Norwegian Air wants Boeing to pay for grounding 737 MAX 8s
The airline has 18 MAX passenger jets in its 163-aircraft fleet and idle planes will add to pressures on the airline, which is making losses
Oslo — Norwegian Air said on Wednesday that it will seek compensation from plane maker Boeing for costs and lost revenue after grounding its fleet of 737 MAX 8 aircraft in the wake of the Ethiopian Airlines crash.
“We expect Boeing to take this bill,” Norwegian Air said in an e-mailed statement to Reuters.
The Oslo-based airline has 18 MAX passenger jets in its 163-aircraft fleet. European regulators on Tuesday grounded the aircraft following Sunday’s crash of a similar plane in Ethiopia, which killed 157 people — the second crash involving this type of plane since October.
Boeing CEO Dennis Muilenburg said in an e-mail to employees on Monday, which was seen by Reuters, that he is confident in the safety of the 737 MAX. Industry sources, however, say the plane maker faces big claims after the crash.
Norwegian Air has bet heavily on the MAX to become its aircraft of choice for short- and medium-range flights in coming years as the low-cost carrier seeks to boost its fuel efficiency and cut the cost of flying. Idle planes will add to pressures on the airline, which is making losses amid intense competition at a time when several smaller European competitors have gone out of business.
The carrier has raised 3-billion Norwegian krone ($348m) from shareholders in recent months and said it will cut costs as it tries to regain profitability this year.
“If this situation gets solved within the next fortnight, this will not be very serious for Norwegian Air,” said analyst Preben Rasch-Olsen at brokerage Carnegie, adding that seasonally low demand in March likely leaves spare capacity.
“The little extra costs they are incurring, they can probably get that covered by Boeing,” Rasch-Olsen said. “But if this situation continues into the Easter holidays, or May and June, then it is a problem. They will need to get in new planes, and then comes the costs.”
Europeans tend to book their summer holidays in May, so the grounding may not yet affect bookings for the peak season for the airline industry, the analyst said.
Meanwhile, Norwegian Air is maintaining its order for more aircraft of the same type from Boeing, spokesperson Lasse Sandaker-Nielsen said.
Norwegian Air is expected to take delivery of dozens more of the MAX in coming years, raising the overall number to more than 70 by the end of 2021, according to recent company announcements.
Shares in the airline have now dropped 10% this week as investors worry about the impact of the Ethiopian crash. Shares fell by 4.8% in early trade on Wednesday but partly recovered to trade down just 0.7% by 10.08am GMT.
Norwegian Air canceled some flights on Tuesday, and on Wednesday it canceled at least three dozen departures, its website showed, most of which were due to fly from airports in Oslo, Stockholm and other Nordic cities.
The company said it aims to minimise the impact on passengers by booking them on to other flights and utilising other types of planes from its fleet to help fill the gaps, confirming, “We are able to accommodate most intra-European passengers by these efforts but are still working on other options for our passengers travelling between Ireland and the US.”