Norwegian Founder & CEO Steps Down

Filed Under: Norwegian

Update: Norwegian has now appointed a new CEO.

Today it was announced that Bjørn Kjos is stepping down as CEO of Norwegian Air Shuttle, a role that he has had for 17 years. While he will leave his current position, he will take on a new role as an advisor to the Chairman, with effect from today.

Until a new CEO is appointed, Norwegian’s CFO, Geir Karlsen, will act as interim CEO.

Niels Smedegaard, Chairman of the Board of Directors at Norwegian had the following to say:

“I am very pleased Bjørn will remain at the company as an advisor to the Board and the Chair. As Norwegian moves from growth to profitability, it will be an advantage for the company to benefit from Bjørn’s extensive network, in-depth knowledge of and experience with global aviation. We have already started the process of recruiting a permanent new CEO.”

Meanwhile Bjørn Kjos had the following to say:

“I am confident that the Board of Directors will find the best qualified successor to lead the next chapters of the Norwegian story together with the top management team. Leaving the exciting future tasks to a new CEO and taking on a new challenge as an advisor, is a set-up I am very happy with. I look forward to spending more time working on specific strategic projects that are crucial to the future success of Norwegian.”

Kjos is one of the founders of Norwegian Air Shuttle, and during his time at the airline it was developed from a small domestic airline with 130 employees and four aircraft, to a global airline with over 11,000 employees and 162 aircraft.

While Norwegian’s growth is impressive, it hasn’t been easy, and the airline has had a very tough couple of years.

For years the airline was solely focused on growth, with little regard for profitability. That wasn’t a problem when getting funding in the airline industry was easy, though we’ve seen a remarkable shift in that over the past year or so, leading to several airline bankruptcies.

Over the past couple of years Norwegian has reportedly been on the verge of going out of business, though they have taken on a significant cost cutting strategy. Last year the airline switched from being focused on growth to being focused on profitability, and some of their metrics are improving.

I’m still not convinced that they’ll actually make it in their current form, though it does look like they’re headed in the right direction.

Perhaps one other misstep for the airline was that they didn’t accept takeover bids from IAG, the parent company of British Airways. IAG was very interested at the time, but Norwegian just valued themselves too highly. A few months later their stock price plummeted, as questions arose about their independent viability.

Despite my skepticism of Norwegian’s business model the past few years, I do want to say that I have utmost respect for Kjos. I’ve heard nothing but great things about him, and wish him all the best.

Comments
  1. Let me translate.. The lenders and ultimately the board have no confidence in him, forcing him into early retirement. It’s easy to borrow money and put the company in a difficult financial situation. It’s much harder to turn a company around and make a reasonable profit.

  2. Being CEO is a tough job. While Norwegian did grow too quickly, this is arguably what shareholders wanted at the time. A fresh perspective could nevertheless be very helpful for the company.

  3. Assuming they survive and get back to profitability, the next potential big blow to D8 will be JetBlue entering the transatlantic market in 2021. And while that will be more worrisome to the legacy carriers (especially for their premium products), Norwegian will suddenly have some serious competition for Coach, too.

  4. A new CEO might be more willing than Mr Kjos to consider a takeover approach from IAG. But let’s not forget that Bjorn Kjos will remain a powerful influence within the company, both through the shareholding of his company HBK Holding, but also through his new role as an adviser.

  5. The next Norwegian CEO will probably be Willie Walsh because we still hear rumours of IAG being interested in Norwegian from time to time. With Kjos gone this leaves the door open for IAG as he was one of the main reasons why the bids were rebuffed.

  6. The only interest that IAG has in Norwegian is to control them in order to keep them from bringing fares down on most routes, possibly also destroy them by destroying their model, in order to keep their own high cost LCC-style model flying high.

  7. At the same time that Kjos resigned, Norwegian also published their quarterly results, which should also be included in this story, since it mentions the problems that Norwegian has been facing:

    “Revenue per seat kilometer (RASK) increased by 13 percent, and revenue per passenger kilometer (yield) increased by 11 percent. Revenue in this quarter increased by 19 percent to NOK 12 billion, mainly driven by the company’s long-distance routes. Nearly 10 million passengers traveled with Norwegian in this quarter, as many as in the same period last year. The occupancy rate was 88 percent, an increase of 1.2 percentage points.”

  8. @ABC

    The man is 72 years old and tired of the job, mandatory retirement age in Norway is 75 if memory serves me right.

  9. @The Jetset Boyz

    From what I hear from some of my contacts in Norway, Kjos had agreed to sell the last time around. It was other large investors in the company that held out for more,.

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