Norwegian Air Shuttle orders 222 new aircraft

Norwegian Air Shuttle ASA (NAS) ordered 222 Boeing Co. (BA) and Airbus SAS (EAD) airliners valued at 127 billion kroner ($21.5 billion) as Europe’s fourth-biggest discount carrier steps up its competition with state-backed SAS AB.

Norwegian Air will buy the latest fuel-efficient models, ordering 100 Boeing 737 MAX8 single-aisle planes and the same number of Airbus A320neos, plus 22 of Boeing’s existing 737- 800s, the Fornebu-based carrier said today in a statement.

Today’s order will add capacity and pare operating costs as the carrier seeks to strip traffic from SAS, the Stockholm-based owner of Scandinavian Airlines. (SAS) Founded in 1993, Norwegian Air switched to a discount model in 2001, emulating Ryanair Holdings Plc (RYA) and EasyJet Plc (EZJ), before adding long-haul flights last year.

“By ordering so many aircraft Norwegian will certainly position themselves to be one of the major players in the European marketplace,” said Hans-Erik Jacobsen, an analyst at First Securities ASA with a “buy” rating in the stock. “It will help to keep costs even lower and to stay competitive.”

The order is Airbus’s first from Norwegian Air, which operates an all-Boeing fleet of 48 737-800s and 14 737-300s, according to the carrier’s website.

The deal is also the first in Europe for Boeing’s MAX model, which the U.S. company decided to offer last year to blunt the success of the A320neo. Single-aisle aircraft are the most widely used globally, and the neo had become the fastest- seller in aviation history as customers sought to cut costs.

Deliveries will start in 2016, Norwegian Air said, and the agreement also includes options for 100 MAX8s and 50 neos. Airbus has said it plans to provide the first neos by late 2015. Boeing’s target for the first 737 MAX delivery is 2017.

Norwegian Air will use some of the new aircraft to phase out planes that were delivered starting in 2009 as they reach seven or eight years of age, and aims to operate 241 planes as of 2022, Kjos said in an interview in Oslo.

The Boeing MAX jets will be powered by the Leap-X, the only engine offered for the model, supplied by the CFM International venture of General Electric Co. (GE) and Safran SA. (SAF) Initial neos will use the geared turbofan made by United Technologies Corp. (UTX)’s Pratt & Whitney, since the engine is the only one available for early deliveries, with the Leap-X an option later, Kjos said.

Norwegian would also like to add more Boeing 787 widebodies as it develops longer routes, the executive said, adding that the Dreamliner’s efficiencies have been an “eye-opener” and that it and the Airbus A350 mark a “revolution” in the industry.

The Nordic carrier agreed in 2010 to take two 787s from International Lease Finance Corp. for 12 years starting last fall, and said it was in talks to add as many as six more. It said last May that it had struck an agreement with Icelandair Group HF to acquire three 787s that Icelandair has on order.

Services from Oslo and Stockholm to Bangkok and New York began in the second half 2011, with Norwegian Air planning to add 15 long-distance routes over the next few years.

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