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The past year has been a testing one for Norwegian. In January we saw the airline forced to offer a rights issue to raise cash for its operations, In February the airline announced huge loses on fuel hedges and canceled all its Caribbean routes, and in July the airline canceled 10 of its US routes for the winter season and mothballed a further 2 routes indefinitely.
Essentially, Norwegian has been doing all it can to keep itself alive but circumstances haven’t been kind to the low-cost carrier.
Norwegian, it would appear, was placing a lot of faith in the Boeing 737 MAX aircraft to help it make some of its unprofitable/marginally profitable routes a little less economically challenging but, with the Boeing MAX aircraft currently banned from performing commercial flights, these expected economic benefits simply haven’t materialized.
With the MAX aircraft grounded (leaving Norwegian short of aircraft to operate a number of its routes), the airline has been wet-leasing replacements to keep its schedules intact…but now things appear to have reached a tipping point.
Wet-leasing aircraft to run routes that are already underperforming isn’t a financially sensible (or viable) strategy for an airline that is already struggling to keep its head above water so Norwegian has finally decided to pull the plug.
As of 15 September 2019, Norwegian is discontinuing all of its routes between Ireland and North America and is contacting customers with offers to accommodate them on other Norwegian flights or offering refunds.
Matthew Wood, SVP Long-Haul Commercial at Norwegian is quoted as saying the following:
As the airline moves from growth to profitability, we have conducted a comprehensive review of our transatlantic operations between Ireland and North America and considering the grounding of the Boeing 737 MAX aircraft, we have concluded that these routes are no longer commercially viable.
We take a strict approach to route management and constantly evaluate route performance to ensure we meet customer demand. Compounded by the global grounding of the 737 MAX and the continued uncertainty of its return to service, this has led us to make the difficult decision to discontinue all six routes from Dublin, Cork and Shannon to the US and Canada from 15 September 2019.
Since March, we have tirelessly sought to minimise the impact on our customers by hiring (wetleasing) replacement aircraft to operate services between Ireland and North America. However, as the return to service date for the 737 MAX remains uncertain, this solution is unsustainable.
We are assisting customers by ensuring they can still get to their destination by rerouting them onto other Norwegian services. Customers will also be offered a full refund if they no longer wish to travel. We will continue to offer scheduled services from Dublin to Oslo, Stockholm and Copenhagen as normal.
It’s interesting to note that Norwegian has chosen to use the word “discontinuing” to announce these route cancellations rather than the word we normally see airlines use when a route gets mothballed – “suspending”.
“Discontinuing” has a far more permanent meaning than “suspended” and, although I may be reading too much into this, I can’t help but feel that we’re not likely to see Norwegian resurrect these routes anytime soon.
I also suspect that it’s not just the issue with the 737 MAX that has pushed Norwegian to take this decision.
There’s a very good chance that the airline’s Ireland – North America routes were hemorrhaging so much money that Norwegian came to the conclusion that even a fleet of fully functioning (and legal) 737 MAX aircraft wouldn’t be enough to turn their numbers around.
Bottom Line
This is another serious blow to Norwegian’s image but it’s a blow that I suspect had to be taken if the airline is to make any headway towards profitability or, at the very least, financial stability.
The grounding of the 737 MAX probably accelerated the timeline to this decision being taken but, MAX issues or not, this was probably a decision that was going to be taken at some point anyway.
