The company struggled financially and lost more than 100 million Norwegian krone (NOK) before terminating operations, having never made a profit.

The airline was established by Trøndelag-based investors on 2 April 1987, having been originally intended to operate charter flights to the Mediterranean area.

The company suffered with its main contractor, Sun Tours, going bankrupt in 1988, after which the airline moved to the British charter market.

Their key goal was to secure concessions to fly between the Scandinavian capital cities of Oslo, Stockholm and Copenhagen, but no permission was ever granted.

[2] The company had an initial share capital of NOK 10 million and established its head office and main base at Stavanger Airport, Sola.

However, Åreskjold stated that the bankruptcy "came at a convenient time"[7] as in the short term Norway Airlines would fly back Sun Tours customers at the expense of the Norwegian Travel Guarantee Fund and that there was a deficit of aircraft on the European charter market.

[7] Within a week, Norway Airlines had signed a contract to fly with both aircraft for Britannia Airways out of London Gatwick Airport.

A new issue of shares for NOK 25 to 30 million took place in June 1988 and the company stated its intent to list itself on the Trondheim Stock Exchange.

The deal also involved that the United Kingdom-based International Leisure Group (ILG) would purchase a 33-percent share of Norway Airlines through a private placement of NOK 25 million.

[12] Air Europe announced on 6 December 1988 that they would start a scheduled service between Oslo-Fornebu and London-Gatwick and intended to offer cheaper flights than the incumbents Scandinavian Airlines System (SAS) and British Airways.

[18] Other routes flown on behalf of Air Europe were from London to Rome, Gibraltar and Malta, although occasionally the aircraft could be used on other services.

[16] Norway Airlines applied in 1990 for permission to operate a charter route from Oslo to Penang, Malaysia,[16] using a Boeing 757.

[20] The Penang route was necessary for Norway Airlines to procure a third aircraft, which according to the company was necessary to generate a profit, and would have created 100 new jobs.

[16] In the meantime, Tjæreborg Reiser sent their charter passengers with scheduled flights to London and onwards with British carriers to Malaysia.

[21] The issue was complicated by the common aviation policy of the three Scandinavian counties, which had largely been established to protect SAS' interest on international services.

[22] The Conservative Party stated that this was in part a response to Danish and Swedish authorities allowing charter services to Phuket, Thailand, which could be seen as competing to SAS' route to Bangkok.

[21] Syse's Cabinet resigned on 3 November over issues regarding Norway and the European Union,[23] before a reply to the application could be made.

Operations started in April and secured sufficient business that the airline could order its third aircraft, along with a contract from Gullivers Reiser for additional charter flights.

[27] A similar concession was also granted to Braathens SAFE, but they stated that the intense competition on the route would make it difficult for them to start a service.

Air Europe's bankruptcy cost Norway Airlines NOK 6 million and required the company to reduce its staff from 196 to 106 employees.

[35] SAS held a monopoly on these routes and the airlines intended to capture the leisure market between the capital regions.

Fokus Bank had gradually become the largest shareholder in Norway Airline and owned 40.6 percent of the company in July 1991.

At a shareholders meeting in July, Stein Øxseth was appointed chairman and all non-Norwegian board members were replaced.

This involved that the transport of 200,000 people annually would be transferred to scheduled services, resulting in Norway Airlines losing the opportunity to extend its engagement with the military.

[41] For the owners of the Boeing aircraft the move meant that they had to find a new lessee in a marketed where leasing prices had fallen from US$250,000 to US$150–180,000 per month.

[46] TransNordic Group started negotiations in June with Braathens SAFE, Maersk Air and Conair of Scandinavia for them to join the alliance.