Norwegian low-cost carrier Norse AtlanticAirways is in discussions with two Asian airlines for a long-term lease of up to six of its Boeing 787 aircraft. This comes as IndiGo abruptly pulled the pin on a damp lease agreement for six of its aircraft, citing challenging geopolitical tension and airspace constraints.

This will see the Norwegian long-haul low-cost airline look for a new partner to lease out the Boeing 787, which it inherited from Norwegian, as it looks to improve its financial position. Norse is currently hitting headlines as the budget carrier continues to struggle with low cash reserves and rising fuel costs.

Norse Atlantic Airways: PIA and Biman Bangladesh Could Be The Saving Grace

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According to a report by Bloomberg, Norse Atlantic ASA is currently in negotiations with two Asian carriers, Pakistan International Airlines and Biman Bangladesh Airlines, where the carriers are working through various lease agreements for up to six of its 787s. The terms of the lease agreements remain unclear, but could range from a dry lease (just the aircraft) to a wet lease (including crew, maintenance, and insurance).

As already mentioned, this comes as IndiGo pulled the plug on its damp lease agreement with Norse and is currently transitioning its services from India to Europe with the Airbus A321XLR. The agreement between the two airlines is expected to end on October 31. Norse is now looking to lease aircraft to the two previously mentioned Asian carriers in a bid to generate stable revenue and offset dwindling cash reserves.

Leasing aircraft, whether this be in a dry or wet lease agreement, should provide the Norwegian carrier consistent revenue and support the airline in returning to a surplus through this guaranteed income.

Additional Aircraft For Continued Expansion

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Suggested by Airways Mag, the desire by Pakistan International Airlines to negotiate a lease agreement with Norse comes as the largest airline in Pakistan looks to expand its widebody fleet for long-haul operations. By leasing these planes, it would ensure quick delivery and the ability to upscale international capacity without waiting for the delivery of new aircraft.

PIA has outlined that its board recently approved arrangements to acquire more widebody aircraft to increase capacity for flights to Europe, and leasing the ready-to-fly 787 could provide an immediate substitute for capacity shortfalls. For Biman, the Bangladeshi airline is expressing interest in Norse aircraft to fill a major capacity gap, as the airline awaits new Boeing jets not due until the next decade.

As described by Prothom Alo, Biman is currently on the hunt for around ten aircraft, as the airline faces a continued fleet shortage and a strong desire to launch new international routes. Biman already operates the 787-8 and 787-9, with two additional 787-9 and eight 787-10 on order.

Is The Writing On The Wall For Low-Cost Long-Haul Travel?

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Low-cost long-haul flights are extremely fragile and have seen a number of airlines fail. The market, especially between Europe and North America, is saturated and continues to be a tough market for budget carriers to crack. There is a string of airlines that have attempted to break the market and ultimately failed:

For short-haul, budget airlines can work with quick turnarounds and high daily flight counts; the long-haul market is shaped differently, with high fixed costs such as fuel, aircraft wear and tear, plus mandatory crew rest. Some airlines have been able to make this work, such as Cebu Pacific, ZIPAIR Tokyo, and Jetstar.

For Norse, it continues to face severe financial distress and is undertaking a strategic restructuring to help improve the airline’s bottom line. The ongoing high jet fuel spikes, operational losses, and geopolitical tension have forced the airline to withdraw from a number of its scheduled routes while also looking for new airline partners for leasing of its 787 aircraft. For now, it could be that PIA and Biman are the saving grace for this airline that seems to be facing challenging headwinds.