LONDON: Bjorn Kjos, a pioneer of low-cost travel as co-founder of Norwegian Air Shuttle ASA, is stepping down as chief executive officer (CEO) after making progress toward resolving a debt crisis that resulted from rapid expansion at the discount carrier.
Kjos, who helped found Norwegian in 1993, will leave the CEO post immediately, the company said today in a statement.
Chief financial officer Geir Karlsen will become interim CEO until a permanent successor is found.
A former fighter pilot, Kjos established Norwegian as a major force in the European short-haul market, taking on no-frills giants led by Ryanair Holdings.
After that market proved tough to crack, he altered course to target low-cost long-haul flights, challenging giants such as British Airways on trans-Atlantic routes.
His heavily discounted fares proved popular with the public but margins were thin and fleet costs stretched the balance sheet to breaking point.
Over the past year, Kjos, 72, has reversed the growth trajectory to stabilise the company and preserve profit.
“This was my last presentation, you can be happy with that,“ Kjos said with a wide grin, his arms outstretched on a video call after the company reported second-quarter results.
In Karlsen, “you have a very good guy here taking over from me.”
The turnaround picked up pace in the second quarter, as earnings before interest and tax more than tripled to 622.8 million kroner (US$73 million).
The improvement has been secured by dropping the worst-performing routes, slowing aircraft deliveries and generally reining in the pace of growth.
Capacity gained 6% in the period versus a 48% surge a year ago.
Norwegian shares declined 3.9% to 42.990 kroner as of 10:13am in Oslo, after earlier rising as much as 4.6%.
The shares are down 69% in the past year, after BA owner IAG dropped a takeover bid and a rights offering announced in February diluted equity owners.
Analysts at DNB suggested the CEO change without a permanent replacement, along with further cuts to growth plans and a smaller cash balance than expected would be negatives for the stock and trigger a revision to full-year earnings estimates.
A 700 million-kroner hit from the grounding of the Boeing 737 Max, and Norwegian’s low fuel hedges, have also left the carrier exposed, Goodbody analysts said in a separate note.
Kjos has been CEO since 2002, as well as taking stints as chairman.
During his tenure, the company has gone from a regional operator with 130 staff and four planes to a global airline employing more than 11,000 people and operating 162 aircraft.
“You shouldn’t lead an airline past your 70s,” Kjos said. “I’m way overdue to retire.”
He had been saying for months that he wanted to retire after earnings showed signs of a recovery.
Kjos will retain direct links to management as an adviser to Chairman Niels Smedegaard, 57, who plans to take on a more active role as the company shifts its focus toward profitability.
“You are one of the foremost entrepreneurs of your time, in spite of challenges right now in Norwegian, one of the toughest businesses in the world,” Smedegaard said.
The ultimate fate of the airline remains unclear, with a report last week suggesting IAG is planning a fresh bid after earlier approaches were rejected – though the London-based group said that wasn’t the case.
Deutsche Lufthansa also examined a purchase and the departure of Kjos following the exit in May of his ally, former chairman Bjorn Kise, may stoke further interest among major industry players.
Another major item on the do-list is to secure a joint-venture plan that would bring in new financing for the airline’s fleet plan and help fund a bond maturity later this year.
Interim CEO Karlsen said Thursday that talks on the joint venture are progressing and the company expects clarity within weeks.