REUTERS SUMMIT-Norwegian's grounded Dreamliner may fly again this week
(For other news from Reuters Nordic Investment Summit, click here)
* Norwegian likely to order more Dreamliners
* Boeing underestimated early problems with jet-Norwegian
* Grounded jet could fly again this week (Adds detail, criticism, analyst, Boeing comment)
OSLO, Oct 1 (Reuters) - Budget carrier Norwegian Air Shuttle said its grounded Boeing Dreamliner could return to short haul service as soon as this week and is so confident in the plane it will probably order more.
Norwegian chief executive Bjoern Kjos said the Dreamliner was a better aircraft than advertised but Boeing was unprepared to cope with its teething problems.
Other budget airlines will flock to it once the jet's reliability is improved because it has performed so well the business case for long haul flights is better than expected, he said.
Norwegian, Europe's third biggest budget airline, grounded one of its two $212 million Dreamliners on Saturday, a month after delivery, calling in Boeing to fix the plane after a string of hydraulic and electrical issues left passengers stuck at long-haul destinations including New York and Bangkok.
The plane's return to long-haul service depends on how it goes on short journey's, he said.
"I believe that the 787 is an incredibly good aircraft," Kjos said in an interview. "It's even better on performance than we anticipated, the fuel burn is lower."
"I feel we have been extra unlucky," said the 67-year-old who once flew Cold War-era jet fighters.
The grounding was just the latest trial for an aircraft that was supposed to be a game changer for the industry, as its light weight and more efficient engines were set to reduce fuel consumption by up to 30 percent.
But a string of electrical problems, including battery meltdowns, forced regulators to ban the jet from flight for more than three months this year.
Kjos said that Boeing was surprised by the plane's difficulties and the firm underestimated how much work was required during its early phase of operations.
"Boeing is increasing parts stocking at all the airports where Norwegian flies its 787s," Boeing said in a statement. "Norwegian will be receiving this increased parts stocking as an enhancement to the services Boeing is providing and the parts are expected to be in place in the days ahead."
Norwegian started long haul operations this year, becoming the only European budget airline with flights to North America and Asia but the launch was first marred by the delayed delivery of aircraft, then by the repeated breakdowns with hydraulic and power issues.
Norwegian may have also rushed the plane too quickly into service after receiving it, not scheduling a transition period after the delivery delay created a schedule crunch, he said.
Critics say Norwegian should have done more testing on the plane before putting it into long-haul service and required Boeing to hold spare parts at more locations. The delays were mainly due to Boeing having to ship parts to the airports were the passengers were stranded.
Better preparation by Norwegian could have limited the damage to the company's reputation, they say.
"This is not just bad luck. It is clear that they were not as prepared for the move into the more complex long haul market as they should have been," Norwegian daily paper Aftenposten said.
Norwegian had hoped to use the advantage of early access to the new large jets to bring a budget service to compete with established and more expensive airlines.
But critics say fuel, which costs the same for all airlines, is a disproportionately high cost in long haul and will erase some of budget carriers' advantage and eventually all operators will have the Dreamliner or the rival Airbus A350.
"Oh, 99 percent of the people said the exact same thing when low cost airlines started flying short haul," Kjos said. "They said Ryanair and EasyJet were a joke. Now the low cost carriers have 50 percent of the market in Europe."
Analysts were also more forgiving.
"As of today, Norwegians long distance flights only make out about one percent of the total number of passengers. So the attention this has gotten in the media has been relatively speaking, very excessive compared to the small part of Norwegian's passengers this actually represents," Ivar Andreas Lemmechen Gjul at brokerage Fondsfinans said.
The stock has also been resilient, falling just 1 percent over the past month and rising 105 percent in the past year.
Kjos said he would aim to fly his Dreamliners 18 hours a day, more than traditional carriers who fly 12-13 hours, to keep his advantage while other budget airlines are still far from entering the market.
"As far as I know the Dreamliner or the Airbus A350 isn't available until 2016, 2017 at the earliest. More than likely you won't get it before 2018," he said. "So we have a 4 to 5 year lead on the rest of the pack. That's the time frame we envisage that we can build up a strong operation on long haul."
Follow Reuters Summits on Twitter @Reuters_Summits (Editing by Anna Willard)
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