OSLO: Low-cost travel pioneer Bjorn Kjos is stepping down as chief executive officer of Norwegian Air Shuttle ASA, just as the discount carrier makes headway toward resolving a debt crisis that was fueled by the rapid expansion he led.
Kjos, who helped found Norwegian in 1993, will leave the CEO post immediately, the company said Thursday in a statement.
Chief Financial Officer Geir Karlsen will become interim CEO until a permanent successor is found.
A former fighter pilot, Kjos established Norwegian as a major force in the European short-haul market, taking on no-frills giants led by Ryanair Holdings Plc.
After that market proved tough to crack, the 72-year-old executive altered course to target low-cost long-haul flights, challenging giants such as British Airways on trans-Atlantic routes.
His heavily discounted fares proved popular with the public but margins were thin and fleet costs stretched the balance sheet to breaking point.
Over the past year, he’s reversed the growth trajectory to stabilize the company and preserve profit.
The turnaround picked up pace in the second quarter, as earnings before interest and tax more than tripled to 622.8 million kroner.
The improvement has been secured by dropping the worst-performing routes, slowing aircraft deliveries and generally reining in the pace of growth. Capacity gained 6% in the period versus a 48% surge a year ago.
Norwegian shares advanced 1.7% to 45.42 kroner at 9:18 a.m. in Oslo. The stock is down 67% in the past year, after BA owner IAG SA dropped a takeover bid and a rights offering in February diluted equity owners.
Kjos has been CEO since 2002, as well as taking stints as chairman. During his tenure, the company has gone from a regional operator with 130 staff and four planes to a global airline employing more than 11,000 people and operating 162 aircraft.
He had been saying for several months that he wanted to retire after earnings showed signs of a recovery, will retain direct links to management as an adviser to Chairman Niels Smedegaard, 57, who plans to take on a more active role, the company said Thursday.
"I’m very pleased Bjorn will remain at the company as an adviser to the board and the chair,” Smedegaard said. "As Norwegian moves from growth to profitability, it will be an advantage for the company to benefit from Bjorn’s extensive network, in-depth knowledge of and experience with global aviation.”
The ultimate fate of the airline remains unclear, with IAG reported last week to be planning a fresh bid after earlier approaches were rejected, though the London-based group said that wasn’t the case.
Deutsche Lufthansa AG also examined a purchase and the departure of Kjos following the exit in May of his ally, former chairman Bjorn Kise, may stoke further interest among major industry players. - Bloomberg