Norwegian Air splits order with Airbus, Boeing

In a surprise, Norwegian Air Shuttle split a large order between Airbus and Boeing for A320 and 737 families. The Airbus order is only for the NEO and 737 order is a mix of MAX and NGs.

We expected only the 737 order; we had previously reported NAS was one of the “commitments” for the MAX.

This represents the third all-Boeing customer Airbus has won for its NEO.

NEO deliveries will begin in 2016, equipped with the PW GTF. Engine selection for later deliveries remains open. The GTF enters service on NEO in 2015 and the NEO CFM Leap engine enters service a year later.

39 Comments on “Norwegian Air splits order with Airbus, Boeing

  1. Congrats to both Boeing and Airbus. I’m surprised Airbus has available slots in 2016 for Norwegian Air given the massive success the A32XNEO has had.

    While it was a “split” order, maybe once again, like the AA situation, its because Boeing can’t supply Norwegian Air with all of its frames at the time needed.

    It also can be that the B737MAX and A32XNEO will be performing different missions and Norwegian Air is purchasing the best frames for its needs.

    • If you look at the bloomberg report today the new CEO Tom Enders is looking to set up a line in the states & as Boeing is leaving Witchita Kanas think how much Airbus will save in a new build F.A.L.

  2. An “ambitious” order from Norwegian, who are aiming for a Ryanair sized operation (four times bigger than present) in the somewhat saturated European market.

  3. Hello
    I read “NEO deliveries will begin in 2016, equipped with the PW GTF. Engine selection for later deliveries remains open. The GTF enters service on NEO in 2015 and the NEO CFM Leap engine enters service a year later”
    Shall I understand that Norvegian has selected the GTF ? or that the first customers are GTF customers ?

    Thanks

  4. The 320 is supposed to be at its best over longer ranges, SAS, Icelandair and others will be wondering what “longer” routes Norwegian has in mind

  5. From GCMAP

    OSL JFK 3204 nm
    OSL ORD 3522 nm
    OSL IAD 3388 nm

    Not specially shorter or longer than from LHR ?

    Per Airbus A320 et A321NEO @ Typical PAX : range : 3750 Nm

  6. They have 787s on order, it will be the thinner routes which will interest them for the NEOs. 787 is a big plane in Norway. ORD and IAD would be good guesses, I think. ORD will hurt Icelandair.

  7. So he 3rd Boeing customer that Airbus has encroached on. Waiting to see if it happens the other way around.

  8. The CEO of NAS has stated that one of the reasons for splitting the order was to ensure real competition between AIrbus and Boeing. Apparently the savings to NAS from a real bidding war is greater than the cost of having airplanes from two different companies.

    • Interesting, but Airbus didn’t really “need” this order like they probably needed the AA order which was a big coup.

      • Maybe, but they may have gotten a discount just for being a former all-Boeing customer. Also, this may strengthen their bargaining position the next time they go shopping. Since their strategy is to update their fleet frequently, this could be important for them

      • Odd, considering the full AA order has been stricken from Airbus’ books.

  9. Has to, I am wondering where Airbus are going to find the slots for this order. There must be A320 operators who won’t get the frames they want, and MAX still has only 250 firm orders.

      • I should imagine that all those slots have already been re-allocated. I seem to recall an article somewhere indicating that Airbus has already been doing that. I just can’t recall where I saw it.

        Actually, given the removal of AA from the backlog, these could be those slots.

  10. I would expect delivery slots are still available, as it is a basic strategy in production planning is it not?
    With a delivery rate of 42/month, in simple terms, you are probably looking at say 30 customers taking one each in a month with the odd customer taking two or more.
    A little empirical I know, but in essence that is how it works.
    It takes a lot of resources for any airline to accept more than a couple of frames in one month.

  11. I’d the the MAX and NEO will have about the same amount of slots available? The MAX comes about a year and half after the NEO and Boeing has a less production rate.

  12. We know airbus is willing to do anything to get an all Boeing customer. The discount price NAS received from airbus is more than made up by the political coup of getting there product in at NAS.

    • My guess is you probably have to turn this around for correctness.

      Boeing is in dire need of sufficient MAX orders to complement the NEO successes.
      Just for the appearance of having matching or better demand than Airbus.

      All those “fixed” but undisclosed customer orders for the MAX are probably still in
      “unexpected deflation” mode and need to be nursed on in a comfy environment.

      • You mean over a thousand in 6-7 months isn’t “sufficient” and there is still a “dire need”?? Go figure…said in a VERY sardonic tone..

    • “We know airbus is willing to do anything to get an all Boeing customer.”
      As is Boeing’s willingness to keep their customer, at any cost, just look at the AA tender.

      I have no doubt that Airbus cut them a good price but with a huge backlog, rare early delivery slots and with big customers still making up their mind, I would suggest it was a good deal for both.

  13. What is this airline up to?
    I have the feeling the OEMs (esp Airbus) is piling orders of which they know exactly the airline can never take all the aircraft. I just can’t see the reason why such an airline orders so many frames.

  14. I find it a strange order, small airliner ordering 222 + 150 options, and ordering from both, which is an even bigger surprise. I guess it means either that their performance levels are pretty much on par or they will be used on different missions.

  15. Whilst the Scandinavian low cost sector has potential the current saturated nature of the European discount market potentially could see Norwegian becoming another over enthusiastic victim & a European Kingfisher.

    Having being forced to fly this carrier on several occasions, the experience compared to Europe’s other major discount operator, whom I now refuse to fly with & who coincidentally also flies exclusively Boeing, the experiance delightfully by comparison it was refreshing & quite professional.

    To select two types for what currently seems the same operational role with the inherent cost risks is unusual, therefore if the growth aspirations of Norwegian bear fruit it would seem they see more mileage from the NeO

    • The difference being that the people who are running Norwegian actually know how to run an airline, which was not true with Kingfisher.

  16. Maybe it was the similar situation to what we saw with America Airlines last yr. A large loyal 737 customer examines both the 737 and A320 and comes to the conclusion the latter looks better (Engine BPR, 2 engine option, cargo belly, quieter cabin/cockpit, spacier cabin, no heritage technology, A321).
    Boeing got this message & saves the day by offering an undisclosed strategic discount (SW got 60% MAX discount & still publicly praised the NEO/GTF, Lion gets Obama + his financing). The rest of the “1000 orders and commitments!” sits on the fence.

    Not at all unlikely IMO. Probably it will leak out soon.
    As far as I can see the MAX has not at all caught up at all. Major airlines refuse to commit / sign up. Boeing might conclude the “minimum upgrade” 737NG will have to go “medium upgrade”.. The time they need to fix the specification suggests so.

    All the cheering the MAX restored parity IMO is wishful non-sense at this stage.

  17. Right now they operate 60 737s plus a small number of turboprops. Even assuming all those get replaced with the new aircraft, they’re talking about almost quadrupling the size of their fleet in what, 10 years? Seems very optimistic.

  18. OK, I give up: which is the third “all-Boeing” conquest that Airbus got last year? Transaero?
    thanks

  19. The airline has released a document, which is worth reading.
    http://media.norwegian.com/en/Document/?Iid=17713
    They say:
    – single fleets are large enough to generate economy of scale (which I think is correct, I doubt there are any major saving beyond fleets of 50-100 aircraft)
    – they never want to operate aircraft older than 7-8 years, which also implies they want to profit from good resale values
    – the fleet growth requires a growth in traffic of 11% per year, which is a third of the growth rate they demonstrated the last couple of years
    The last point is a bit weak: like Ryanair and the like, the growth is stipulated by the different business model which attracts people who didn’t use aircraft as mode of travel before. However, there is a limit. Quite visible at Ryanair. Given the rather limited home market, they need to expand into mainland Europe at some point, which requires some sort of joint venture as Norway is non-EU. I also think that Europe by now is quite well supplied with low-cost airlines.
    Time will tell.

    • Given the rather limited home market, they need to expand into mainland Europe at some point, which requires some sort of joint venture as Norway is non-EU.

      No, Norway is a member of the European Economic Area (EEA) and is in the Schengen Area as well, so there is no need for any joint ventures for Norwegian to operate as they wish.

      http://en.wikipedia.org/wiki/European_Economic_Area

    • Your correct with your last observation, working on the assumption that Norwegian’s current service levels are maintained, the advantage would appear to be that every new Norwegian route gained & flown is one less offering for Ryanair to disappoint.

  20. keesje :
    Maybe it was the similar situation to what we saw with America Airlines last yr. A large loyal 737 customer examines both the 737 and A320 and comes to the conclusion the latter looks better (Engine BPR, 2 engine option, cargo belly, quieter cabin/cockpit, spacier cabin, no heritage technology, A321).
    Boeing got this message & saves the day by offering an undisclosed strategic discount (SW got 60% MAX discount & still publicly praised the NEO/GTF, Lion gets Obama + his financing). The rest of the “1000 orders and commitments!” sits on the fence.

    Not at all unlikely IMO. Probably it will leak out soon.

    You were right about one thing, the real reason leaked out. “substantial rebate”

    Airline Norwegian Air Shuttle ASA (NAS.OS) got a substantial rebate on its order of new Airbus aircraft, said Thomas Enders chief executive of Airbus, in an interview with Norwegian daily Dagens Naeringsliv published Friday.

    http://www.foxbusiness.com/news/2012/01/27/airbus-ceo-norwegian-air-shuttle-got-substantial-rebate-report/#ixzz1kgig3ywl

    • Logic would suggest that the OEM that is late to the market, is still finishing up specs, gave documented steep discounts shortly before, has an aircraft that most probably won’t be better, looks for a euro launchcustomer and wants to keep existing customers, is the one that would give suitable discounts. Not the one that practically sold out & has gained orders all over the world with a seemingly better spec. Pretty obvious, but a no-go area for many here it seems..

  21. Splits order with Airbus and Boeing, and big order, and another big order after another, maybe it’s the new reality in the context of expansion/consolidation in this world market: consider this too !:

    Delta Air Lines Inc. is studying US Airways Group Inc. as a possible acquisition target, people familiar with the matter said, the latest twist in a swirl of deal-strategizing for the industry.

    Delta, the world’s No. 2 airline by traffic, also has been assessing a similar move for much-larger American Airlines parent AMR Corp., the people have said. It is working with Goldman Sachs Group Inc. as one of its financial advisers, along with Blackstone Group, the people said.

    In the Wall St. Journal:
    http://online.wsj.com/article/SB10001424052970204573704577187373128520982.html?mod=WSJ_hp_LEFTTopStories

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