neo engines.

What was Norwegian Air Shuttle's strategy for long-haul operations?

Norwegian aimed to become a low-cost long-haul carrier by leasing Boeing 787s for transatlantic routes, despite the operational challenges that come with long-haul flights.

What financial struggles did Norwegian encounter leading up to the COVID-19 pandemic?

Norwegian's aggressive growth strategy resulted in a weak equity ratio and high operational costs, leading to financial difficulties even before the pandemic exacerbated the situation.

How did Norwegian Air Shuttle respond to the COVID-19 pandemic?

In response to the pandemic, Norwegian cut its workforce by 90%, downsized its fleet significantly, and returned its long-haul aircraft to lessors while seeking government support.

What were some outcomes of Norwegian's restructuring efforts after the pandemic?

Norwegian successfully restructured its operations, reducing its fleet to 50 aircraft, canceling all long-haul operations, and returning to a more sustainable business model.

What legacy did Norwegian Air Shuttle leave regarding employee treatment?

Despite initially having a good reputation for working conditions, many former employees expressed dissatisfaction with how they were treated during the airline's abrupt cuts and restructuring.

What is the current status of Norwegian Air Shuttle as of the latest updates?

Norwegian has gradually rebuilt its fleet to 86 aircraft, including some 737 MAX 8s, and has acquired Widerøe, a regional operator, but it no longer operates 787s for long-haul flights.