Norwegian Air Shuttle, the Norwegian low-cost airline, announced the departure of its CEO and co-founder Bjørn Kjos in a surprise move.
The CFO, Geir Karlsen, will act as interim CEO for the Norwegian group while it recruits a new one. Bjørn Kjos, who was at the head of the company for 17 years, will remain as an advisor to the Chairman. The change takes effect immediately.
The group also reported a net profit of 73.2 million crowns (€7.6 million) against 295.9 (€30 million) a year earlier. It lowered its capacity growth target to a range of 0-5%, against 5-10% previously.
The 18 Boeing 737 MAX aircraft on the ground also weighs on the results. Norwegian announced it expected its 737 MAX aircraft to return to service by October 2019.
Back from the brink
Since 2012, the airline has disrupted the long-haul market with low-priced transatlantic tickets. While these flights are very popular, margins are extremely low.
This fast development has led to heavy losses and high debt. Norwegian struggles can be traced back to its aggressive and ambitious fleet and network expansion focused on long-haul flights. In 2012, Norwegian ordered 100 Boeing 737 MAXs and 100 Airbus A320neos to support its long-haul operations.
Eventually, the aircraft acquisition was forecasted to weigh down $1.75 billion in the company’s budget for 2018 and $2.2 billion for 2019. At the time, some suspected that this expansion plan led to the departure of the company’s previous CFO, Frode Foss, after 15 years of a career within Norwegian.
Last year the company’s net loss amounted to €155.7 million. The company blamed high fuel prices, competitors and technical problems with its Boeing 787 Dreamliner engines. In late December 2018, Norwegian managed to reach an agreement with Rolls Royce to compensate the LCC with €100 million for the technical challenges.
After British Airways’ parent company, IAG, announced on January 24, 2019, that it would renounce acquiring Norwegian, the airline had to raise three billion crowns (€311 million) from its shareholders to stay airborne.
Today, Norwegian has a workforce of more than 11,000 employees and operates a fleet of 162 aircraft.