'Return to profitability' prompts Norwegian to sell subsidiary to JetSMART
Dec 6, 2019: Norwegian Air Shuttle is selling 100 percent of its Argentinian subsidiary Norwegian Air Argentina (NAA) to JetSMART Airlines. An agreement for the sale has been signed, which is among Norwegian Air Shuttle's "steps to return to profitability".
“As Norwegian moves from growth to profitability, we are taking all the necessary actions required to ensure that Norwegian is well positioned going forward. Over the past few months we have made important changes to our route network to ensure long-term profitability. Attaining satisfactory profitability for a relatively small domestic operation has proved difficult to achieve, given the overall situation in the country. While most of NAA’s costs are denominated in dollars, revenue is obtained in pesos only, and the sharp depreciation of the peso against the dollar has created a significant gap between costs and revenue,” said Geir Karlsen, acting CEO and CFO, Norwegian.
JetSMART will assume the NAA operation with immediate effect. To minimize the impact on passengers, JetSMART will continue to operate the NAA scheduled flights from Aeroparque airport. The parties expect that the integration process will take several months, and the Norwegian brand will be phased out in the domestic Argentinian network during this period. Over the next six months, the three Boeing 737 currently operated by NAA will be replaced by JetSMART’s Airbus A320 aircraft. The three Boeing 737s will return to service for Norwegian in Europe.
“We are very excited about the opportunity to combine Norwegian Argentina with our current JetSMART operations. JetSMART has a long-term commitment to Argentina as well as of our vision of becoming the leading ultra low-cost airline in South America. With this transaction we will continue providing affordable air travel to our customers both from Aeroparque and El Palomar airports,” said Estuardo Ortiz, CEO, JetSMART.
Norwegian’s employees in NAA will, as per the agreement, be employed by JetSMART except for the company’s Argentina-based call centre staff. They will continue as Norwegian employees providing customer services to JetSMART's domestic Argentina operation and to our customers on our long-haul operation between Europe and South America.
“All our colleagues in Argentina deserve a word of recognition for their dedication and hard work. The past two years have proven eventful – not only have they built a fully-fledged airline from scratch, but they have also operated it to the highest professional standards. In doing so, they have earned for Norwegian the gratitude and respect of the Argentinian people,” said Ole Christian Melhus, CEO, Norwegian Air Argentina.