Norwegian Air announced on Monday it would build on its rapid growth over recent years by renting out up to 150 of its planes to other airlines. It would make Norwegian Air one of the world’s biggest plane leasing companies.
Chief Executive Bjørn Kjos told Swedish newspaper Svenska Dagbladet Norwegian had significant orders for new aircraft, which would be used to expand its route network and phase out older planes. The rental plans were the next big step for the budget carrier, and Kjos said his eventual goal was to carve out the leasing operations into a separate listed company.
“We have just established a new leasing company in Ireland,” he said. “We will use that to rent out 100-150 planes and that will make us one of the world’s biggest plane leasing companies. This is going to change the company a lot. Already this year we’re beginning to lease out some planes, and the leasing is going to be a large part of our business. It’s also where the money in the airline industry lies.”
Both Boeing and Airbus offer considerable discounts to companies that place large orders. Norwegian Air has 260 planes on order, and options on a further 150. The deal means the company could make a good return both on new planes and on aircraft the company doesn’t need itself. Norwegian would most likely rent out its Boeing 737s and Airbus A320s used for routes within Europe, while keeping the new long-haul Dreamliners it has on order for its own needs.
“There have been fantastic times for the aircraft leasing companies and all indications are that the airlines will continue to rent going forward,” said Kjos. “Eventually there could be a separate listing of our plane leasing company, but Norwegian will probably always retain control over the company.”
It’s an ironic move for the company that was itself forced to hire dozens of old aircraft last year, after delivery delays and ongoing technical problems with its much-hyped new fleet of Boeing Dreamliners.
Long haul routes 90 percent full
In the meantime, Kjos said the company would maintain its focus on establishing its fledgling long haul routes. He said 0ccupancy on Norwegian Air’s Scandinavia to US routes was around 90 percent, and its new London to US routes were enjoying similar rates.
Kjos said Norwegian had deliberately chosen Gatwick airport for its UK base, where budget competitors Ryanair and EasyJet operated from. He hoped European travelers would fly to Gatwick on the budget airlines, then continue with Norwegian across the Atlantic. “That EasyJet and Ryanair are found there is going to drive up occupancy for us,” he said.