Norwegian drops Argentina unit, hires former JetBlue exec amid restructuring

Dec. 04, 2019

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3 min read

Norwegian drops Argentina unit, hires former JetBlue exec amid restructuring

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Norwegian Air continues to restructure its business with a deal to sell its subsidiary in Argentina and exit that country's domestic market. The move comes less than a week after Norwegian dropped long-haul flying from two of its Nordic bases.

The Oslo-based carrier has sold Norwegian Air Argentina to Chilean low-cost carrier JetSmart Airlines, Norwegian said Wednesday. JetSmart will immediately take over operations of the three Norwegian-owned Boeing 737-800s with plans to replace them with the JetSmart Airbus A320s in the next six months.

The deal will see the Norwegian brand exit the domestic Argentina market, which it has served since 2018. The airline's separate long-haul arm will continue to serve Buenos Aires Ezeiza (EZE) with flights from London Gatwick (LGW).

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JetSmart, which is owned by private equity firm Indigo Partners that also owns Frontier Airlines, is a relative newcomer to South America's skies. Launched in 2017, it only began flights in Argentina this April, though it has said it plans to double in size in the market by next April.

“As Norwegian moves from growth to profitability, we are taking all the necessary actions required to ensure that Norwegian is well positioned going forward," said Norwegian's acting CEO and chief financial officer Geir Karlsen in a statement on the deal. "Over the past few months we have made important changes to our route network to ensure long-term profitability."

Some of Norwegian's most notable recent route network changes have been in its transatlantic offerings. Flights from Copenhagen (CPH) and Stockholm (ARN) to the U.S. will not resume in 2020, nor will those between Ireland and North America.

Norwegian is also shaking up its executive ranks. The airline announced Wednesday that it has hired former JetBlue Airways executive Marty St. George as interim commercial chief as the airline's senior management ranks continue to turn over. A new CEO, Jacob Schram, will take over the top spot in January.

The restructuring comes as Norwegian has long faced financial challenges in the face of rapid growth. Despite lowering fares for travelers and opening up the long-haul low-cost market between Europe and the U.S., the airline lost 1.45 million Norwegian kroner ($155 million) in 2018 even as revenues increased.

At the same time, many of Europe's budget and leisure carriers have faced liquidity challenges that have forced the likes of Adria Airways, Thomas Cook and WOW Air to shut their doors this year. Norwegian has avoided a similar fate but not without its own struggles, and the departure of long-time CEO Bjørn Kjos in July.

JetSmart operated 14 A320 and one A320neo jets at the end of October, according to Airbus' orders and deliveries. It has firm orders for another 56 A320neos and 26 A321neos.