Despite the board’s efforts to reduce Jacob pay-off to what it called “a level reflecting the challenges of the industry”, he will receive two years’ salary. The airline said on Monday that its board had voted to end Jacob Schram’s time as chief executive with immediate effect and replace him with the well-regarded Geir Karlsen.
Svein Harald Oygard, Norwegian’s chair, said Karlsen was the board’s choice to try to finish the turnround as Covid travel bans look set to ease across Europe.
Norwegian has cut its debt significantly through a large-scale financial restructuring in Ireland and Norway after it expanded too quickly and was hit by the Covid-19 pandemic. It has abandoned its lossmaking long-haul operations and will focus more on its Nordic home market and flights from there to the rest of Europe.
“In parallel, further efforts will be made to strengthen Norwegian’s position as a low-cost airline and to return the company to sustainable profitability. Geir is the ideal CEO to lead these efforts,” he added.
Karlsen, who has been Norwegian’s chief financial officer since April 2018, was acting chief executive for five months in 2019 following the departure of founder Bjorn Kjos.
Many analysts were surprised when Karlsen, who had already led Norwegian through several capital increases, was overlooked as permanent chief executive in favour of Schram, a former McKinsey consultant and boss of a petrol station operator. The decision appeared to indicate that Norwegian’s then board thought the airline was out of financial trouble, only for it to be plunged back into it by the pandemic.
Karlsen has previously worked with John Fredriksen, the shipping and oil magnate born in Norway who is now Norwegian’s biggest shareholder and known for ousting managers. The new chief executive will receive a base salary of NKr4.5m ($516,000), plus bonuses and share options.
Norwegian’s survival has led Wizz Air, the Hungarian low-cost carrier, to call off a shortlived entry into domestic flights in Norway. Kjos has backed a new airline aiming to revive Norwegian’s former low-cost long-haul business.
Karlsen said: “Our main priorities will be to increase the profitability of our low-cost operations and to attract new and existing customers in all key markets. Norwegian is well positioned following the recent reconstruction of the company.”