January 24, 2022

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Biggest Challenge - E24

Biggest Challenge – E24

Norwegian has already reduced the offer of its flights this winter. Norwegian CEO Geir Carlsen has warned that the spread of the Omicron virus may lead to new cuts as early as January.

Geir Karlsen, Norwegian CEO, has successfully forged the company for a new era. But the spread of the mutated Covid virus “Omicron” threatens aviation again.

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Norwegian has the best available aircraft charter agreements, and has reduced winter carrying capacity.

The airline only pays the rent while the aircraft are in flight for a number of aircraft. This makes it much wiser to have machines on the ground during the low season, traditionally a period when airlines lose money.

However, the spread of the mutated coronavirus could mean that Norwegian will reduce the additional capacity already in the new year, CEO Geir Carlsen of Norwegian told E24.

– We are prepared for the fact that it may have consequences in January and February, depending on how this develops, says the Norwegian President, and continues;

We have some flexibility that we want to use. If necessary, we will reduce the capacity during that period.

New rules for infection control

The spread of the mutated Corona virus in South Africa has raised fears in the markets, and aviation has once again been dealt a severe blow.

With the increase in passenger traffic, several countries announced entry bans from several African countries, and major airlines such as British Airways canceled a number of routes to the region.

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This week, new infection control rules were introduced with distance requirements, table service in restaurants, face masks for public transportation and more.

The airline SAS introduced immediate muzzle requirements on all of its flights in Scandinavia from December 6, and on Friday, Widerøe, Flyr and Norwegian followed up on mask requirements from today and Saturday.

The Norwegian president is clear on what the Covid situation has to say to the Norwegian.

– Covid is the biggest challenge as I see it now, Karlsen tells E24.

Norwegian CEO Geir Carlsen said November and October look fine for the company, but they are prepared for the virus situation to hit the company’s reluctance in January.

– We’ll see how this turns out

SAS CEO Anko van der Werf told E24 earlier this week that it was too early to say what consequences the omicron virus might have on aviation.

On the contrary, he was encouraged by the good sales numbers from the airline’s Black Friday campaigns.

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This is also supported by the Norwegian president, who feels “comfortable” with the rest of 2021.

– What we can say is that Black Friday was good for us too. November is fine, and December is fine, so we’ll see how this turns out (omikron, editor’s note), says Carlsen.

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Departure discount

Any cuts to the flight offer in the new year will primarily affect the number of flights, according to Norway’s president.

– To the extent we do (cuts, editor’s note) more than we planned, there’s more frequency we’re talking about than taking trails. Then we’ll see. But maybe it’s something that we and maybe everyone else follow from day to day and week to week, says Carlsen.

There is also only talk of discounts in the winter programme.

– We are not doing anything now for the summer season next year, says the Norwegian coach.

– What about the lines of Spain for example this winter, do you want to reduce the frequency there?

– It’s too early to say. We already have less frequency for foreign destinations, so we’ll see if we can do something more with it, he says.

The Norwegian manager said it was too early to do anything about next year’s summer season.

Max back

The Norwegian announced on Wednesday that it had entered into an agreement Maximum rent of two Boeing 737s For delivery in the new year.

It marks the resurgence of the type of aircraft in the fleet after Max aircraft worldwide were grounded in 2019 following accidents in Indonesia (2018) and Ethiopia (2019) that killed 346 people.

All Norwegian Max aircraft have been returned to their owners in connection with the company’s rescue plan.

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The new Max aircraft was approved by US aviation authorities in November 2020 and European aviation authorities in January 2021 agreed Also Chinese type aircraft.

– Who do we want?

Carlsen explains that the two planes now chartered are the last two Norwegians of the new type have delivered.

He noted that the aircraft had already been configured and painted for Norwegian, and could be installed as early as next year if desired.

– There were some Max engines that we might not want, while this is certainly what they want, which has the latest “fat”, not least on the engines, which are very attractive, says the Norwegian president.

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– Very attractive

The aircraft lease has the same terms as the lease agreement for 13 Boeing NG 737-800 aircraft, as announced in October.

– It’s important for us to get a good deal. The price we pay is very attractive, says Carlsen.

The Norwegian pays rent only for the time the planes are in the air, the so-called PBH/power-by-the-hour, for the current and next winter season.

This is in contrast to competitors such as SAS, which also has a more robust winter program.

However, newcomer Flyr has similarly favorable hourly lease agreements for the existing fleet of 3-5 aircraft until well into the new year. However, the recently announced agreement for six Max aircraft to be phased out this spring has not been implemented.

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He must be flexible

The Norwegian president laughs when asked how he managed to get such favorable rents.

– Yes, it is unique. Why did we manage to do that? no we she has Obviously it is.

How can the competitors compete with this?

– I suppose others are trying to achieve something similar. But, it’s in a way part of what we talked about before, that we have to create resilience during the low season, in the future, says Carlsen, and continues;

– We now have on all the 50+ planes we’ve chartered today, flexibility as well next winter.

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He reiterated to E24 earlier this fall that the airline should join a fleet of 80-90 aircraft “as soon as possible” in order to take full advantage of economies of scale and reduce unit costs.

– I think when you cut back on the cost side enough it’s hard to fall back further without getting a bigger scale. This will reduce the cost of the seat kilometer (..) But the main challenge now is Covid, says Carlsen.

Norwegian will display traffic figures for November next Monday 6 December at 08.00. E24 will be back with more.

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