LONDON – With Norwegian looking to increase its fleet to 100 aircraft within two years, will they make the same mistake they made last time around that resulted in bankruptcy?
The airline’s CEO, Geir Karlsen announced this at Routes Europe in Bergen, which would see the fleet size increase by 40%.
“We have an organization at Norwegian where we can probably run close to 100 aircraft, with the same staff,” Karlsen said.
“That’s why I think the sweet spot today is 90- to 100-aircraft and we would like to get up there as soon as possible.”
Karlsen Admits Norwegian Was Too Aggressive…
In what is probably a first, Karlsen went as far as admitting that the growth plans Norwegian had pre-bankruptcy were too aggressive:
“Back in 2017, 2018, and 2019, we had a lot of aircraft coming our way, meaning too many deliveries, both on narrowbodies and on widebodies as well.”
“The growth was too aggressive, way too aggressive. This time, we have the luxury of actually growing into demand.”
This would suggest the view that Karlsen is making this decision for fleet expansion carefully, as he doesn’t want the airline returning to the same position it was in last year.
Norwegian Is On The Up…
Norwegian Air’s restructuring was formally approved by Norwegian courts back in April 2021, with the-then CEO Jacob Schram stating that this enabled the airline to continue “the work of raising new equity”.
As mentioned in previous analyses on AviationSource, we predicted that Norwegian still had a roadmap for success, even in the wake of adverse competition from the likes of Norse Atlantic and flyr.
The next few points below will substantiate that view accordingly.
It was around nine months ago when the carrier announced a substantial Summer 2022 schedule, which would see over 140 weekly flights, with London Gatwick becoming a key focus once again.
Then, around three months ago, the airline announced that it would be leasing 10 new Boeing 737 aircraft, in what was seen as a step in the right direction for the airline.
By March 2022, things were getting increasingly better with the new version of the airline handling a million passengers, which was an incredible feat offering 80% load factors.
And, even a week ago, despite the airline reporting a NOK849m loss, the airline still remains strong and liquid. Because after all, the conversion rate states it is only a £7m loss, which means the airline is itchingly close to profitability.
Long-Haul Flights Not On The Agenda…
Karlsen also did confirm at Routes Europe that long-haul flights are not on the agenda for the airline to expand.
This definitely generates the view that the airline has learned its lesson from expanding so rapidly in this segment of the market, especially when you have a plethora of other airlines competing in the same space.
Instead, the fleet expansion is going to focus on Karlsen’s plan for growth outside of the Nordics, particularly with a focus on Gatwick, Germany, and Spain.
As reported by RoutesOnline, around 15 Boeing 737 MAXs will be delivered to the carrier next year, and are going to form a path of evenly spread operations.
From the coverage coming out of Routes Europe regarding this, it remains clear that Karlsen is the right person to captain the ship that is Norwegian.
It’s also quite obvious that Norwegian is learning from the mistakes it has made and is only creating expansion plans that they know will actually be sustainable.
This view is going to be very refreshing for the carrier and the staff that work there, as they know that considerable job security is there on the table.
The Summer 2022 season is going to be an important one for the carrier, as this could definitely tip them to the edge of profitability.
And this will be relatively easy, especially as they are only chasing up on a £7m loss, which by their standards, should be definitely more than achievable.