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Norwegian outlines expected cost of Max grounding

Norwegian expects to incur costs of NKr300-500 million ($35-58 million) over the coming six months as a consequence of the grounding of its Boeing 737 Max jets.

Briefing investors today, the Scandinavian low-cost carrier's chief financial officer Geir Karlsen said the estimate was based on an assumption that the Max jets would not be back in service before August.

Karlsen declined to give a breakdown of the costs, for what he describes as "obvious reasons". He says the carrier is in discussions with Boeing over the financial impact of the grounding, but adds that these talks are subject to nondisclosure clauses.

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737 MAX Ada Lovelace

Norwegian

The Oslo-based carrier grounded its 18 Max jets last month. It has since made changes to its scheduled services and contracted in wet-lease partners in order to support its operations.

Chief executive Bjorn Kjos says Norwegian expects to operate its schedule as planned this summer. He says the carrier is experiencing less disruption from the Max grounding than it did when a number of its 787s were taken out of service last year amid issues with their Rolls-Royce Trent 1000 engines.

This is because it is easier to replace a Max jet's seat capacity with alternative aircraft than a 787's, Kjos explains. As a result, he says, the airline is not expecting to incur as much cost from "care and compensation" payments under EU261 regulations this year as it did from the 787 groundings.

Norwegian is set to take delivery of 16 Max jets this year, although Karlsen says he does not expect them to be flying during 2019.

Despite the grounding, he says Norwegian has been able to finance a "whole bunch" of the jets. He is "comfortable" that the airline can secure future financing for the jets, he adds.

Cirium's Fleets Analyzer shows that Norwegian has 18 Max jets in storage and 92 on order, and holds options for a further 90.

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