Bowing to the inevitable
Norwegian has decided, inevitably, to shutter its long haul operations permanently, formally closing operations in Italy, US, UK and France with a loss of some 2,000 additional permanent jobs.
Instead the Norwegian LCC will concentrate on rebuilding its European short haul operations and swapping to the 737MAX. It hopes this year to operate 50 aircraft and then take that to 70 in 2022.
It’s also somehow under the impression it can persuade somebody to cough up €590 million in new investment to fund it through the period. Frankly that alone is going to be a challenge and if this summer turns into a covid-19 broken holiday season in Europe, the chances are even slimmer.
The long haul dream began on ex-Emirates A340-300’s from Oslo and Copenhagen in 2013, then matured onto the 787’s with flights from LAX, SFO, Boston and JFK amongst many.
While customers praised its operations for their value and relative quality, the company was spending around $100 more per passenger that they were charging, and all along, wiser minds and accountants were saying that flights from the UK especially simply didn’t add up financially. Bargain fares in the £399 return bracket were utterly unsustainable as the UK APD, VAT and Airport charges alone made up almost 90% of the fare. This was quickly recognised by BA and Virgin Atlantic who modified their fare structures to offer better value, especially from Gatwick.
At its peak the airline had 8 787-8 and 29 787-9 operating on the log haul market. It currently has just 12 737-800’s in service. 58 are parked with another 18 MAX-8 also parked.
The attempt at flying 737MAX’s to the US from Edinburgh and Belfast in 2018/19 failed miserably, and despite the staggering rise in seat numbers offered in 2017-19, the airline was acting more like a pyramid scheme, sucking in as much money as it could to keep its creditors at bay hoping that by offering ever more seats, the income stream would never stop.
That was inevitably, going to fail. The Rolls Royce Engine problems on the 787’s then the MAX groundings were a twin catastrophe, and the cash vacuum cleaner ran out of suction, quickly revealing problems across the company, Covid was just the straw that broke the camels back.
Like many businessmen, personality overcame common sense and Bjorn Kos was able to persuade enough investors to keep going. The companies opaque multi-company set up, allowing it to shift wooden dollars around from one subsidiary to another hid many of the problems for a while, but they soon re-emerged.
Now the company is struggling to even keep where it is, operating a handful of aircraft and finally facing up to the fact its dreams ran away with themselves.
Once again a charismatic, charming, bombastic, larger than life leader put on a show loud enough and bright enough to keep the willing convinced, until the scales finally fell from peoples eyes and they realised billions of Euros, Pounds and Dollars had basically vanished into thin air and were never coming back.
The world is littered with men and women who have led airlines, industries, and recently the United States, down a blind alley, only for the scales to fall from everyones eyes at some dire inflection point, and for them to see the consequences. Too often those leaders walk away, still wealthy, still admired, but with the perpetual taint of failure and the betrayal of those who believed in them always drifting behind.