Think that the company can save hundreds of millions – E24

At the same time that Norwegian has been fighting a desperate battle since March to secure its finances and survive the corona pandemic, another important job has been going on at the airline: Insourcing, or “moving home” if you will.

In July, Norwegian announced that it had terminated the personnel contract with OSM Aviation and that they would assume responsibility for the employer of 3,000 flight employees.

Norwegian boss Jacob Schram, who started the work in January, called it “a great and important strategic step on the road for New Norwegian.”

However, internal hiring of employees was only one of several steps that were taken.

Norwegian has also worked extensively to outsource maintenance management for the company’s long-haul aircraft and the new Max aircraft.

On June 29, Norwegian announced in an announcement on the stock exchange that the company had canceled the GoldCare agreement with Boeing and the remaining order for 5,787 Dreamliner and 92 737Max long-haul aircraft.

Save hundreds of millions

Often the company itself has performed the maintenance itself, while some has been done in other workshops, but it is the aircraft manufacturer Boeing who has managed the maintenance program and who has been responsible.

The company has paid for it and Norwegian believes it can save large sums of money by doing the work itself.

– When we measured this at the beginning of the project, we saw that we would save 40 percent on the 787 flight time rate and 25 percent on Max, Ahmad Abu-Nima, Norwegian’s head of technical services, tells E24.

It refers to the maintenance cost per hour in the air of the aircraft.

– With the fleet we had in operation before the crown (156 aircraft, journal.anm.), This equates to a saving of around NOK 700 million a year, he continues.

Ahmad Abu-Nima is Norwegian’s head of technical services and also leads the project to outsource aircraft maintenance management and management.

This means that almost all maintenance management for Boeing aircraft and CFM engines must be performed by Norwegian.

Norwegian will continue to use Lufthansa Teknik for major technical overhauls of the aircraft, and Rolls-Royce will continue to maintain the complicated Dreamliner engines. All under the auspices of the Norwegian.

Although the Norwegian management has given clear signals that the fleet will be reduced in the future, there will still be significant savings.

P.S! Norwegian sued Boeing and demanded an unknown sum in compensation for the problems with the Max and Dreamliner jets. Parties is scheduled to appear in a court hearing in Illinois on December 15.

He worked when Norwegian was going to grow up

Abu-Nima says Norwegian originally entered into full maintenance agreements with Boeing (GoldCare) and the engine makers Rolls-Royce (engines for the Dreamliner aircraft) and CFM (engines for the 737).

– In those agreements we paid a price per flight hour, and that price included all the maintenance, planning and engineering work. It was a model that was very optimal for us when Norwegian expanded, but when we had to adjust it and shift the focus from growth to profitability, we saw that we had a great opportunity to outsource, says Abu-Nima.

– What helps make this transition complex is that we are talking about two newer types of aircraft, the 787 Dreamliner and the 737 Max. Especially on the Dreamliner, it’s a major technical change compared to the 737 NG world we came from, says Abu-Nima further, in reference to the predecessor of the Max plane.

This fall, Norwegian received the approval they need from the Norwegian, Swedish and British aviation authorities to take over. Therefore, the Americans are out of the picture.

Behind the approval is extensive documentation, training, and a lot of work.

– We have analyzed aircraft maintenance since the beginning of the year, as part of the many cost initiatives that took place at Focus2019, says Abu-Nima, referring to the cost program that Norwegian launched before improving profitability before to hit the crown.

– It was in the March-April period that we really started working on the opportunities that we saw here, he continues.

As the basis for all the work, they wanted to see how to have better control of costs and be able to operate simpler and smarter maintenance.

Although Norwegian has filed for bankruptcy protection under Irish law, it has chosen to let this project continue, the airline claims.

But it is not completely affected, because Abu-Nima and his team have also had to introduce recruitment bans for the time being.

– Is it easier to do such an internalization of the technician now under the crown?

– Absolutely. Many planes are parked and operation is severely reduced compared to the normal situation, says Abu-Nima.

– But then it is also the case that many thought that we should have little to do in the technical department when the crown arrived, with all the planes that were parked. That is completely wrong, because there is a lot of work to take care of the planes, he continues.

I need people

In addition to Norwegian not having to cover the margins for Boeing who will have to manage maintenance, Norwegian also has better control over when and how maintenance will take place.

The company can be further controlled when it comes to getting the job done based on the flight needs of the company on its route network.

Furthermore, those who control the Norwegian fleet now only need to deal with their own technical department, whereas before they also had to deal with Boeing.

– To carry out internal recruitment, we must hire employees in the Oslo area and we must develop the necessary competence. We need planners, project managers, and engineers. Based on a fleet of 110 “New Norwegian” aircraft, we should increase the department from 50 to around 95, he says.

– Is it difficult to find people with that competence?

– It will be a challenge. We will probably bring someone from abroad, but there is also Norwegian experience in this and we will also train our own people, says Abu-Nima.

– We hope to be fully awake and go to the 2021 summer program, when the crown situation has hopefully stabilized, continues Abu-Nima.

Before the corona pandemic, Norwegian attacked workshops at Oslo, Arlanda, Kastrup and Barcelona airports. In addition, the company has smaller technical bases in Trondheim, Bergen and Stavanger.

– The look of our workshop network next year will depend on the traffic schedule and what the world looks like, says Nima.