DALLAS – Yesterday, Norwegian Air (DY) announced that they had reached an agreement with Boeing for a recommitment to purchase 50 Boeing 737-8 MAX aircraft.
The deal includes options for an additional 30 aircraft, with deliveries scheduled between 2025 and 2028 to align with lease expirations for its current fleet.
The new aircraft will be crucial in the airline’s ambitious plans to reduce carbon emissions by 45% by 2030.
But the deal highlights the significant financial struggles that the airline faced due to operational challenges faced by the grounding of some of its aircraft, and the impacts of the COVID-19 pandemic.
The airline eventually ended up in bankruptcy protection and shed significant portions of its operation to survive, from which it emerged last year.
Norwegian’s Dramatic Rise, Fall, and Rise?
Norwegian Air saw a dramatic rise to the top of the market as a low-cost carrier operating seemingly prosperous routes in the short, medium, and long haul markets.
However, the groundings of significant portions of the airline’s Boeing 787 fleet due to Rolls-Royce Trent 1000 engine issues and global Boeing 737 MAX groundings hurt the airline’s operations.
Rapid, unsustainable growth also became a focus of the airline’s fall, and can be seen indirectly in the airline’s press release, which carefully noted the deal entailing “a limited net increase of the company’s current fleet.”
The question remains; will a more prudent strategy allow the airline to once again become a premier low-cost carrier?
Geir Karlsen, Chief Executive Officer of Norwegian said, “The overall terms achieved are attractive for Norwegian, and the deal fits well with our long-term fleet strategy and route program.
He continued, “The deal will also strengthen the company’s equity considerably, further solidifying Norwegian’s financial position.”
Svein Harald Øygard, Chair of the Board of Norwegian said, “This is a landmark deal that sets out a path whereby Norwegian will own a large share of its fleet. This will result in lower all-in costs and increased financial robustness, enabling us to further solidify our Nordic stronghold.”
Featured Image: Alberto Cucini/Airways