Friday, October 11, 2013

Norwegian Air Shuttle still happy with 787 despite recent issues

Norwegian Air Shuttle CEO Bjorn Kjos has made a stink about his problems with the Boeing 787 Dreamliner, but he said he would still order the aircraft if he had it to do over again.

"It's a fantastic airplane; it's great," Kjos said, in a telephone interview. "The 787 is incredible on fuel burn. Boeing has been very professional; they understand the aircraft has to be flying."
By now, the story of Norwegian's 787 problems is well-known because the airline has been relentless in discussing them with U.S. reporters. In one recent press release, it called the 787 "a nightmare for the airlines relying on this new craft." Asked if he has perhaps complained too much for Boeing's liking, Kjos responded: "I don't think so. They understand. It shouldn't have done (what it did) and it has performed much better."

Oslo-based Norwegian began flying the 787 in August on European routes as well as Oslo and Stockholm to Bangkok and New York. Its two planes have suffered from a series of problems, including failures of the brakes, hydraulic pumps and power systems, causing cancellations of several flights.

Recently, Boeing sent a team of about two dozen technicians to Stockholm to work on the planes. Kjos, a former fighter pilot, was all smiles on Friday.
He said the problems were largely confined to one aircraft, the second 787 to be delivered to Norwegian, which is scheduled to fly again on Monday.

"We were unlucky with the second airplane," he said. "It had a lot of problems, minor bugs that have kept it on the ground for a long time." But the first one, he said, "is working very nicely (with) very high reliability." 

Looking back to the time of the aircraft order in 2009, Norwegian considered the usual options from Airbus and Boeing. "The (Airbus) 340 used too much fuel, the 330 didn't have the range and the 767 didn't have the range," he said. The A350-900, meanwhile, was "too big to use as a start-up" and also, was not going to be ready in time.

The 787 could fly economically, given that Norwegian put 291 seats on the aircraft. Fuel efficiency and high utilization enable Norwegian to offer low fares across the Atlantic, starting at $236 one-way from New York. From the West Coast, where service starts next year, one-way fares start at around $300.

Some passengers connect to Bangkok and other destinations, Kjos said. He noted that even with added service in 2014, only about 5% of Norwegian revenue will be from trans-Atlantic flights; short-haul European flying accounts for the bulk of revenue. Norwegian, profitable in 2012, expects to be profitable in 2013.

Kjos realizes that Norwegian, like other European carriers, competes with Middle East carriers like Emirates for connecting passengers to India and Asia, but said Norwegian has an advantage in terms of flight time. To Bangkok, he said, "the shortest way is via Stockholm. You save at least an hour or two. Why stop in Dubai, when it is better to stop in Stockholm?"

Told that Emirates has become the biggest carrier between the U.S. and India, according to Deutsche Bank analyst Mike Linenberg, Kjos said Norwegian will look at India. It is also eyeing additional U.S. destinations including Chicago, Denver, Las Vegas, Seattle and Washington.

As for an alliance with a U.S. carrier, Kjos said JetBlue "would be a natural if we wanted an alliance with somebody in the U.S." JetBlue is the largest domestic carrier at JFK and has alliances with a variety of international carriers, although it eschews costly code share agreements. Kjos said he has met JetBlue CEO Dave Barger and his team, but "we haven't been able to set one up yet" and "we are not in talks" at the moment.

(Tim Reed - The Street)

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