WASHINGTON—Norwegian is taking its most dramatic action yet in its effort to deal with the latest U.S. imposed travel restrictions and the fall in demand for transatlantic services. 

The airline said Mar. 12 that it will lay off at least half of its staff temporarily, ground 40% of its long-haul fleet and cut up to 25% of short-haul flights.

Bernstein Research analyst Daniel Roeska said Mar. 11—before the U.S. measures were announced—that “the airline we are worried about among our coverage remains Norwegian.” The company “hangs by a thread.”

“This is an unprecedented situation,” the airline’s CEO Jacob Schram said. “The new restrictions imposed further pressure on an already difficult situation.” Schram urged “international governments to act now to ensure that the aviation industry can protect jobs and continue to be a vital part of the global economic recovery.”

Norwegian plans to cancel the majority of its long-haul flights to the U.S. in the short term. It will suspend all U.S. services from Amsterdam, Athens, Barcelona, Madrid, Oslo and Paris from the end of March until the end of April. Norwegian’s Gatwick flights on eleven U.S. routes will continue to operate. “Our goal is to reroute as many of our customers as possible through London during this difficult period,” the airline stated.

With a revenue share of almost 20%, the U.S. has so far been Norwegian’s biggest market. 

In addition, Norwegian will cancel a large part of its domestic flights in Norway and many within Scandinavia, in addition to all flights to Italy.

“Due to the extraordinary market situation as a result of the coronavirus, and thus a dramatic drop in customers and subsequent production decline, Norwegian must look at all possible measures to reduce costs,” the airline said. This includes temporary layoffs of up to 50% of the employees “and the number may rise.” All units will be affected and the company has already initiated consultations with the unions.

Norwegian employs around 10,000 people. The airline operated a fleet of 156 aircraft at the end of 2019. Among them were 11 owned and 26 leased Boeing 787-8/9s, 14 owned and four leased 737-8s as well as 40 owned and 61 leased 737-800s. The airline had been in deep restructuring mode before the crisis, cutting back capacity and securing fresh funding. Among others, it created a joint venture with China Construction Bank Leasing (CCBL) that will pick up an initial 27 Airbus A320neos Norwegian ordered earlier.