Call it the end of an era. After 17 years in the role Bjørn Kjos, the CEO of Norwegian, will step down from the role with immediate effect. CFO Geir Karlsen steps in as acting CEO while Chairman Niels Smedegaard will take on a more active role in the management.
Bjørn has played an unprecedented role in Norwegian’s success. His vision of offering affordable fares for all, combined with his enthusiasm and innovating spirit, has revolutionized the way people travel for pleasure and for business, not least between the continents. Bjørn is definitely one of the most influential European entrepreneurs of our time. – Norwegian Air Shuttle Chairman Niels Smedegaard
The announcement comes as the carrier continues its transition from growth to profitability, a shift that will be completed by a new management team. The initial efforts to optimize the route portfolio and cut costs were overseen by Kjos with reasonably positive results. Growth in available seat kilometers (ASKs) was only 6% in the quarter, down from a whopping 48% in the same period last year. Fewer new aircraft deliveries and especially the grounding of the 737 MAX fleet contributed to the slowed growth. On the cost front the carrier realized a $65mm YoY reduction for the quarter.
“Norwegian’s Q2 results show that we are delivering on our strategy of moving from growth to profitability. Despite operational issues outside of our control, like the grounding of our 737 MAX fleet, we are delivering the highest second quarter operating revenue in the history of Norwegian. I am also pleased with the booking figures for the coming months, especially on long-haul,” said CEO of Norwegian, Bjørn Kjos.
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The 737 MAX grounding is now expected to negatively impact the company to the tune of $82mm for 2019. Norwegian operated 18 of the 737 MAX 8 when the type was taken out of service in March 2019.
Financial and operational challenges drove much of the company’s actions for the past several years. Kjos oversaw the development of a long-haul route network powered by 36 787s since mid 2015, a rapid expansion by any standards. The process was hardly smooth, due to both internal (excessively optimistic scheduling) and external (Rolls Royce engine) factors. But the company is still in business, despite predictions by several other airline CEOs that the long-haul LCC experiment would be a failure.
Norwegian outlasted long-haul LCC competition from upstart WOW Air and also pivots by Primera and Eurowings into the segment. With a recent recapitalization completed and a possible takeover by IAG defeated, the next CEO inherits a strong legacy as well as great opportunity to write the next chapter in the story of this market segment. Whoever fills that role (Peter Bellew also just announced his resignation as COO of Ryanair effective at the end of the year) will have massive shoes to fill.