DTN News - AIRLINES NEWS: Norwegian Carrier Aims High With 222 Aircraft Orders

DTN News - AIRLINES NEWS: Norwegian Carrier Aims High With 222 Aircraft Orders
Source: DTN News - - This article compiled by Roger Smith from reliable sources By Andrew Parker in London FT
 (NSI News Source Info) TORONTO, Canada - January 26, 2012: Norwegian Air Shuttle plans to buy 222 new aircraft worth $21.1bn from Boeing and Airbus in a move that heralds its ambition to become one of Europe’s leading low-cost airlines. Boeing secured its largest ever European deal through a firm order by the Oslo-based airline for 122 737 narrow-body aircraft, worth $11.4bn at list prices.

Norwegian also departed from its previous policy of only operating Boeing aircraft by making a commitment to purchase 100 A320 narrow-body aircraft from Airbus, worth $9.7bn at list prices.

Analysts said Norwegian’s orders looked like a bet on the demise of SAS, the struggling Scandinavian carrier.

Norwegian’s shares closed up almost 13 per cent at NKr74.5. Shares in SAS dropped 1 per cent to SKr9.

Bjorn Kjos, Norwegian’s chief executive and one of its founders, told the Financial Times that the airline would focus its expansion on Nordic countries, although he highlighted plans to open a new operating base this March in Malaga, Spain.

“If we have the newest equipment and one of the best cost bases in the world, we can more or less set up operations wherever we want,” said Mr Kjos, a former fighter pilot in the Norwegian air force, who is also a lawyer and author of a spy thriller.

Mr Kjos also highlighted Norwegian’s plans to begin long-haul operations next year, with flights linking Scandinavia with Asia and the US.

Norwegian started its low-cost carrier operations in 2002. It has operating bases in Norway, Denmark, Finland and Sweden, although Norwegian’s routes reach beyond Europe into north Africa and the Middle East.

Its fifth-largest shareholder is Finnair, Finland’s flag carrier.

Aircraft financing has become more difficult to obtain since the financial crisis, but Mr Kjos expressed confidence that Norwegian’s orders with Boeing and Airbus would secure loan guarantees from European and US export credit agencies.

Norwegian’s orders should increase its fleet from the current 64 to between 150 and 200 by 2020, because some of the new aircraft will replace existing ones.

Ryanair, Europe’s leading low-cost airline by passenger number, has 277 aircraft, while EasyJet, the second largest, has 204.

Andrew Lobbenberg, analyst at RBS, said Norwegian’s orders looked like “a gamble on SAS failing”.

The deals with Boeing and Airbus underline how airlines are keen to buy fuel-efficient aircraft because of high oil prices.

Norwegian is buying planned new aircraft that should burn between 10 and 15 per cent less fuel than existing ones.

Airbus will start delivering its A320neo aircraft to Norwegian in 2016, and Boeing will begin supplying its 737 Max jets in 2017.

Boeing on Wednesday announced strong fourth-quarter results, although it said profitability would be dented in 2012 by higher pension costs.

*Link for This article compiled by Roger Smith from reliable sources By Andrew Parker in London FT
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