Bjorn Kjos, chief executive of Oslo-based low-cost carrier Norwegian, is the first to admit that his work schedule is about to get much busier following the acquisition of Swedish budget carrier FlyNordic and a recent firm order for 42 Boeing 737-800s.
But Kjos is ready for the challenge as he focuses on strengthening the networks of both Norwegian and FlyNordic, as well as turning around the latter’s fortunes and making it profitable.
Norwegian recently signed a firm order with Boeing for 42 737-800s plus 42 purchase rights, building on a previous lease agreement for 11 of the same model. Kjos says the new aircraft will be used to replace Norwegian’s 22-strong fleet of Boeing 737-300s, as well as FlyNordic’s Boeing MD-80 fleet. The leased aircraft will be delivered between 2008 and 2010, while the purchased aircraft are scheduled for delivery between 2009 and 2014.
“We will start with FlyNordic and will begin phasing out its MD-80s from next year,” says Kjos. He remains tight-lipped on plans for new routes, except to point out that the 737-800s will enable Norwegian to operate longer distance city pairs. The carrier already serves Marrakech, and Kjos says it “may look at” additional destinations in North Africa.
“The next phase will be to expand our operations from Stockholm and Warsaw. We plan to strengthen our network in and out of Scandinavia and we already have a strong position in Norway, so we will concentrate on building our network in Sweden and from Warsaw,” he adds. FlyNordic is based at Stockholm’s Arlanda Airport and Warsaw is one of Norwegian’s seven bases.
Earlier this year the carrier announced that its seventh operational base would be Rygge, which is located 65km (40mi) south of the Norwegian capital. “Oslo Airport is full in rush hour and we needed more capacity,” explains Kjos. The carrier will station two 737-800s at Rygge and will serve 14 cities from the airport, including Barcelona, London and Marrakech.
Kjos adds that Norwegian is “looking at opening a base” in Copenhagen, a move he hopes will occur “as soon as deliveries of the new aircraft start”.
Kjos says Norwegian posted a €10 million ($13.6 million) profit in the first half of this year, and he expects the second half of 2007 to be “considerably better”. The carrier saw its passenger numbers increase by 2% year-over-year in 2006 to 5.1 million. Kjos is also confident that FlyNordic will be profitable this year, despite the carrier’s past difficulties in attaining profits.
Norwegian acquired 100% of the Swedish budget operator from Finnair earlier this year in a deal which saw the Finnish oneworld member take a 5% stake in Norwegian and an option to take an additional 5% by the end of the year. Finnair and Norwegian also agreed to link the Oslo-based carrier’s Scandinavian network with Finnair’s long-haul Asian network.
FlyNordic will continue to operate under its own brand because it is well-known in Sweden, says Kjos, but the newly-acquired carrier will co-operate with Norwegian in a number of ways: “We will codeshare, of course, and we will have an integrated booking platform and fleet management programme to ensure that we get the most out of both companies.”
Kjos concedes that the Scandinavian market is very competitive and that SAS remains Norwegian’s “biggest competitor”. He also says low-cost competition from airlines such as Ryanair and Sterling is increasing, but points out that Norwegian “does not meet Ryanair directly” on any routes because of Norwegian’s strategy of serving primary airports.
The recent collapse of Swedish budget carrier FlyMe “did not have much effect” on Norwegian’s operations because FlyMe was a small operator and did not fly any competing routes, adds Kjos.
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Source: Airline Business