Wednesday, 4 December 2019

Struggling Norwegian sells its new Argentinian subsidiary to JetSMART Airlines after just eleven months.

In a surprising move, Norwegian Air Shuttle has agreed on a deal to sell 100% of its Argentinian subsidiary Norwegian Air Argentina (NAA) to JetSMART Airlines after little over a year of operation.

Norwegian Air Argentina operates domestic flights within Argentina with a small fleet of 3 Boeing 737 aircraft. All NAA employees will be transferred to JetSMART except for the company’s Argentina-based call centre staff,  who will continue as Norwegian employees providing customer services to JetSMART's domestic Argentina operation and to Norwegians long-haul customers flying to and from Europe. 

The deal comes into immediate effect so JetSMART is taking over operations from now and to minimise the impact on passengers, JetSMART will continue to operate the NAA scheduled flights from Aeroparque airport. Slowly the Norwegian NAA brand will be phased out and over the next six months, the three Boeing 737 will be replaced by JetSMART’s Airbus A320 aircraft. Those three Boeing 737s will return to service for Norwegian in Europe.

“As Norwegian moves from growth to profitability, we are taking all the necessary actions required to ensure that Norwegian is well-positioned going forward. Over the past few months, we have made important changes to our route network to ensure long-term profitability. Attaining satisfactory profitability for a relatively small domestic operation has proved difficult to achieve, given the overall situation in the country. While most of NAA’s costs are denominated in dollars, revenue is obtained in pesos only, and the sharp depreciation of the peso against the dollar has created a significant gap between costs and revenue,” said acting CEO and CFO of Norwegian, Geir Karlsen.

“We believe that the agreement we have signed today with JetSMART secures a significant part of what we have built over these two years; continuity of the network and opportunities. It brings the two newest airlines in Argentina into a stronger combined entity that currently carries about 10 percent of the domestic market and will become the third-largest operator in the country,” he continued.

“We are very excited about the opportunity to combine Norwegian Argentina with our current JetSMART operations. JetSMART has a long-term commitment to Argentina as well as of our vision of becoming the leading ultra-low-cost airline in South America. With this transaction we will continue providing affordable air travel to our customers both from Aeroparque and El Palomar airports,” said Estuardo Ortiz, CEO of JetSMART.

“All our colleagues in Argentina deserve a word of recognition for their dedication and hard work. The past two years have proven eventful – not only have they built a fully-fledged airline from scratch, but they have also operated it to the highest professional standards. In doing so, they have earned for Norwegian the gratitude and respect of the Argentinian people,” said CEO of Norwegian Air Argentina, Ole Christian Melhus.

NAA received its Air Operator's Certificate in January 2018 and started operations on 16th October that year. The company currently operates a fleet of three Boeing 737-800s, with twenty daily flights across eight routes between Buenos Aires’ Aeroparque airport to Bariloche, Córdoba, Iguazú, Jujuy, Mendoza, Neuquén, Salta, and Ushuaia. So far, NAA has carried 982,000 passengers.

Many aviation experts were surprised by the sudden sale, indeed only a few days ago there was speculation that Norwegian was about to buy a number of Russian Sukhoi superjet100's for its NAA operation. However,  the airline has been struggling to move into profitability instead of rapid growth. 

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