State-owned Avinor failed to file for Norwegian bankruptcy when it did not pay its bills in 2018-2019. When the pandemic hit, the economy was so bad that they were on the verge of bankruptcy again. Then the company was saved – with billions of government corona.
This appears in “Turbulens,” a new book on the history of Norwegian airlines written by journalist DN Jacob Trumpy and former journalist Bernt Gran.
They tell of jubilation and great optimism at both Oslo and Norwegian airports regarding the opening of the expanded terminal building in Gardermoen in April 2017:
Gardermoen is the jewel in the kingdom of Avinor, and now they can seriously participate in the competition with Stockholm and Arlanda. Norwegian and SAS are also elated that they have big growth plans.
The book describes the close dependency relationship between Avinor and Norwegian:
With fees and duty-free income at the terminal at all times of the day, Avinor has been able to fund huge investments with its own money – without any form of government support.
Next to SAS, Norwegian was the largest contributor to this.
But happiness rarely lasts forever.
After 2018, the Norwegian began to struggle. The first analyzes began in Avinor because the Norwegian made a loss of billions.
Avinor was the first to notice the consequences: The Norwegian stopped paying her bills.
Espen Tuman, director of communications at Norwegian, says the company does not wish to comment on this matter.
– Over 500 million
Airlines regularly pay take-off and landing fees, airport tax and passenger tax. For Norwegians, this fee was about 600 million NOK per year at most.
“In the fall of 2019, the economic crisis in Norway was very severe
Avinor’s unpaid bills exceeded NOK 500 million. Avinor
He obtained legal assistance from a partner at the law firm Hjort, and an attempt was made to reach a legally binding agreement with Norwegian. The purpose of such an agreement was to prevent Avinor from filing for Norway’s bankruptcy,” the authors wrote.
For Avinor, it was necessary to find a solution before the end of fiscal year 2019. A Norwegian payment agreement was entered into for unpaid bills until the Corona crisis began in March 2020.
“Then payments from Norwegian stopped again, and new negotiations on a new payment agreement were needed,” the book says.
The management of Avinor did not take the risk of Norwegian bankruptcy seriously.
– exclusively related to norwegian
According to authors Trumpy and Gran, the state footed the bill instead:
When Avinor presented its accounts for the first quarter of 2020 – after the coronavirus crisis paralyzed the airline market – NOK 236 million was set aside for late and unpaid fees.
“Although it did not appear in the report, this amount was associated exclusively with Norwegian,” the book says.
And the:
“In Avinor’s annual accounts for 2020, a provision was made for losses of NOK 207 million, again the amount being almost exclusively related to unpaid fees from Norwegian,” the authors wrote.
The Norwegian has applied for bankruptcy protection in Ireland.
Avinor’s current CEO, Abraham Voss, told VG they were not giving Norway special treatment. Read the answer below in the article.
80 billion debt
The authors write:
“The vast majority of the money went forever through the ensuing bankruptcy proceedings in Irish and Norwegian court. During this period, Norwegian competed at times aggressively with airlines that continued to pay general taxes and other creditors when due.”
Was the risk of bankruptcy imminent:
“At the end of 2019, the debt was at interest 80 billion kroner –
He, and the company had other commitments through the purchase of aircraft from Boeing and Airbus totaling NOK 85 billion.”
The crisis coincides with the fact that the Norwegian master, Bjorn Kjos (76), who has been with the company since its inception in 1993, was forced to step down as CEO.
A few months after his passing, Jacob Schramm became new norwegian coachin January 2020.
Schramm had a background from McKinsey, Statoil and Circle K and took over just two months before the Big Bang really hit Norwegian and a slew of planes were grounded:
epidemic in March 2020.
The authors have dubbed the chapter the “Blessed Virus.” Here they describe how the coronavirus crisis saved a company on the brink of bankruptcy:
Erna Solberg’s government came up with major financial crisis packages during the Corona crisis, which were funded with taxpayers’ money.
Saved again
In the book, it appears that the value of the Norwegian stock market was still NOK 6.5 billion at the beginning of 2020. In March, there were only NOK billion left – and the company presented a quarterly result with an operating loss of NOK 2 billion:
The company has been on hold as much as possible — and now that coronavirus has crippled flights, the risk of bankruptcy, according to the book, is imminent.
But then it turns out that the politicians saved the company with their Corona package:
“When the circumstances became known on Thursday 19 March, the government was supposed to allocate half of the amount through the six billion Norwegian kroner crisis package to bail them out. The rest of the money was to be distributed between Widerøe and SAS.”
The authors write that it is reasonable to believe that the Corona crisis saved the Norwegian from imminent bankruptcy.
“Both the billion-dollar debts and repayment problems were uncontrollable. Many aircraft large and small were grounded due to technical problems, and neither Boeing nor the engine manufacturer Rolls-Royce showed any willingness to fully compensate the Norwegian for the problems. It was impossible to fill Cabinets with a view of the coming winter.
But in order to gain political support for Solberg’s government support package, it was important to ostensibly get rid of the economic crisis, the authors wrote.
– The best ever
According to the book, the protests against giving money to Norwegians came from the left in politics:
“The state has no interest in buying a company with huge debts and a lot of speculation,” said SV Torger King Felixness, vice president.
Then the Norwegian Press Service intervened, according to the book.
The communications director responded to the SV Summit and said the Norwegian worked out most of the problems before the pandemic. The message from Norwegian was “the company was expecting the best summer ever, and has notified the market with a profit in 2020”.
Avinor: No special benefits are given
Avinor’s current CEO, Abraham Voss, told VG they were not giving Norway special treatment.
The situation was constantly reported to the Group’s Board of Directors and the Ministry of Transport, and it was agreed that it was not appropriate for Avinor to report to the Norwegian Bankruptcy Court. In short, Avinor behaved in a business-like manner and did not give the Norwegian any special advantages.
He denies that they did anything illegal.
– Avinor did not provide support for the Norwegian distorting the competition. Avinor continued to bill Norwegian after they initially stopped paying the bills. We worked on getting a payment agreement with the company, and such an agreement was finally concluded on a business basis. This was implemented and followed.
Loss: 100 million
He says Norway’s Avinor’s total losses were NOK 100 million.
– Avinor’s final loss as a result of the restructuring in Norwegian was NOK 99.9 million, net. In our 2019 and 2020 financial statements, provisions are routinely made for potential losses. Here it is important to understand that an accounting provision is not the same as an actual realized loss. Nor is it that the loss provisions were exclusively related to Norwegian.
He says there is also a NOK 50 million debt in air traffic control fees with the European air traffic service Eurocontrol, which has yet to be settled.
Solberg: – I accomplished more
Then-Prime Minister Erna Solberg told VG they did what they had to do.
– When corona broke out and people stopped traveling, we created a powerful aviation package that helped SAS, Widerøe and Norwegian. It is clear that the Norwegian language received the largest number, but among other things, the SAS also received help from the Swedish and Danish states.
She says they followed the company’s finances closely.
We saw it as absolutely necessary for Norway to find a solution with its creditors, but at the same time withheld further support so that the Norwegian taxpayers’ money would not end up in foreign-owned venture capital firms and leasing companies.
Solberg says she believes the most important support for airlines is that which has included state intervention and the purchase of flight routes that would otherwise have had no commercial basis during the pandemic.
I don’t want to go back to monopoly
She says they also scolded the state of the competition.
The goal of everything we did in the aviation business was to ensure that competition and low ticket prices in the Norwegian domestic market continued even after Corona. Not to go back to a bygone era with air monopoly. We avoided it, which is very good for Norwegian travelers.
Note: VG is not given access to the entire book, only chapters are selected.
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