OSLO (Reuters) – Loss-making Norwegian Air (NWC.OL) has appointed Jacob Schram as chief executive to take charge of the budget carrier’s ongoing restructuring as it struggles with a low-cost, long-haul model in an overcrowded industry.
FILE PHOTO: Passengers board a Norwegian Air plane in Kirkenes, Norway October 26, 2019. Picture taken October 26, 2019. REUTERS/Gwladys Fouche
Schram, who does not have a background in aviation, joins Norwegian from McKinsey, where he worked as an advisor, Norwegian’s board said on Wednesday.
He replaces Bjoern Kjos, Norwegian’s founder who stepped down in July after building the carrier into Europe’s third-largest budget airline, shaking up the market for translatlantic travel with low fares to challenge traditional carriers such as IAG’s (ICAG.L) British Airways.
Schram, 57, will be tasked with cutting costs and making the airline profitable again after a breakneck expansion left it with hefty losses and high debts, forcing it to repeatedly ask shareholders for new funds to stave off collapse.
That will be no easy job in an industry plagued with overcapacity that has seen the grounding of several operators this year alone.
“(Schram’s) extensive management experience from global companies, proven leadership skills, strong commercial consumer orientation and impressive track record of value creation will greatly benefit Norwegian as the company enters into a new phase,” board Chairman Niels Smedegaard said in a statement.
In 2010, Schram led the process to list Statoil’s petrol station business, Statoil Fuel and Retail, later acquired by Canada’s Couche-Tard (ATDb.TO) to become Circle K.
Norwegian has been run on an interim basis since July by Chief Financial Officer Geir Karlsen, who has raised cash, postponed debt payments, sold off assets and cut unprofitable routes to keep the company aloft.
Karlsen will continue as CFO as well as deputy CEO.
Amid a flurry of deals to save Norwegian, Karlsen in October announced plans for a Chinese leasing firm to take stakes in its fleet, and partnered with U.S. carrier JetBlue (JBLU.O) to feed passengers into each others’ network.
The company has a similar deal in Europe with Britain’s easyJet (EZJ.L).
Former CEO Kjos, who is Norwegian’s largest shareholder and retains the title of president, on Tuesday told a conference in Berlin that the carrier aims to build further alliances.
Shares in Norwegian Air were trading down 0.6% at 1146 GMT.
Reporting by Terje Solsvik and Gwladys Fouche; Editing by Kirsten Donovan