By Vince Sullivan

Law360 (April 20, 2020, 11:53 AM EDT) -- European airline Norwegian Air moved four affiliates into bankruptcy Monday in Sweden and Denmark, jeopardizing the jobs of more than 4,700 pilots and crew members, as COVID-19 has caused a dramatic drop in both passengers and revenue in recent weeks.

According to a statement from the airline, the four affiliates employ Norwegian's pilots and cabin crew members in Sweden and Denmark, and quarantines and travel restrictions across Europe have led to a virtual halt to air travel while the company's labor costs have remained the same.

"The impact the coronavirus has had on the airline industry is unprecedented," Norwegian CEO Jacob Schram said in the statement. "We have done everything we can to avoid making this last-resort decision and we have asked for access to government support in both Sweden and Denmark."

The four companies that have filed are Norwegian Pilot Services Sweden AB, Norwegian Pilot Services Denmark ApS, Norwegian Cabin Services Denmark ApS and Norwegian Air Resources Denmark LH ApS, which together employ 1,571 pilots and 3,134 cabin crew workers, according to the release. About 2,000 crew members in Norway, France and Italy will not be impacted by the bankruptcy filings.

The subsidiary that employs the airline's Norwegian crew members has taken advantage of government relief available in Norway, so those entities were not impacted by the bankruptcy filings. Employees there will have their salaries covered by the government during furlough periods, according to the statement.

The airline has also terminated crew services agreements with OSM Aviation, which serves the air travel industry by recruiting, training and providing cabin crew to its airline customers. Based in Oslo, Norway, the contractor has crews based in the U.S., the U.K., Spain, Finland and Sweden that serve Norwegian Air's fleet.

This termination will affect about 500 crew members based in Norwegian Air's New York, California and Florida bases, and the company told Law360 on Monday that it intends to directly rehire these employees once operations return to normal.

Norwegian Air announced in early April that it would be seeking a debt-for-equity conversion with aircraft lessors, bond holders and suppliers so that it would qualify for an aid program enacted by the Norwegian government worth 3 billion Norwegian Krone ($2.89 billion).

Back in February, the company announced that it was projecting positive net profits for 2020 after it took several steps to reduce costs by optimizing its route network in an effort to create financial headroom for the year, according to company statements. By March 6, the effects of the COVID-19 outbreak, including restrictions on nonessential travel, led Norwegian Air to withdraw that guidance.

The airline has scheduled an "extraordinary general meeting" of the company for May 4 where the debt conversions will be considered.

Norwegian Air is the latest carrier to feel the financial effects of the COVID-19 outbreak. British airline Flybe was tipped into bankruptcy in early March after facing a string of economic struggles, including rising fuel costs and general market uncertainty. The company had already received a government bailout in January because of its financial condition.

In the U.S., RavnAir Group filed for Chapter 11 protection in early April after travel restrictions in Alaska eliminated its passenger revenue, chewed up its liquidity and made it impossible for the company to continue operating the freight and mail services that rural parts of the state rely upon for survival.

With 160 planes in its fleet, Norwegian Air served 36 million passengers in 2019.

--Editing by Alyssa Miller.

Update: This story has been updated with more details.

Update: This story has been updated with current numbers for the amount of U.S. workers impacted by the bankruptcy filings.

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