Business World

Saturday 19 October 2019

Norwegian vulnerable to Boeing Max 8 grounding

Norwegian Air has been accused of being trapped in a “‘Mad Men’ universe”.Photo: PA
Norwegian Air has been accused of being trapped in a “‘Mad Men’ universe”.Photo: PA

Christopher Jasper

Norwegian Air Shuttle's reliance on the fuel-saving 737 Max jet to underpin its ultra-low-cost transatlantic strategy has exposed the loss-making carrier as the most vulnerable in Europe to the worldwide grounding of the plane.

The Scandinavian carrier took delivery of its first Max 8 jet from Boeing in June 2017, and has since deployed them on routes, including those between Ireland and the United States, as it sought to capture a bigger share of the transatlantic market.

But with Max 8 aircraft having been grounded in the wake of the crash last week of one of the jets flying with Ethiopian Airlines, Norwegian has been forced to use larger jets which are more expensive to operate, to plug the gaps in its fleet as its Max 8s sit on the tarmac.

It has deployed a Boeing 787 Dreamliner to service its daily service from Dublin to Stewart International in New York. Passengers for its Dublin-Providence, Rhode Island service are on the same flight, and being taken by bus to Providence from Stewart. Norwegian was among the earliest adopters of the new narrow-body Max jet, using its extra range to launch services on Europe-US routes traditionally dominated by twin-aisle planes.

The 737 crisis has hit Norwegian at a time when it can least afford disruption. The carrier is already grappling with a cash squeeze from splurging on planes and was forced to raise fresh funds in a rights issue this month. The move came after Aer Lingus parent IAG dropped a takeover approach, helping to send Norwegian's stock south. The shares dropped as much as 4.8pc yesterday, taking losses to 46pc since the start of the year. Industry observers are pessimistic Norwegian can weather an already harsh storm.

Bloomberg

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