April 11, 2015

Despite operating at a loss, Norwegian Air is determined to remain independent

Over recent years Norwegian Air has expanded to become Europe’s third-largest budget airline after Ryanair and easyJet. However the rapid expansion has seen the airline trade at a loss and, as a consequence, it has attracted a great deal of interest from other airlines, including Ryanair itself, though the airline refused to confirm it had been in discussion with them during a recent strike. Norwegian Air’s Chief Executive, Bjørn Kjos, confirmed “We have been approached by most of the airlines in Europe that want to work together with Norwegian. We have been asked about all sorts of arrangements”.
The Norwegian Air fleet comes to just under 100 aircraft and has in excess of 200 jets on order, with plans to lease out many of them through a new Dublin-based subsidiary, which is a unique move for a budget carrier. Although not currently scheduled to receive its first Airbus A320neos until 2016, Kjos has indicated that the first leasing agreement may be only a few weeks away. “We assume that in the next few months we will start leasing out the first (A320neo) aircraft,” he said at a conference in Paris. “We are in final discussions with lessees so it will be highly likely before the summer.”
Norwegian Air is Europe’s first budget airline to fly long-haul routes from Britain and the Nordics to North America and Asia, and is currently planning new routes to South America and South Africa. Falling fuel costs will be likely to assist Norwegian this year, but Kjos has made it clear he is not keen on hedging fuel after Norwegian Air suffered big hedging losses last year when oil prices fell. “We have hedged very little fuel and only at a low price,” Kjos said. “You might see (crude) prices up to US$70 but I think they will swing between US$50 and US$70 in the future, so what is the benefit of hedging?”



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