Norwegian’s aircraft order cancellations wreak havoc on planemakers

written by Hannah Dowling | March 8, 2021
A Boeing-787 in Norwegian livery (Norwegian)

Norwegian Air’s order cancellations have seen Airbus’ order book fall into the red, while its dispute with Boeing will come to a head in US courts.

The troubled carrier cancelled 88 aircraft orders worth billions of dollars from European planemaker Airbus, after getting approval to do so by an Irish bankruptcy court.

The decision has plunged Airbus into a negative total for orders year-to-date, with the planemaker sitting at negative 81 orders after the first two months of 2021.

Meanwhile, Norwegian remains at a stalemate with Boeing over its attempt to cancel three contracts, encompassing a total of 97 aircraft orders.

According to a lawyer for the airline, the matter is expected to be decided upon in a US court, separate to the bankruptcy proceedings taking place in Ireland.

“Clearly it is not proper for this court to interfere in those proceedings or to prejudge them in any way,” Norwegian Air’s lawyer Declan Murphy told the court.

“We are not asking this court to exercise an exorbitant jurisdiction to interfere with those proceedings.”

Norwegian has also entered into a US$1 billion lawsuit against Boeing over the delay of several of its 737 MAX and 787 Dreamliner deliveries, due to the prolonged grounding of the former and ongoing quality inspection processes of the latter.

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Boeing has since requested the dismissal of the lawsuit, and has kept the cancelled orders on its books while it waits for the courts to weigh in.

While such significant order cancellations will see both planemakers take a financial hit, both Boeing and Airbus are entitled to keep any deposit monies on ordered aircraft already received from Norwegian.

Airbus has confirmed that it is still owed US$850,000 from the embattled airline as outstanding deposits on purchased but as-yet undelivered aircraft.

Norwegian has been operating under bankruptcy protection in both Ireland and Norway, where much of its assets are held, since late last year. Restructuring negotiations are continuing.

Last week, World of Aviation reported that Norwegian Air had officially cancelled all 88 narrow-body jets it had on order from Airbus, mostly made up of A320neo and A321LR aircraft.

A deal was originally struck between Airbus and Norwegian in 2012 for 100 A320neos, of which 30 were subsequently converted to A321LRs as the airline prepared to take on trans-Atlantic routes.

Of the deal, 88 aircraft were yet to be delivered, all of which have now been cancelled as the struggling airline refines its fleet and cuts back long-haul operations to survive insolvency.

At the same time, World of Aviation reported that Norwegian Air and Boeing are unlikely to reach an agreement over the airline’s cancellation of aircraft orders before the restructuring process is finalised, according to Norwegian chief financial officer Geir Karlsen.

“We don’t expect that we will have a deal with Boeing before we are out of this reconstruction, that much I can say.”

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