Norwegian abandons long-haul operations, refocuses on 737 routes in Europe

Chalk up another major long-haul LCC failure. Norwegian will abandon its fleet of 37 787 Dreamliners, refocusing on the short-haul European market served with single-aisle aircraft.

Our short haul network has always been the backbone of Norwegian and will form the basis of a future resilient business mode.

– Jacob Schram, CEO of Norwegian

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The long-haul LCC market started as a point-to-point operation and quickly grew to a massive network of routes crisscrossing the North Atlantic. If operated from hubs in Paris, London-Gatwick, Rome, and Barcelona, among others.

By 2019 Norwegian operated the most routes across the Atlantic of any foreign carrier, nearly 50 in total. It was the largest foreign airlines in New York City by number of passengers flown and also the largest airline to Europe from the San Francisco Bay area, Los Angeles, and Florida.

Norwegian was somewhat surgical in its long-haul route planning, choosing markets where existing transatlantic demand could spill over to help fill its planes. Add in (often dramatically) lower fares and a bit more traffic could be induced to join. Even adjusting for seasonal operations the ability to get tourists between the US and Europe nonstop drove significant volumes of business.

Few of the routes ever demonstrated anything close to profitability, however. And without the spillover traffic (or really any traffic crossing the Atlantic) in the near future the operation is no longer viable.

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Borders closed, demand destroyed

In a statement the company suggests that government restrictions and shifting advice factor into the decision as they “continue to negatively influence demand for long haul travel.”

CEO Jacob Schram further explains, “We do not expect customer demand in the long haul sector to recover in the near future, and our focus will be on developing our short haul network as we emerge from the reorganisation process.” The revised business plan seeks to raise half a billion dollars in new capital while reducing the overall debt to around $2 billion. This is on top of multiple recent reorganization and refunding efforts in the past year, including some government support.

As part of the reorganization efforts the company will seek insolvency/bankruptcy protection in Italy, France, the UK, and the US. Thousands of employees will be affected by these cuts.

Norwegian’s new short-haul fleet

The new operation intends to fly approximately 50 737s in 2021 and grow to 70 in 2022. The aircraft will serve domestic routes in Norway, the Nordics, and key destinations further afield in Europe. Only a dozen are active today focused on the domestic Norwegian market owing to border closures and impaired demand.

What this means for the carrier’s 737 MAX order book remains unclear as it no longer needs those planes for expansion.

Collateral Impact

Grounding the 787s will also affect some suppliers, including in-flight internet provider Collins Aerospace. Collins is the integrator for the Inmarsat GX Aviation hardware flying on the Norwegian long-haul fleet. FlightPath3D delivers the moving map on the IFE system for Norwegian as well.

This also removes the only free wifi browsing option in the TATL market.

The proposed interline agreement with JetBlue is also likely on ice, mostly because it was predicated on connecting Norwegian passengers onward in the USA through JetBlue’s gateways in Boston, JFK, and Fort Lauderdale. And the inverse connections as JetBlue intends its London launch later this year mostly won’t connect at the correct airports.

In addition to dumping nearly 40 787s back into the leasing market the move should release a number of slots at Gatwick and other limited operations airports. That could allow new entrant airlines like JetBlue access previously denied.