Norwegian purchases 222 new aircraft

Discussion in 'Other Airlines | Europe' started by nime01, Jan 24, 2012.  |  Print Topic

  1. nime01
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    Norwegian has just announced that they have signed an agreement with both Airbus and Boeing for delivery of a total of 222 new aircraft. The order includes 122 aircraft from Boeing; 100 of the new Boeing 737 MAX8 and 22 Next-Generation 737-800. Norwegian will be the European launch customer for Boeing’s new aircraft. The Airbus order includes 100 Airbus A320neo. The total agreement is the largest ever in European aviation history and has a contract value at list prices of NOK 127 billion. The order includes additional purchase right of 150 aircraft from both manufacturers.

    http://www.newairplane.com/737/737Max/norwegian/
     
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  2. TRAVELSIG
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    Good to know.
    Norwegian has been very agressive in the market, and is also hiring a large number of new employees.
    Nice to see an EU airline focusing on growth rather than just cost cutting.
     
  3. rwoman
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    I've known several people who have used NO and really liked it.

    :)
     
  4. TRAVELSIG
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    I've met a few of their flight crews in Bangkok, and they are super-enthusiastic about the growth of their company.
     
  5. jbcarioca
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    Norwegian Air Shuttle is aggressive, that is for certain. They have 62 aircraft today, including some old 737-300 IIRC, and they already had 57 737-800 on order and 6 787. It seems improbable that several fo the recent huge orders will actually end out being delivered as planned. I hope my pessimism is misplaced. This company is clearly doing a very good job so far and I wish them well.
     
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  6. nime01
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    According to Norwegian newspapers, NAX are looking to employ 5,500 more within the next 8-10 years, and plans to have 200 aircraft in the air.
     
  7. jbcarioca
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    The industry press is making similar reports. The good news is the new aircraft will be much more efficient, reliable and easy-to-maintain than are the old ones. The growth rate is still very aggressive...
     
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  8. Merlin
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    First - Norwegian Air Shuttle is registered in Norway and hence not part of the EU (we are famous for being outsiders).
    Second - the growth at Norwegian was passenger wise in 2011 +20.5% and theeir year total was 16 million passengers. The traffic (RPM) grew even more with +26.5% and the average segment length was around 50% longer than what the SAS single aisle fleet had in 2011. Norwegian was at the end of 2011 8% larger than the SAS single aisle if you compare te RPMs.

    As I see it, these orders are both to cover for a planned growth and also partly to implement their new 7 years fleet replacement rule. In other words, the last of the 738 in this order will be replaced with newer 738max and/or a320neo from this same order. CEO Kjos at Norwegian says they plan for a fleet of 197 aircraft 10 years from now (I presume that will include their 788 too). That is around 40 aircraft more than the SAS fleet of today.
     
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  9. TRAVELSIG
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    OOPS! Thanks for the correction Merlin. I meant EU as in the geographic area of Europe (continent wise) not the political area. Slip of the keyboard.
     
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  10. Merlin
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    Had to be bit short last time and couldn't give you any "Likes" then - iPhone, Milepoint app and a full tram isn't the best combo when you want to link to this graph I made during last weekend

    [​IMG]

    I apologize for the text not being in English, but I think you will understand most of it if I say the X-axis shows the months of the year, the Y-axis shows the RPK values (= RPM / 1.608), SK LH = SAS longhaul, SK SH = SAS single aisle fleet and DY = NAX = Norwegian Air Shuttle.

    You have to look for dark red curve to find Norwegian's numbers for 2011 - Norwegian is 6 months out of 12 higher than SAS single aisle fleet, 2 on par and slightly under in the 4 months February - May. In 2010 Norwegian was only slightly above SAS single aisle the 2 summer holiday months July and August plus the Christmas holyday month December. You may also notice the drop for all three in April 2010. That was the result of the Icelandic ash spreading in to European airspace and causing closures.

    The graph below may also of interest. It compares the passenger numbers from almost the startup of Norwegian with SAS.

    [​IMG]
    The linear trend line for Norwegian tells us the growth has been 15 million passengers in 8 years, but if you look at the six last months the actual growth has broken off from the more and less linear trend. The new trend points to 30 million yearly passengers by late summer 2015, and that's without the longhaul Dreamliner operation. This match really well with today's press release from Norwegian about its fleet renewal/expansion.

    If I also say that this time as well there is a Star Alliance carrier with a blue tail mixed up in a race they can't win. jbcarioca might nod in recognition to something that happened in his neighbourhood a few years ago - though this time it's at the other end of the compass rose ;)
     
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  11. jbcarioca
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    Very interesting stuff Merlin. It looks quite like GOL did compared with Varig a decade or so ago. People are prone to forget that no Alliance can compensate for uncompetitive cost structure, fleet and innovation.

    Despite all the positives Norwegian shares a hugely optimistic outlook with most of the rest of the large orderers of aircraft these days. They have more advantages than most and a couple very incompetent competitors, and that does minimize the risks.

    We are not too far away from being able to pick up cancelled aircraft for Indonesian, Indian and other overly optimistic orderes, though. Maybe they got pricing that reflects that probability.
     
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  12. nime01
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    Spanair is now bankrupt, and SAS (11% ownership) will face a financial loss of 1.5 billion NOK.
    Norwegian (DY) is very well positioned for the future now.
     
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  13. Merlin
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    Another fine day at work for the Norwegian employees - and SAS it's been the opposite:
    It will be difficult for SAS now - up to 193 million EUR (253 million USD) lost due to this Spanair belly up. In addition to that SAS has to find money for a 9.9 billion SEK (1.46 billion USD) pension fund deficit within end of 2012. This has to be covered in the form of equity according to new accounting regulations. The cliff end is getting closer and closer for SAS. Maybe 2012 will be the first year with two Star Alliance members cease to operate?

    For Norwegian it's one more ticked off, and they are now very much closer to a Malaga (Spain) base.
     
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  14. HaveMilesWillTravel
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    Do they have rights to fly routes entirely outside of Norway?
     
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  15. Merlin
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    Yes. they do Have MilesWillTravel. Norway is part of EEA and therefore any Norwegian carrier enjoy the same rights as any other EU carrier. As an example Norwegian is flying out of Stockholm Arlanda to 14 international destinations that is not in Norway tomorrow (Sunday) - 1x BCN, 1x SXF, 3x CPH, 1x DXB, 2x HEL, 3x LGW, 1x AGP, 1x RMF (charter), 1x MUC, 1x NCE, 1x PRG, 1x FCO, 1x TFS and 1x TKU. In addition to that there are 5 flights to Oslo and 14 domestic flights to GOT, LLA, MMX and UME this same Sunday. The total number of seats from and to ARN that can be filled tomorrow Sunday is 14,364 (38 flights with 186 seat Boeing 737-800).

    If this had represented a normal day at ARN, a whole year with 80 passenger load would have given 4.2 million passengers only at this airport. But since it's a Sunday (aircraft are used to fly less number of departures, but longer segments during the weekends), low season (a number of Norwegian aircraft are enjoying tender care/maintenance during the Winter season) and then there is the planned growth at ARN - the number is likely to be much higher than 4.2 million.
     
  16. jbcarioca
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    I am finding little information about the base plans for the next few years. I suppose there is already some good information. In particular are there plans for any bases in Southern Europe?
     
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  17. Merlin
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    It's a bit hush hush and Norwegian is good at keeping secrets (ref. the 222 aircraft order came as a bomb for most people knowing the business). Rumours have it that Malaga will be their the first base in Southern Europe. This I would say is more likely than ever now after Spanair bellied up.
     
  18. jbcarioca
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    I suspected they would head for some Spanair stronghold, but was clueless about where. Malaga makes sense. Thanks.
     
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  19. nime01
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    There is also ongoing rumors that DY will establish a base in BKK once they've taken delivery of their 787's.
     
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  20. Merlin
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    Nime01, you can add PEK too to the DY IC list.
     
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  21. TRAVELSIG
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    Yes however I don't think for a base???
     
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  22. Merlin
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    Indeed a base TRAVELSIG, CEO Kjos said this partly concealed in an interview with Swedish media. To explain why is a bit too complicated here, but a hint can be if I mention bilateral agreements for landing and overflying rights between Scandinavia and Asia.

    Norwegian is aiming for 18 hours per day in the air with their 788 fleet, and by flying for example BKK-OSL-JFK -OSL-BKK you land exactly at 18 hours per day (2 aircraft is enough to cover daily flights). But with PEK, airports further in to USA can be reached - like PEK-ARN-ATL-ARN-PEK. All depends on the partners they choose in the US, yes I said partners - and there are rumours even that says Norwegian will be a member of an alliance.
     
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  23. HaveMilesWillTravel
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    Are the two destinations you mentioned, ATL and JFK, purely coincidental, or an indication of what alliance it might be?
     
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  24. TRAVELSIG
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    Thank You Merlin for the insight. Very interesting to consider a base at Beijing- I didn't know foreign ownership was permitted for a base at Beijing- although perhaps this hints at a different company structure or at least shareholder base.
     
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  25. Merlin
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    ATL is purely coincidental ;)
     
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