Scandinavian low-cost carrier Norwegian has entered into a nine-year ‘power-by-the-hour’ leasing agreement for two Boeing 737 MAX aircraft. This is a pivot away from the restructured carrier’s previous stance back in March when it decided to drop all of its MAXs from the fleet. However, the deal allows the airline to switch the MAX for ‘new technology’ Airbus aircraft.
While in the throes of restructuring to the ‘New Norwegian‘ this spring, the popular Nordic budget carrier said it would not operate the Boeing 737 MAX. The airline said goodbye to the ones it had already acquired after already having canceled an order for 97 planes in June last year.
At the beginning of last month, when disclosing a new agreement for 13 Boeing 737-800s, there was some indication however that the carrier could change its mind about the type. While nothing as extravagant as a new order for close to 100 aircraft, it is now confirmed that Norwegian will be leasing two Boeing 737 MAX 8.
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Important step to efficient fleet
The airline did not disclose the chosen lessor but did say it was ‘well reputed’ and had a longstanding relationship with Norwegian. Meanwhile, the carrier said that delivery would begin ‘shortly’ to enable it to fulfill its summer 2022 program, which will include close to 270 routes.
“This agreement is an important step in Norwegian’s plan to build an efficient and modern fleet for the future. The flexibility of ‘power-by-the-hour’ will allow us to manage our capacity through the low season adjusting for variations in seasonal demand,” Geir Karlsen, CEO of Norwegian, said in a statement issued on Wednesday.
Two years of flexible operations
The lease term for the two planes is nine years. It includes ‘power-by-the-hour’ arrangements for both the IATA winter seasons 2021/22 and 2022/23, allowing the airline to make capacity adjustments for lower demand more easily.
The term Power by the Hour is actually trademarked by Rolls-Royce since 1962. It was first applied in support of the Viper engine on the de Havilland/Hawker Siddeley 125 business jet. Generally applied to engines, it basically means that an operator pays for the equipment when it is working.
Could Norwegian fly Airbus jets in the future?
However, that the MAX will be with the airline for long is not set in stone. According to the agreement, Norwegian has the option to replace the Boeing narrowbodies with ‘new technology’ Airbus aircraft. This would be the first time Norwegian would take on Airbus planes on its own, although it has previously leased widebody A340s for a few months from Hi-Fly.
It would also mean a step away from the all-737 fleet, a tried and tested concept with long-time low-cost giants such as Southwest and Ryanair, as well as newer entries such as flydubai. The question is if Norwegian wants to gamble on a diverse fleet as it emerges on the other side of the pandemic a much smaller operation than when it began. Time will tell.