* First flights to Bangkok and New York
* One-way ticket to New York starts at $170; website crashes
* Shares up 67 pct in one year
By Henrik Stolen and Balazs Koranyi
OSLO, Nov 8 Budget carrier Norwegian Air Shuttle
will launch long-haul operations next year with heavily
discounted flights to Bangkok and New York, hoping to undercut
battered Nordic carrier SAS in yet another market.
Norwegian will start the new services from its bases in Oslo
and Stockholm in the second quarter when it receives the first
of eight Boeing 787 Dreamliners, turning up the
competitive heat with SAS just as it is trying to cut costs,
sell assets and extend credit facilities.
"Long-haul prices in Europe are very high. Operators are
simply milking the market," said Norwegian Chief Executive
Bjoern Kjos, a former fighter pilot. "We have to do something
about the market so everyone can afford to fly."
A one-way ticket to New York was going for 999 Norwegian
crowns ($170) on Wednesday until Norwegian's website crashed
shortly after tickets went on sale.
Norwegian is a rare success story in an industry struggling
with high costs, expensive fuel and crippling legacy costs. It
placed the biggest aircraft order by a European airline this
year with a deal for 222 planes worth $21.5 billion at list
SAS, which has not made a full-year profit since 2007, had
been due to unveil a restructuring plan on Thursday but delayed
until Monday saying it needed more time. The plan may include
the sale of 3 billion Swedish crowns ($447 million) of assets.
Meanwhile Deutsche Lufthansa is pushing ahead with
painful cost cuts, Air France-KLM is shedding about
5,000 jobs and Iberia could soon announce 7,000 job cuts.
Norwegian shares have risen 67 percent over the past year
while SAS shares are down 46 percent.
"There is a strategic shift going on in Europe and Norwegian
is one of the winners," said Preben Rasch-Olsen, an equity
analyst at brokerage Carnegie.
"Passengers want to fly point-to-point. They are no longer
interested in being flown all over Europe before they get to
their destination," he said.
Where Norwegian and other budget airlines offer these direct
flights to and from smaller destinations, traditional flag
carriers often operate through large hubs.
"SAS is not the only one suffering, just look at Lufthansa
and others. Ryanair, EasyJet and Norwegian will
be the big winners."
Airlines have also suffered as jet fuel prices soared above
$1,000 a tonne in October, punishing airlines like SAS, which
fly with older, less fuel-efficient aircraft, and helping
companies like Norwegian and Ryanair, which fly with newer
To reduce cost further, Norwegian will establish a base in
Bangkok, flying to Europe with an Asia-based crew. The firm
earlier estimated that a Bangkok-based Dreamliner could be
operated as much as 50 percent cheaper compared to a rival's
"If you take the Dreamliner, where the operating cost is 20
percent lower and you also save 30 percent on the service, and
you combine that with an Asian crew, which is cheaper, then
could get to 50 percent," Rasch-Olsen said.
Kjos, who still flies gliders and also writes mystery
novels, estimated that Norwegian would carry 1.3 million
long-haul passengers a year by the time all eight Dreamliners
come into operation in 2015, and said its overseas service would
be cash positive from day one.
While Norwegian thrives - its fleet will grow 18 percent
next year - and finances itself from the market, SAS needed
government funding in both 2009 and 2010, and could again ask
the Swedish, Norwegian and Danish states for help.
"It just doesn't make sense that taxpayers money should be
used this way," Kjos said. "If private investors do not want to
put their money in there, then why should states?"