Norwegian 737MAX8

by Karim Toure

Norwegian Air Shuttle announced today Europe’s largest ever aircraft order to both Boeing and Airbus. The deal valued at 127 Billion Norwegian Krown ($21.7 billion) will secure 100 Boeing 737 MAX8 and 22 Boeing 737-800 NextGen aircraft from Boeing and 100 A320neo aircraft from Airbus. In a addition, both agreements provide Norwegian with the right to acquire 100 Boeing 737 MAX along with 50 A320neo.

While the A320neo portion of deal marks Norwegian first ever transaction with Airbus, the $11.8Billion portion with Boeing for the firm aircraft will officially make Norwegian Europe’s launch customer for the 737 MAX. Norwegian, Scandinavia’s second largest carrier which has an existing backlog with Boeing for another 55 737-800 NextGen and 6 787-8 should begin receiving its new 737 MAX8 aircraft starting in 2016. Following a previous firm purchase of 42 Boeing 737-800 NextGen in 2007, the carrier exercised the right on 24 of 42 options available. With 2 aircraft delivered in 2009, 5 in 2010 and 16 in 2011, the remaining 737-800 NextGen aircraft should have joined the fleet by 2016.

Boeing 737 MAX and Airbus A320neo fuel efficiency

Boeing 737 MAX and Airbus A320neo are the two highly fuel efficient newest incarnation of respectively the Boeing 737 and Airbus A320 aircraft (Airbus claims as much as 95% airframe commonality between the neo and previous versions). The two designs are incorporating new engine technology and blended winglets (marketed as sharklets by Airbus) allowing the double digit improvement in fuel efficiency over the previous version. While Airbus is offering the A320neo with a choice of 2 engines; the Pratt & Whitney PW1100G PurePower and CFM LEAP-X, the Boeing 737 MAX is restricting its offer to the CFM LEAP-1B engine.

In the 180 passengers single aisle segment, Norwegian expects the MAX8 to deliver 10-12% fuel burn reduction over its 737-800 NextGen and near 20% over older (2001-build) 737-800 it operates. While the A320neo would deliver about 15-17% reduction in fuel consumption over older A320. The environment-friendly model espoused by both designs also delivers quieter operation while releasing 10-12% less CO2 and NOx pollutants.

For Norwegian, the 16 million passengers transported in 2011 represents a net gain of 3 million over 2010. The spike in market share is directly attributed to the 16 additional 737-800 NextGen delivered throughout the year. For instance the December 2011 24% growth in RPK over the previous year has been attributed to the 22% rise in capacity over the same period.

Current Strategy

For Norwegian CEO Bjorn Kjos a sustained environment-friendly strategy provides an opportunity for lower fuel and other aircraft related operating cost and hence higher revenue potential for the carrier. The carrier is also implementing a very aggressive fleet renewal policy of operating aircraft for no more than 7 years duration, after which time period they will be rented out or sold.

Levels of service aboard the low Cost carrier’s aircraft have encouraged business travelers by introducing more comfort. Characteristically aboard the 737-800, the introduction of Recaro leather seats, their reduction in numbers from 189 to 186 for increased seat’s pitch, and the use of Boeing signature Sky Interior’s with WiFi and LED ‘mood Lighting’ highlight that trend.

Boeing Sky Interior aboard Norwegian 737-800NextGen Featuring Recaro Leather Seats

To its growing network of destinations in Scandinavia, Europe, Africa and the Middle East, 54 new routes were added in 2010 alone. The 118 destinations currently served in 36 countries are served by more than 300 direct flights and offer a choice of some 5,058 itineraries. Daily flight operations intensity is led by the Oslo-Bergen route supported by 14 flights followed by the Oslo-Trondheim to which 12 flights are assigned. For 2012, the current fleet of 48 737-800 and 14 Boeing 737-300 will transition to an all-737-800 fleet while growing to 63 aircraft permitting the carrier to pursue additional growth and lower cost.

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