Norwegian’s Argentina Arm May Be At Risk Of March Closure

Norwegian’s low-cost Argentina arm might be set to shut down, as rumors circulate about the Scandinavian giant’s exit from the market. The airline has removed any tickets for sale beyond March next year and maybe preparing to sell the airline itself to its local rival JetSMART.

Argentina low-cost
Norwegian might be about to pull out of the country of Argentina. Photo: Atle Straume/Norwegian

What are the details?

Last year, Norwegian took advantage of the deregulation of the Argentina aviation market by opening its own airline in the country. They flew in one of their Boeing 737-800 from Europe to start flying low-cost routes in the country.

From there, the airline expanded to four 737s operating a countrywide route network to eight local destinations. The airport of Buenos Aires Aeroparque acted as its hub, and this was additionally connected all the way back to the mainline fleet by a Boeing 787 (cutting into British Airways profits who had long run the route as a monopoly).

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NAS B737 landing
Norwegian had big plans for the airline. Photo: Norwegian

But according to CH-Aviation, the airline is planning an exit from the country.

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And the signs are all there.

  • For one, the airline has removed the ability to buy tickets on its website from March 28th, 2020 onwards. This is the most telling indicator that the airline is not confident in the future of its operations.
  • Additionally, the airline has also reduced its fleet from four Boeing 737s down to just three.

Back in April 2019, the Norwegian’s CFO and acting CEO did say that they would review operations of the Argentina route and, if it was not satisfactory, move to sell the airline.

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Who would they sell the airline to?

As luck would have it, Norwegian might be able to pass on the airline and its airport slots to local rival JetSMART.

JetSmart A320neo
JetSMART’s A320neo. Photo: Airbus

JetSMART is a low-cost carrier based out of Chile that is one of the Indio Partners affiliate airlines. Indigo Partners helps operate not only JetSMART but also Wizz Air in Eastern Europe, Frontier in the United States and Volaris, a Mexican low-cost carrier. The firm has a controlling interest in JetSMART and Frontier but is only a shareholder in the other two.

If JetSMART did buy Norwegian, the first thing they would do would be to move operations from  Buenos Aires El Palomar (which has an evening curfew) over to Buenos Aires Aeroparque. It is not clear if the airline would take over the Boeing 737s operating in Argentina as JetSMART has an all-Airbus fleet.

Confirmation of a sale is expected by mid-December.

However, this may not be the case, as a Norwegian spokesman told Aviacionline, “at other times, we have also launched commercialization within a three- or four-month timeframe to adapt to seasonal changes in demand in Argentina and Europe, due to the inconvenience caused by the lack of single-aisle aircraft after the MAX delivery was disrupted.” 

What do you think about this news? Should Norwegian sell to JetSMART? Let us know in the comments.

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TonytTDK

Without having a real idea of the profitability, or otherwise, together with any idea of the numbers/% per flight/routes, it’s incredibly difficult to know whether, they’re cutting back on aircraft in Argentina, to help out in Europe,
or if things are so bad, that realistically, there’s no ‘asset’ to sell in Argentina
& they’re going to fulfil their existing commitments, before shutting down & bringing their aircraft ‘home’.?

dan

the economy may be tanking…avianca argentina went kaput, and aerolineas has their 737 maxs grounded

Ezequiel

Argentina domestic market has been suffering overcapacity for over a year now, there is not one airline, that despite having decent LF, can make a profit. Avianca has already gone bankrrupt, Andes has significantly downsized to almost no operations and one single aircraft, and Norwegian will eventually be either sold or closed. Norwegian’s main assets to JetSmart are its slots in the highly congested AEP, centrally-located, and not prone to such severe restrictions as El Palomar Airport. Under the ongoing recession the situation doesn’t seem to progress, and therefore more cuts should be on the way.