Norwegian (Oslo Gardermoen) has posted a NOK1.25 billion krone (USD129.5 million) profit for 2Q 2022 largely on the back of reversing pre-delivery payments to Boeing (BOE, Washington National) for MAX jets. Approximately NOK2.1 billion (USD217.1 million) was reversed in the quarter after settling a long-running dispute with Boeing, pushing the airline into the black for the period.

"(We're) very happy that we have now finally had an agreement with Boeing in place," Norwegian Chief Executive Officer Geir Karlsen said in an earnings call this week. "I think we can say that we feel that we have done a really good agreement with Boeing."

In June 2020, Norwegian cancelled orders for ninety-two B737-8 MAX and five B787-9s, at the same time accusing Boeing of “gross negligence and shoddy production.” Boeing fought the lawsuit, but in June 2022, both parties agreed to settle. A compensation settlement with Boeing allowed Norwegian to reverse those pre-delivery payments this quarter. As part of the settlement, Norwegian is using those funds to re-order fifty MAX 8 jets, with options for another 30.

"The price we are paying for these MAXs are, I would say, more than 10% lower than what we had (paid) back in 2018 or 2019," said Karlsen in the earnings call, adding that the compensation payments was already been applied to pay instalments on the order, including NOK800 million (USD82.7 million) in July.

"(The) vast majority of the equity we need to take delivery of these 50 aircraft have already been paid in," he said. Norwegian plans to own outright the majority of the MAX 8s it will acquire but says it will conduct a limited number of sale/lease-back deals to cover "the small portion of equity we need to finance."

The MAX 8s are scheduled for delivery between 2025 and 2028 at a rate of about 15 per year and are timed to arrive by spring each year to accommodate the summer peak season. "We have all the redeliveries of the older aircraft into the fall," adds Karlsen. The 30 options would arrive between 2028 and 2030 and the Norwegian CEO says B787-10s are under active consideration. He notes the existing MAX order allows for fleet renewal rather than fleet growth.

"Time will show whether we add capacity to what you’re actually seeing here over the next years. We have the 30 options .. and these options are priced lower than the 50 aircraft, even more attractive as we see it.

"We are planning to order MAX 8 with 189 seats. We have obviously an option also to consider the B737-10 MAX. We have not taken any decision on that. We are considering it. (The) MAX 10 is more or less the same aircraft, but with additional 30 seats. So we will have to see how the market develops over the years, but those aircraft are – will be attractive for a company like Norwegian."

According to the ch-aviation fleets module, Norwegian's fleet entails forty-five B737-800s operated via its Norwegian Air Shuttle AOC (DY, Oslo Gardermoen) production carrier while Norwegian Air Sweden AOC (D8, Stockholm Arlanda) operates two MAX 8s and twenty-seven B737-800s. Overall, the B737NG fleet currently averages around 8.5 years of age with all but two of the combined 72 leased.