Monday, April 23, 2018

NEW AIRLINE PLANS: Norwegian Air Argentina to be suspended ?


The future of Norwegian Air Argentina, the new Argentine Low-Cost Carrier (LCC) that was planned to start service later this year, appears to be in doubt.

Rumors that Norwegian would establish an LCC in Argentina started a couple of years ago but the carrier surprisingly did not participate in the route hearings of 27Dec16, the first held in Argentina in over ten years.  While Norwegian appeared to progress more concretely recently, having participated in the 06Sep17 route hearings and even having brought a 737-800 to Argentina fully-painted in NAA's colors complete with the image of Argentine composer Astor Piazzolla on the tail, the carrier's planned start-up date was pushed back from August to October 2018 and again now to the end of this year.   

Explanation for the delays has been tied in some media to the late delivery by Boeing of new 737 MAX 8's to Norwegian, the parent carrier, which was in turn related to the late delivery of the new aircraft type's engines, the LEAP-1B, by their manufacturer, CFM International.  However, some recent reports have suggested that Norwegian failed to make timely payments to Boeing causing the manufacturer to hold up deliveries.   

Indeed, Norwegian has been in financial trouble lately having lost EUR 31 million last year and amassed a debt of some EUR 2,000 million (EUR 2 billion), very burdensome for a carrier its size.  This invited the interest of IAG, the owner of Aer Lingus, British Airways, Iberia, Level and Vueling, resulting in the airline group buying 4.61% of Norwegian with an eye to buying all of the carrier.  Should IAG buy Norwegian (not a foregone conclusion due to European regulators' concerns of potentially reduced competition resulting from such an acquisition), the future of Norwegian Air Argentina would hinge on IAG's interest, or lack thereof, in pursuing an LCC project in Argentina.   
Sources:

3 comments:

  1. Where can I find information about norwegian’s failure to make timely payments? Thanks!

    ReplyDelete
    Replies
    1. http://www.aviacionnews.com/blog/2018/04/podra-esto-modificar-el-proyecto-de-norwegian-en-la-argentina/

      Aunque hay quienes sostienen que el atraso no sería responsabilidad de Boeing (ni de los motores) sino de la misma aerolínea que habría demorado algunos pagos ya comprometidos con el fabricante, producto de la crisis financiera de la empresa que en Europa definen como transitoria.

      The above is a reputable source in Argentina but they do not give specific evidence.

      Delete
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