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COVID-19 EU PolicyWatch

Database of national-level responses

Eurofound's COVID-19 EU PolicyWatch collates information on the responses of government and social partners to the crisis, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for case NO-2020-14/728 Updated – measures in Norway

State loan guarantee for airlines

Statlig lånegaranti for norsk luftfart

Country Norway , applies nationwide
Time period Temporary, 31 March 2020 – 30 June 2020
Type Legislations or other statutory regulations
Category Supporting businesses to stay afloat
– Access to finance
Author Aasmund Arup Seip, FAFO and Eurofound
Case created 19 April 2020 (updated 06 October 2020)

Background information

The parties in parliament have agreed to a state loan guarantee for airlines with Norwegian operation permits and promised to contribute to maintaining Norwegian aviation throughout an economically demanding period. The government regards the crisis in aviation as significant, and observe that many countries are establishing major schemes to ensure liquidity for the airlines. The Norwegian government’s loan guarantee totaling NOK 6 billion. Of these, 3 billion are directed to Norwegian, 1.5 billion to SAS and the remaining 1.5 billion to Widerøe and other airlines.

Content of measure

It established a state loan guarantee for airlines with Norwegian operation permits totaling NOK 6 billion. The guarantee scheme will be organized through the Guarantee Institute for Export Credit (GIEK). The state contributes 90 percent of the guarantee provided that external banks, credit institutions or other commercial counterparties provide the remaining 10 percent. To take part in the scheme it is required that the company is solvent. For companies that did not have an equity ratio of at least 8% at the end of the last quarterly report prior to the corona crisis, financial creditors must waive interest and defer repayment for three months to gain access to the guarantees. SAS and Widerøe satisfy the equity requirement. For Norwegian, an immediate facility of NOK 300 million will be made available. When and if the company achieves a reduction in interest and repayments from creditors, an additional NOK 1.2 billion will be made available. The last NOK 1.5 billion will be made available when the company has improved its solvency to a satisfactory level. If the state is to provide guarantees to Norwegian, both owners and lenders must contribute to a better financial situation for the company. The EFTA Surveillance Authority ESA has approved the guarantee scheme.

Updates

The following updates to this measure have been made after it came into effect.

20 September 2020

The 20 September, the government proposed to prolong the loan guarantee scheme for airlines until 31 December 2020. The change must be approved by EFTA Surveillance Authority (ESA) before it can enter into force.

29 May 2020

The 29 May, the government proposed three changes to the guarantee scheme:

  • Extension of the scheme from 30 June to 31 October 2020.
  • Possibility to deviate from the requirement for risk sharing on equal terms (the pari passu condition) and replace the condition by other terms.
  • In addition, the government will open a dialogue with ESA on an adjustment that imply that shareholder contributions in the form of equity injection can be accepted as a "commercial tranche" corresponding to 10 percent of the state guarantee, so that GIEK in the scheme can guarantee 100 percent of loans. Such a change will be positive in terms of the state's risk, and may make it easier for companies to access the scheme.

Use of measure

No information to date.

Target groups

Workers Businesses Citizens
Does not apply to workers Sector specific set of companies
Does not apply to citizens

Actors and funding

Actors Funding
National government
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Consulted Consulted
Form Direct consultation outside a formal body Direct consultation outside a formal body

Social partners' role in the implementation, monitoring and assessment phase:

  • Social partners jointly
  • Main level of involvement: Sectoral or branch level

Involvement

Social partners have been consulted regularly during design and implementation of the measure.

Views and reactions

The social partners are supportive of the measure. In March 2020, Federation of Norwegian Aviation industries (NHO Luftfart) and the two LO unions the Cockpit Association of Norway (NF) and the Norwegian Cabin Assosiation jointly sent a letter to the government and the Storting with specific proposals to measures in a crisis package for aviation.

Sectors and occupations

    • Economic area Sector (NACE level 2)
      H - Transportation And Storage H51 Air transport

This case is not occupation-specific.

Sources

Citation

Eurofound (2020), State loan guarantee for airlines , case NO-2020-14/728 (measures in Norway), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.