Norwegian Air chief executive, co-founder Kjos steps down

Bloomberg

Bjorn Kjos, a pioneer of low-cost travel as co-founder of Norwegian Air Shuttle ASA, is stepping down as chief executive officer after making progress toward resolving the carrier’s debt crisis.
Kjos, who helped found Norwegian in 1993 and led its rapid growth, will leave the post immediately, the company said 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 Plc. 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 tempered growth to stabilise the company and preserve profit.
“You shouldn’t lead an airline past your 70s,” Kjos said on a video call after the company reported second-quarter results. “I’m way overdue to retire.”
The turnaround picked up pace in the second quarter, as earnings before interest and tax more than tripled to $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 percent in the period versus a
48 percent surge a year ago.
Still, Norwegian shares declined 5.8 percent to 42.10 kroner in Oslo, dragging the return to negative 69 percent in the past 12 months, during which British Airways owner IAG SA dropped a takeover bid and a rights offering announced in February diluted equity.
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, were negatives for the stock and would trigger a revision to full-year earnings estimates.
A 700 million-kroner hit from the grounding of the Boeing Co 737 Max, as well as Norwegian’s low fuel hedges, have also left the carrier exposed, Goodbody analysts said in a separate note.

Succession Plan
Kjos was the driving force behind the airline and “built it from nothing,” said Davy Stockbrokers analyst Stephen Furlong.
He has been CEO since 2002, while taking stints as chairman, guiding the company from a regional operator with 130 staff and four planes to a global airline employing more than 11,000 people and operating 162 aircraft.
“This was my last presentation, you can be happy with that,“ Kjos said with a wide grin, his arms outstretched. “Geir is awesome,” he said.
He had been saying for months that he wanted to retire after earnings showed signs of a recovery. Kjos will remain an adviser to Chairman Niels Smedegaard, 57, who plans to take on a more active role as the company shifts its focus toward profitability.
The ultimate fate of Norwegian remains unclear, with a report suggesting IAG is planning a fresh bid after earlier approaches were rejected — though the London-based group said that wasn’t the case.