On September 1, 2002, Norwegian Air Shuttle took to the skies with a Boeing 737 from Oslo to Bergen, Norway’s two biggest cities. Few could have predicted that the airline would go on to fly 15 million passengers on that one route alone over the following 20 years.
The Norwegian of today is a very different airline having been on a turbulent ride of growth and financial troubles. Its budget long-haul operation was popular with passengers but stretched the company’s finances to the verge of bankruptcy.
Only a total corporate restructure under bankruptcy protection saved the airline and steered it through the global pandemic. The Norwegian that emerged is leaner and more focused on Scandinavia, but as it posts its first profitable quarter since 2019, the airline once again has growth in mind.
A profitable airline once again
Against a backdrop of rising fuel prices and chaos at some major European airports, Norwegian reported a profitable quarterly result for the first time in almost three years. The airline reported an operating profit (EBIT) of NOK 1.36 billion ($136 million) on sales of NOK 4.8 billion ($480 million) in the second quarter of 2022.
The positive effect on ticket sales caused by the SAS pilots’ strike mostly happened after the end of the quarter, so the third quarter results are also likely to be impressive.
The rollercoaster story of Norwegian
Beginning with just four domestic routes in Norway, the airline quickly grew to become a major competitor to SAS within Norway and eventually elsewhere in Scandinavia and Europe.
Norwegian CEO Geir Karlsen said that not everyone liked the competition when the airline launched with low prices in 2022 but that since then, “airfares have come down and Norwegian has made it possible for many people to travel.”
At its height, Norwegian became one of Europe’s biggest airlines and operated a long-haul network from Oslo, London Gatwick and several other European airports. Rather than focus on daily flights to compete with legacy carriers, Norwegian preferred to fly less often to underserved markets such as Fort Lauderdale and Oakland from the Scandinavian capitals.
Despite being popular with passengers, the rapid expansion into long-haul overextended the airline’s finances. With wafer-thin margins, issues with Rolls-Royce engines, varying demand on speculative routes and the grounding of the Boeing 737 Max all piled on the pressure. The Covid-19 pandemic then proved the final nail in the coffin for the ‘old’ Norwegian.
The airline that emerged from a six-month bankruptcy protection process had ditched the long-haul model entirely and trimmed its fleet by more than 100 planes. The initial focus on Norway and Scandinavian routes has since been expanded and the airline now serves 280 routes to 108 destinations this summer.
In the summer of 2023, Norwegian reopens its Barcelona base while extra planes will be based in Malaga and Alicante. However, the focus for these airports will continue to be Scandinavian destinations.
With startup airline Norse Atlantic Airways taking over Norwegian’s former Dreamliner aircraft and launching a strikingly similar long-haul business model, Norwegian seems unlikely to return to the long-haul business anytime soon, despite placing an order for up to 50 Boeing 737 Max aircraft that will be delivered between 2025 and 2028.