Norwegian Air Shuttle has announced that it will sell its Argentinian subsidiary. JetSMART Airlines will now own Norwegian Air Argentina (NAA) due to the financial difficulty that Norwegian has been facing.
According to a Norwegian press release, the ultra-low-cost airline will be gaining full control of the shares of NAA immediately.
Despite the swift change in direction, passengers will not immediately be impacted by the move. This is because the new operations will take a while to fully integrate. Moreover, JetSMART will continue to operate the NAA scheduled flights from Aeroparque airport.
Over several months, Norwegian will be phasing its branding out of the domestic Argentinian affairs. Furthermore, within half a year, NAA’s three Boeing 737s will be replaced by JetSMART’s Airbus A320 planes. Subsequently, the replaced aircraft will return to Europe to be operated by Norwegian elsewhere.
Norwegian chief financial officer and acting chief executive officer Geir Karlsen spoke of the company’s decision to sell. The businessman took over as CEO in the summer after Bjørn Kjos stepped down. However, former energy retail company head and management consultant advisor Jacob Schram will now be taking over the post from January.
“As Norwegian moves from growth to profitability, we are taking all the necessary actions required to ensure that Norwegian is well positioned going forward,” Karlsen said, as per the release.
”Over the past few months, we have made important changes to our route network to ensure long-term profitability
“Attaining satisfactory profitability for a relatively small domestic operation has proved difficult to achieve, given the overall situation in the country.”
Karlsen further stated that Argentina’s depreciating currency had an impact on Norwegian’s motives.
“While most of NAA’s costs are denominated in dollars, revenue is obtained in pesos only, and the sharp depreciation of the peso against the dollar has created a significant gap between costs and revenue,”
Karlsen is confident in JetSMART’s validity to take what his company has built to another level. He says that the deal brings the two newest airlines in Argentina together. He also said that the combined entity currently carries about 10 percent of the domestic market and will become the third-biggest carrier in the country.
Additionally, JetSMART CEO Estuardo Ortiz is excited about his company’s new purchase. He is keen to combine NAA with his current operations, as he feels that his firm has a long-term commitment to Argentina.
Furthermore, he states that JetSMART has a vision of becoming the leading ultra-low-cost airline in South America. With this negotiation, Ortiz feels that the carrier can provide affordable air travel to its customers. It will do this from both from Aeroparque and El Palomar airports.
Simple Flying reached out to Norwegian for comment on the sale. We will update the article with further announcements.
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