Norwegian has sold 100 per cent of its Argentinian subsidiary to JetSmart Airlines as it continues to seek a return to profitability.
The low-cost carrier was given an operator’s licence by authorities in Argentina in 2018 after setting up the subsidiary in 2017. It operated domestic services within the country.
South American low-cost group JetSmart has assumed the operation of Norwegian Air Argentina and will continue offering the airline’s schedules flights from Aeroparque airport. It will eventually be integrated into JetSmart’s operations over the course of several months, at which point the brand will be retired.
The Argentinian subsidiary’s three Boeing 737 aircraft will be replaced by JetSmart’s Airbus A320 and will return to service for Norwegian’s European operations.
Acting CEO and CFO Geir Karlsen commented: “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
“We believe that the agreement we have signed today with JetSmart secures a significant part of what we have built over these two years; continuity of the network and opportunities,” Karlsen continued. “It brings the two newest airlines in Argentina into a stronger combined entity that currently carries about 10 per cent of the domestic market and will become the third-largest operator in the country.”
Estuardo Ortiz, CEO of JetSmart, added “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.”
Norwegian recently announced the appointment of a new CEO following the sudden resignation of co-founder Bjorn Kjos earlier this year. The airline has faced a difficult financial situation, reporting a loss of £131 million in 2018.
Despite its hardships, Norwegian has been granted six runway slots at Heathrow airport, meaning the low-cost airline can go head-to-head with legacy carriers on some popular routes.
norwegian.com