Norse Atlantic, initially defined as a Long Haul-Low Cost airline, is undergoing a strategic shift by prioritizing crew leasing agreements (ACMI) as a key pillar of its business model. This approach aims to reduce dependence on variable income from regular operations by focusing on long-term contracts that ensure financial stability and predictability.
The airline signed a letter of intent (LOI) with a «reputable international airline» for the ACMI leasing of six aircraft. According to the preliminary terms, two aircraft will be assigned to the contract in February 2025, and the remaining four in September of the same year. The contract has a minimum estimated value of $462 million, with the potential for additional revenue if the monthly block hours exceed 350 per aircraft.
“The contract with this top-tier international airline confirms the long-term potential of the ACMI market and represents a new era for the company. We can now allocate more of our fleet’s capacity to stable contracts, reducing market risks,” stated Bjorn Tore Larsen, CEO and founder of Norse Atlantic Airways.
Strong results in the third quarter
This strategic move comes in the context of a solid third quarter, during which the airline reported an 18% increase in passengers transported (514,913) and a 20% rise in capacity measured in available seat kilometers (ASK). Additionally, it achieved a record load factor of 86% and reduced its CASK (excluding fuel) to the lowest level in its history, 3.55 cents per dollar.
Despite these operational achievements, the company acknowledged a decline in passenger yields, from $438 in 2023 to $406 in 2024, reflecting revenue challenges during the peak summer season.
Investment to support the new model
To strengthen its transition toward this mixed model of ACMI and regular operations, Norse secured a $15 million investment through a combination of equity and debt provided by its founding shareholder, B T Larsen & Co Ltd. The share issuance, with a subscription price 30% above the market price, reflects shareholder confidence in the new strategy. Furthermore, the maturity of a $20 million credit was extended until March 2026, providing short-term relief.
With this strategic shift, Norse Atlantic aims to stabilize its business model in a highly competitive market. ACMI agreements, along with charter contracts and fleet adjustments such as the return of three Boeing 787-8 aircraft, enable the company to transition toward long-term contracts with fixed revenues. This not only strengthens Norse’s financial position but also adds confidence in its operational continuity.
