OSLO (AP)--The small Norwegian airline Coast Air declared bankruptcy and immediately canceled all flights on Wednesday, saying it had been stunned by unexpected and unsustainable fourth-quarter losses.
Coast Air was Norway's fourth-largest airline, after SAS AB's (SAS.SK) SAS Norway, Norwegian Air Shuttle (NAS.OE) and Wideroe. It had eight routes in Norway and two international connections, to Copenhagen, Denmark, and Gdansk, Poland.
"The bankruptcy is the result of a dramatic and unexpected increase in negative results for the fourth quarter," said Trygve Seglem, a major shareholder. He didn't disclose the extent of the losses.
He said the cost of operating the aircraft had increased dramatically, and the airline had failed to reach a revised agreement with pilots that would have cut costs and increased crew flexibility.
The airline said about 400 passengers had been booked on flights Wednesday, and their tickets were rendered invalid by the bankruptcy. Seglem said the company had no money left to offer them compensation or book them onto other airlines. Its staff of about 90 people was also immediately laid off.
The airline, based in the southwestern Norwegian city of Haugesund, was founded in 1975 and operated eight aircraft.
Seglem called the bankruptcy "a paradox," saying strong growth in passengers and traffic was accompanied by a cost explosion that broke the company.
CEO@AFG From Norway, joined Jan 2001, 253 posts, RR: 3
Reply 2, posted (7 years 2 months 6 days 8 hours ago) and read 1521 times:
HAU - Haugesund on the west coast between Bergen and Stavanger. They've run with consistent losses for the last few years, and Seglem (a shipping magnate) has been the go to guy for cash infusions. The last quarter the operations and losses deterred significantly and they finally went belly up.
"Looks like I picked the wrong week to quit sniffing glue." Steven McCroskey, Airplane!