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February 26, 2024
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Low-cost carrier Norwegian is set to reduce its short- and medium-term fleet plans, by announcing deferral of new aircraft deliveries and divestments of aircraft currently owned, it said in a January 29 announcement to investors.

Full details will be disclosed on February 7, when Norwegian will present its Q4 2018 results, a spokesperson tells Airinsight. As reported here on January 25, Norwegian is in the midst of a restructuring plan to bolster its financial position.

To strengthen its balance sheet and increase flexibility, Norwegian has secured a fully written 3bln kroner ($353m) rights issue. This is almost double the amount needed to cover obligations to pay for its 1.6bln kroner bonds, which are due next December. By reducing Capex and costs this year by a targeted 2bln kroner, Norwegian should further stabilize its finances that have been marked in recent years by huge investments in its fleet and network expansion. Helping its cash position is the fee Rolls-Royce will pay as part of the agreement to cover additional costs Norwegian had to make as its Trent 1000-powered 787s were grounded for engine replacements and modifications. At its Q3 2018 presentation, the airline said it was to get compensation for initially 1bln kroner, excluding undisclosed amounts from both Boeing and Rolls-Royce.

To curb fleet costs short- and mid-term, Norwegian will divest an unspecified number of aircraft. It will conclude a joint-venture with a third party (most likely a lessor), on which the airline has been working on for over a year. The last couple of years the airline divested a double-digit number of owned Boeing 737-700/800s through sale-and-leaseback (17 in 2017).
In its January 8 presentation to investors, the number of owned 737-800s was said to be reduced from 52 to 45 this year and remain at this level for the next two years. The leased -800 fleet was to be reduced step-by-step from 61 to 54 to 43 over the 2019-2021 period.

Also undisclosed for now is the number of deliveries to be deferred. In the January 8 presentation, Norwegian said it would take delivery in 2019 of 21 aircraft and grow its fleet to 177, to 211 in 2020 and to 236 in 2021. This includes deliveries of 12 (owned) Airbus A320neo’s from 2020 and 22 the following year. Delivery of the first 4 neo’s already slipped by a year compared to what Norwegian said at its Q3 results presentation. Boeing deliveries were said to include 16 MAX 8s in 2019, 24 in 2020 and 28 in 2021, plus 5 787s this year and 5 more in 2020.
If these numbers will change remains to be seen. Boeing’s January order book lists 92 MAX8s out of 110 ordered to be delivered plus 5 787-9s out of 13 ordered. The Airbus list shows 63 A320neo’s and 30 A321neo’s on order, meant to be used on medium-haul routes.

Reducing the fleet has all to do with what Norwegian calls ‘optimization of the base structure and route network’, which until recently included 500 routes to 150 destinations. Part of this plan is the closure of bases in Spain (Palma de Mallorca, Tenerife, Gran Canaria) and Italy (Rome) and two in the US (Stewart and Providence).

The full package will be voted on during an extraordinary shareholders meeting on February 19.

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Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
Richard is contributing to AirInsight since December 2018. He also writes for Airliner World, Aviation News, Piloot & Vliegtuig, and Luchtvaartnieuws Magazine. Twitter: @rschuur_aero.

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