Norwegian To Dump 787 Dreamliners As It Ends Long-Haul Flights

This week Norwegian Airlines announced the end of its famed low-cost, long-haul flights that took budget passengers all over the world. Indeed, the airline in 2019 was the largest foreign carrier in New York, carrying more than two million passengers to Europe and other destinations.

Hoping to survive COVID-19 and a sea of red ink, Norwegian will now concentrate on its Nordic and European network. The failure of Norwegian’s long-haul service has resulted in contraction and job losses for the airline. Soon, it will also result in the departure of its long-range aircraft. Anyone want to buy 37 used Boeing 787 Dreamliners?

Norwegian’s current plan is to serve Europe with 50 narrow-body aircraft in 2021. While the narrow-bodies are easier to fill and cheaper to fill, this will also put Norwegian into head-to-head completion with Ryanair and other discount airiness. If all goes well Norwegian plans to increase the fleet to around 70 narrow-body aircraft in 2022.

The back-to-basics approach may or may not work for the struggling airline, which has ben repeatedly bailed out by stockholders and the Norwegian government. But it’s definitely bad news for Boeing. Even the 70-aircraft figure represents just half of Norwegian’s current all-Boeing fleet of 140 aircraft. And a source close to the struggling airline confirmed there is no future at Norwegian for the widebody Boeing 787.

Norwegian’s website cheerfully notes that “with an average fleet age of just 4.6 years, Norwegian has one of the youngest and most fuel-efficient fleets in the world.” But the airline’s struggle to survive (it is in insolvency procedures in a number of countries) looks like breaking up that fleet is a certainty, dumping the planes on a sluggish post-COVID market.

Norwegian currently has some 85 Boeing 737-800 narrow-body aircraft, with an additional 18 Boeing 737 MAX aircraft.

Long-haul service was provided by the airline’s 37 widebody 787 Dreamliners. Norwegian has both the 787-8 (291 seats, 8,823 mile range), and the 787-9 (344 seats, 9,196 mile range.)

Norwegian Dreamliners provided service to a dozen US cities and to European (London, Barcelona Paris, Rome, Madrid, Oslo), South American (Buenos Aires, Rio) and Asian (Bangkok) destinations. Why the past tense?” Norwegian says its entire fleet of Dreamliners has not flown since March of 2020. The airline said that with future demand highly uncertain, “a long-haul operation is not viable for Norwegian and these operations will not continue.”

So it seems that all 37 Dreamliners are on the chopping block, as are several dozen 737-800 and/or 737 MAX aircraft. Most of Norwegian’s aircraft are leased, creating issues for the leasing companies that are their actual owners. But if Norwegian does sell some 737s, at least they will be far more saleable than giant A380s.

Putting the 737 and especially the 787 aircraft back on the market will create headaches for Boeing. Average prices for new 787-8 models run around $248 million, while a new 787-9 is pegged at $292 million. (Obviously, aircraft prices are highly negotiable.) How about a used one? Controller.com has a 787-8 built in 2017 listed at $122 million, with three others “Call for price.”

As of December 2020, Boeing had built 992 787s. Norwegian’s orphaned Dreamliners represent almost 4% of that total. Dumping 37 expensive new widebody planes on a world aviation market struggling to come back from COVID will no doubt further depress pricing. It may also further limit 787 manufacturing, which has already been cut four times in 19 months. Boeing 787 production, which has faced a number of quality issues, is now down to just five aircraft per month.

Manufacturing cuts reflects a larger problem. Reuters quoted Boeing Chief Financial Officer Greg Smith as telling a Credit Suisse conference “We’ve got a large number of undelivered 787 aircraft.” Flight Global reports that the “large number” is 60.

But the coming dump of Norwegian’s Boeing aircraft is only part of the “relationship problem” between the two companies.

In June 2020, Norwegian issued a notice of termination of the company’s purchase agreements of five Boeing 787s, 92 Boeing 737 MAX aircraft and related GoldCare service agreements.

Norwegian is also suing Boeing for over one billion dollars over the grounding of the 737-Max and engine issues on the 787. “Instead of delivering what they promised, Boeing has deliberately misled and omitted information, shown gross negligence and clumsy production, and made aircraft with significantly impaired value and utility, which in the case of the MAX aircraft had tragic and fatal consequences,” stated the lawsuit, filed with the District Court for the Northern District of Illinois in July 2019.

Norwegian, noted in the filing that “737 MAX aircraft have been grounded since the world-wide grounding of the aircraft type was imposed on 12 March 2019. This has also disrupted [Norwegian Air Shuttle] operations and caused significant losses. In addition Norwegian’s Rolls-Royce Trent 1000-powered 787 aircraft have suffered from long-running reliability issues that have affected reliability and resulted in premature and unplanned maintenance, which has disrupted the Company’s operations and caused further significant losses.”

In November, Boeing tried to get the lawsuit dismissed, but it was deferred to a later date. 

Breaking up is hard to do. The breakup of the industry love affair between Boeing and Norwegian may prove painful for both.