Accounting firm KPMG has been appointed to handle the liquidation process of Norwegian Air’s (NAS.OL) UK business.
The move allows 1,100 employees of the troubled Scandinavian airline — who are based at Gatwick airport — to apply for state-funded redundancy payoffs.
Jobs at Norwegian Air Resources UK (NAR UK), the airline’s UK crewing business, have been in air for weeks after the company announced it would halt long-haul flights as COVID-19 hammered the sector.
Norwegian, stopped its long-haul operations to avert going bust.
The end of long-haul operations meant that NAR UK “no longer had the necessary funds to meet its financial obligations,” the Big Four firm said.
There has been some lingering doubt about the survival of the company and it has been applying for more support from Norway’s government.
But in November, it was dealt a blow when the Norwegian government said it would not provide extra financial support. The country’s Ministry of Transportation rejected proposals for cash to support the business, which has been badly affected by widespread COVID-19 lockdowns.
The Oslo-based airline had said in November that it would run out of money in the first quarter of 2021 unless it received a fresh cash injection.
In September, Norway’s industry ministry said it would extended loan guarantees for Norwegian Air by two months, until the end of 2020.
Earlier last year, the country’s airline secured a state aid package worth $330m (£240m), after a debt restructuring, but it said it would need to raise more funds to get through the impact of COVID-19.
Norwegian has been a trailblazer in creating low-cost routes over the Atlantic, and its rapid expansion left it with ballooning debt bills. By mid-2020 these totted up to close to $8bn.
The airline’s July passenger volume fell by 90.4% on the year, after the coronavirus crisis and global lockdowns saw most of its fleet grounded. It flew only 356,093 passengers during July 2020, compared to 3.7 million in the previous year.
“This is extremely disappointing news for the UK aviation industry and the employees,” David Pike, a partner at KPMG, said.
He added: “This appointment forms part of Norwegian Air’s wider operational and restructuring programme which will see the company exit its long-haul routes and instead focus on routes within Norway and Europe.
“Given this outcome and its impact on staff, our clear priority is to work with the employees and their representatives so that we can assist them with making claims to the Redundancy Payments Service, as well as assisting them in securing training records and other important information.”
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