Norwegian Air has been forced to furlough an additional 1,600 employees following Government's decision not to give further support.

The pandemic-hit airline faces a battle for survival this winter, it said today after the country's government declared that it will not provide additional financial support for the cash-strapped carrier.

Norwegian Air has grounded 15 out of 21 aircraft that have been operating in the recent months. It plans to keep 6 jets on domestic routes in Norway.

More than 10,000 people worked at Norwegian Air prior to the pandemic, but in the coming months, that will be reduced to 600.

It said in August that it would run out of cash in the first quarter of 2021 unless it could secure fresh funds and has held talks with the government in the hope of winning support. 

"The company and the board will turn every stone to get through this situation," chief executive Jacob Schram told a news conference this morning, adding that the budget airline is not out of cash yet. 

"But we need ventilator support to get through the winter," he added. 

Asked whether the company was at risk of bankruptcy, Schram said he would not rule out any potential outcomes. 

Norwegian's shares fell 17% this morning, extending this year's price plunge to 99%. 

Favouring free enterprise, Norway's centre-right coalition government has long ruled out any nationalisation of Norwegian or other carriers and in 2018 sold the state's remaining 10% stake in rival SAS. 

"It is a tough message to get. But we are answerable for the responsible use of public funds," Industry Minister Iselin Nyboe told an earlier news conference. 

"Norwegian Air has a financial structure that makes it risky for us to go in with support. It was not defensible," the Minister said. 

A pioneer in low-fare transatlantic air travel, Norwegian Air's rapid expansion left it with debt of close to $8 billion by mid-2020, making it vulnerable to the fallout from the Covid-19 pandemic. It is due to report third-quarter results tomorrow. 

The carrier has shown a great ability to overcome financial difficulties in the past, Transport Minister Knut Arild Hareide said. 

"I don't want to speculate on their ability to do so," Hareide said when asked about Norwegian's chances of staying in operation. 

Creditors and lessors took control of the airline in May with a financial rescue that allowed it to access state-guaranteed loans of 3 billion crowns ($329m) as the company sought to operate a slimmed-down service. 

Norwegian last month operated only 21 of its aircraft, leaving more than 100 grounded, including its entire fleet of 37 Boeing 787 Dreamliners used for transatlantic journeys. 

The airline industry is likely to provide sufficient services and will still see healthy competition in the time ahead, Nyboe said. 

Scandinavian carrier SAS is a major competitor in Norway, and Hungary's Wizz Air recently launched several services to Norwegian cities. 

"Norwegian is evaluating the effects of the current situation with the aim of safeguarding the interest of all stakeholders," the airline said. 

The company has said that more funding could come from the sale of aircraft, conversion of more debt to equity or from its owners and the Norwegian government, while declining to specify the amount it might seek. 
 
The government also said it had rejected a request from a start-up carrier for public funds. 

So far this year, Norway's government has provided an estimated 13 billion crowns in support for the airline industry including loans, guarantees and tax cuts, it said.