Overview of Norse Atlantic Airways’ Wet-Lease Agreement
Norse Atlantic Airways, the ambitious carrier based in Norway, has strategically planned to enhance its operational flexibility and financial stability through a significant wet-lease agreement. This deal, set to commence in 2025, involves leasing up to six of Norse’s Boeing 787-9 Dreamliners to a yet-to-be-disclosed reputable international airline. As of now, the parties have agreed in principle, with the arrangement outlined in a letter of intent signed in late November 2024.
The phased approach will see two aircraft transferred in February 2025 and an additional four in September, subject to final agreements, corporate approvals, and necessary regulatory clearances. Norse Atlantic anticipates this venture to not only bolster its income through guaranteed monthly payments for 350 block hours per aircraft but also offers potential additional revenue if usage exceeds the agreed threshold.
Financial Implications and Strategic Benefits
The financial implications of this agreement are significant, with the potential contract value estimated at $462 million, should an extension be negotiated. This move is aligned with Norse’s dual strategy of operating scheduled and charter passenger flights, alongside pursuing ACMI (Aircraft, Crew, Maintenance, Insurance) wet lease agreements. Such strategies have historically allowed Norse to mitigate the impacts of seasonal fluctuations, ensuring consistent revenue streams and high fleet utilization year-round.
During Norse’s off-peak periods, typically the northern winter, the carrier has successfully leveraged its fleet by entering into wet lease agreements with other airlines. This approach not only provides a steady income but also keeps the aircraft and crew actively engaged in operations throughout the year.
Speculations and Market Response
While Norse has not disclosed the identity of the international airline involved in this wet-lease, speculation abounds with Riyadh Air, a newcomer from the Middle East, being frequently mentioned. Riyadh Air is set to commence operations in early 2025 and, facing potential delays in receiving its own ordered fleet of 787-9s due to ongoing supply chain issues at Boeing, may find Norse’s offer particularly appealing.
The market’s response to this strategic move by Norse has been cautiously optimistic, recognizing the potential for Norse to secure a stable operational footing while expanding its global footprint through such partnerships.
Potential Impact on Norse’s Operations
The execution of this wet-lease agreement will require Norse to carefully balance its existing service commitments with its new leasing obligations. In the summer of 2024, Norse expanded its operations to include flights from various European cities to multiple US destinations and added new routes like London to Cape Town and Stockholm to Bangkok for the 2024/25 winter season.
The agreement’s impact on Norse’s future operational capabilities and scheduling needs careful management to ensure that the carrier can continue to meet its service commitments across its growing network while fulfilling the terms of the wet lease.