August 30, 2007 / 7:21 AM / 12 years ago

UPDATE 4-Norwegian Air places $3.1 bln Boeing order

(Adds background on 737 and Boeing orders, Boeing share price)

By Aasa Christine Stoltz and Camilla Bergsli

OSLO, Aug 30 (Reuters) - Norwegian Air Shuttle ASA NAS.OL ordered 42 Boeing 737-800 planes worth $3.1 billion at list prices, landing the U.S. group its biggest European 737 order this year and its biggest-ever order from a Scandinavian carrier.

Norwegian Air also secured rights to buy 42 more of the short-to-medium haul model, the low-fare airline said on Thursday.

“We have not paid the full list price, but exactly how much we have paid is a corporate secret,” Chief Financial Officer Frode Foss told Reuters.

Boeing Co (BA.N) said the order was the largest ever from any Scandinavian carrier and was the largest European order this year for the 737.

The 737, a mainstay in the airline industry, is the best-selling plane in history. Boeing said it has more than 1,700 unfilled orders for the plane worth more than $120 billion at list prices.

The Norwegian Air orders could put Boeing ahead of rival Airbus, a unit of European aerospace group EADS EAD.PA, in the race for the title of biggest-selling plane maker this year. Through July, Boeing and Airbus were neck and neck, each with 688 firm orders.

The planes will be delivered from 2009 through 2014, with about 10 planes to come each year, and will supplement 11 Boeing 737-800s that Norwegian Air ordered in May this year.

“The new airplanes will strengthen Norwegian’s competitive position in the Norwegian, Nordic and European aviation markets,” Chief Executive Bjorn Kjos said in a statement.

The U.S. Export-Import Bank could finance 85 percent of the list price, Norwegian Air said.

“We will consider all possibilities for financing,” Foss said. “The planes will be financed one by one, and if we finance them in full or choose a share issue, we will come back (with an announcement) at that point.”

Forty-two new planes is roughly the size of Norwegian Air’s current fleet, but the carrier, which has a market capitalization of around $430 million, said it may continue to grow.

“We will look at the development in Norwegian and in the market moving forward and grow if the conditions call for it,” Foss said.

COST EFFICIENT

Norwegian Air, a tiny rival to Scandinavian airline SAS (SAS.ST), said the new planes are more cost-efficient and more environmentally friendly than its existing fleet.

The reduction in fuel consumption is up to 33 percent and the reduction in nitrogen oxide (NOx) emissions up to 43 percent compared with the oldest airplanes in Norwegian’s current fleet, the company said.

“(The plane’s) versatility will allow Norwegian to operate it very economically on both its short-haul and long-haul routes,” Marlin Dailey, Boeing Commercial Airplanes vice president, said in Boeing’s statement.

The new airplanes each have 189 seats, against 148 seats in the current 737-300, it said.

“These purchases will open up new opportunities, enabling us to fly longer distances and thus consider new, interesting routes,” Kjos said. He added this will ensure greater flexibility when phasing out older airplanes and adapting to market trends.

The U.S. Federal Aviation Administration recently ordered airlines operating newer model Boeing 737 aircraft to inspect their planes after an explosion and fire erupted, destroying a China Airlines (2610.TW) 737-800 in Japan last week.

The FAA required check-ups of all 737-600 through 900ER models.

Norwegian Air shares were up 2.1 percent at 120.50 crowns at midmorning.

Boeing shares fell 0.5 percent to $96.44 in morning trading on the New York Stock Exchange. ($1=5.829 Norwegian Crown) (Additional reporting by Chris Reiter in New York)

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