Norwegian has sold its Argentinian subsidiary to Chilean low-cost carrier JetSmart for an undisclosed amount, as the Scandinavian group looks to cut costs and focus on core operations.
“As Norwegian moves from growth to profitability, we are taking all the necessary actions required to ensure that Norwegian is well-positioned going forward,” states acting chief executive and finance chief Geir Karlsen.
Control of Norwegian Air Argentina’s operations have been transferred with immediate effect.
Norwegian’s three Boeing 737s are not included in the deal. They will return to Europe over the next six months and be replaced with JetSmart Airbus A320s.
“Over the past few months we have made important changes to our route network to ensure long-term profitability,” states Karlsen. “Attaining satisfactory profitability for a relatively small domestic operation has proved difficult to achieve, given the overall situation in the country.”
Profitability was also hampered by rapid devaluation of the Argentinian peso, creating a significant gap between the subsidiary’s earnings and its dollar-denominated costs.
JetSmart will continue to operate Norwegian Air Argentina’s scheduled flights from Buenos Aires Aeroparque airport. However, the unit’s branding is to be phased out over the coming months.
The enlarged JetSmart group will control around 10% of the domestic market and will be the third-largest operator in the country.
“We are very excited about the opportunity to combine Norwegian Argentina with our current JetSmart operations,” states chief executive Estuardo Ortiz. “JetSmart has a long-term commitment to Argentina as well as of our vision of becoming the leading ultra-low-cost airline in South America. With this transaction we will continue providing affordable air travel to our customers both from Aeroparque and El Palomar airports.”
All of Norwegian Air Argentina’s flights are domestic, and the sale will not impact Norwegian’s long-haul flights from London to Buenos Aires, which are operated by Norwegian Air UK.
Norwegian Air Argentina began operations in October 2018 with a fleet of three Boeing 737-800s. It operated 20 daily flights across eight routes between Aeroparque airport and Bariloche, Cordoba, Iguazu, Jujuy, Mendoza, Neuquen, Salta and Ushuaia.
Separately, Norwegian has disclosed the appointment of Marty St George as interim chief commercial officer.
St George has more than 30 years’ industry experience. Until recently, he served as commercial chief at JetBlue Airways, having previously held positions at United Airlines and US Airways.
Helga Bollmann Leknes, who had been serving as commercial chief, “has decided to leave the company after two years, following changes in Norwegian’s top management team”, says the airline.