Norwegian agreed to lease a pair of Boeing 737 MAX 8 aircraft, bringing the type back into service at the carrier. The two planes will join the carrier’s operations “shortly” with a focus on meeting the Summer 2022 goal of serving approximately 270 routes.
This agreement is an important step in Norwegian’s plan to build an efficient and modern fleet for the future.– Norwegian CEO Geir Karlsen
The nine year lease for the 737 MAX includes a pair of interesting considerations, both for the airline and the lessor.
First, the contract for Winter 2021-2022 and Winter 2022-2023 stipulates a “power-by-the-hour” arrangement. Under this agreement the airline only pays for the hours the planes fly.
Historically the imbalance in Norwegian’s winter and summer schedules led to significant expenses in the off-season that it could not reasonably recoup. By reducing the leasing costs in the next two winters the company has a better chance of profitable utilization of these two planes.
Second, the lease offers an option to change the aircraft type. The carrier states it has the option “to substitute the subject 737 MAX 8 aircraft for new technology narrow-body aircraft from Airbus.”
While Norwegian previously also held a significant order book for the A320neo family of aircraft, its stated intention was to lease them out, not to operate them directly. Retaining the option to swap the MAX out for a NEO adds flexibility, but also challenges.
Operating just two A320neo family planes is unlikely to be an efficient use of resources. But Jet2 did something similar shortly before deciding to renew and expand its single-aisle fleet with Airbus aircraft, transitioning away from Boeing. Norwegian’s 737 NG fleet today is significant, but smaller than Jet2’s Boeing operation.
Prior to COVID-19 and Norwegian’s subsequent restructuring the carrier held an open order book for more than 100 737 MAX aircraft. A small number were delivered and entered service. They were removed from the fleet and the balance of the order was cancelled in mid-2020.
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