Norwegian Air Shuttle has been feeling the impact of the Boeing 737 MAX crisis, with their 18 aircraft grounded and 92 future orders undeliverable. This is causing a significant dip in passenger numbers, as reported by AINonline.
What are the details?
Norwegian has been struck hard by the grounding of their MAX fleet, and the unavailability of new MAX aircraft due to be delivered from Boeing. Their fleet of 18 MAX aircraft, the biggest in Europe, formed a substantial part of their operation and fed passengers onto profitable long-haul international routes.
Passenger numbers are down
Norwegian Air Shuttle has reported a second consecutive month of falling passenger numbers, with June moving down 1% compared to the month before, to a total of 3.5 million passengers. The lack of aircraft also contributed to a worse on-time performance and slid Norwegian down in the ‘reliability’ rankings.
Wet lease aircraft, with less control
They’ve had to hire wet-lease aircraft to cover the capacity shortfall, but these operations are harder for them to synchronise and maintain customer expectations.
“This wet-lese capacity is not part of our day-to-day operations and we have less control over it,” a Norwegian spokesman told AIN. “This is the case with most airlines, not just Norwegian.”
Whilst many of these wet-lease aircraft have been deployed on inter-Europe routes, Norwegian has had to go as far as to wet-lease an A330 from Evelop Airlines for their transatlantic route from Dublin to New York.
What about profitability?
Fortunately, the silver lining of this situation is that Norwegian has been able to maintain its plan to strengthen its bottom line. By having the MAX series offline, Norwegian has been able to remove unprofitable routes and focus on services that actually make them money (and shut down the runoff expenditure that comes with rapid expansion).
Much of this growth has been from their long-haul routes, operated by efficient Boeing 787 Dreamliners that can carry a lot of passengers for an excellent cost-per-seat. Norwegian recently took ownership of their 36th Boeing 787-9 aircraft and has been able to open new profitable routes to South America and to Greece.
Who is paying for the grounded Boeing 737 MAX aircraft?
Naturally, Norwegian has also been quick to mention that any results they post don’t include any settlement from Boeing. The airline has said that Boeing will have to pay for this crisis and that they would be reimbursed any losses they currently have.
These grounded aircraft are expensive; not only do they need to be maintained and ready to fly at any time (which I’m sure the airline would be very happy to do so once they get the all clear) but their pilots need to be employed (despite not working), and loan repayments need to continue.
The figure that Norwegian expects from Boeing is likely to be in the millions.
As mentioned in our previous story, Norwegian Air are currently keeping customers up to date with the 737 MAX 8 issues on their website. Travellers are advised to check this for the latest information on their flight plans and aircraft.
What do you think? Let us know in the comments.