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Norwegian Air Appoints New CEO And Plans To Expand Alliance With Other Carriers

Published on Nov 22 2019 9:00 AM in General Industry tagged: Trending Posts / norwegian air

Norwegian Air Appoints New CEO And Plans To Expand Alliance With Other Carriers

Norwegian Air has appointed Jacob Schram as chief executive to take charge of the budget carrier's restructuring as it struggles with a low-cost, long-haul model in an overcrowded industry.

Schram, who does not have a background in aviation, joins Norwegian from management consulting company McKinsey and was previously a top executive in the petrol retail industry, Norwegian's board said.

He replaces Bjoern Kjos, Norwegian's founder who stepped down from the CEO role in July and is now president of company, shaking up the market for transatlantic travel with low fares to challenge traditional carriers such as International Airlines Group's (IAG) British Airways.

Schram, 57, will be tasked with cutting costs and making the airline profitable again after the breakneck expansion left it with hefty losses and high debts, forcing it to repeatedly ask shareholders for new funds to stave off collapse.

In 2010, he led the process to list Statoil's petrol station business, Statoil Fuel and Retail, later acquired by Canada's Couche-Tard to become Circle K.

"Petrol retailing is not the aviation industry, but it's still a tough business that's gone through restructuring," Schram said at a news conference.

"There have been many cost cutting programmes, transformation programmes in Statoil Fuel and Retail and in McKinsey projects, so I'm used to working with that," he later told Reuters, adding that he used to clean airplanes as a teenager at the old Oslo airport and was "fascinated" by the airline industry.

That industry is currently plagued by overcapacity, which has led to the collapse of several airlines this year alone.

While Norwegian has prioritised profits over growth this year, it has been hampered by the global grounding of Boeing's 737 MAX aircraft and long-running technical problems with Rolls Royce engines on Boeing Dreamliners.

Disruptions to its fleet, such as leasing replacement aircraft for its 18 Boeing MAX, added around 300 million crowns ($32.7 million) to its costs in the third quarter.

Norwegian has been run on an interim basis since July by chief financial officer Geir Karlsen, who has raised cash, postponed debt payments, sold off assets and cut unprofitable routes to keep the company aloft.

Karlsen will continue as CFO as well as as deputy CEO.

"The two of them are a dream team to me," chairman Niels Smedegaard said of Schram and Karlsen.

Alliance Expansion Plan

Amid a flurry of deals to save Norwegian, Karlsen announced plans in October for a Chinese leasing firm to take stakes in its fleet, and partnered with US carrier JetBlue to feed passengers into each others' network.

The company has a similar deal in Europe with Britain's easyJet.

Kjos said this week that Norwegian Air plans to expand its alliance that includes JetBlue and easyJet to other airlines.

"It will be a much, much larger alliance. You will see a large entity coming up," said Kjos.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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