Norwegian (DY, Oslo Gardermoen) says it has reached an agreement over the sale of its Norwegian Air Argentina (DN, Buenos Aires Aeroparque) subsidiary to the Indigo Partners' South American ULCC operator JetSMART (JA, Santiago de Chile Int'l).

In an Oslo stock exchange disclosure, Norwegian said that in order to minimise the impact on passengers, its Argentine operations will be merged into JetSMART Argentina (WJ, Buenos Aires El Palomar) effective immediately.

"JetSMART will continue to operate Norwegian Air Argentina's (NAA) scheduled flights from Buenos Aires Aeroparque airport," it said. "The parties expect that the integration process will take several months, and the Norwegian brand will be phased out in the domestic Argentinian network during this period."

Over the next six months, NAA's three B737-800s will be replaced by JetSMART A320-200s. The Boeings will be returned to service with their Nordic parent.

According to the ch-aviation schedules module, NAA connects Buenos Aires Aeroparque with each of Córdoba Int'l, Iguazu, Jujuy, Mendoza, Neuquen, Salta, San Carlos de Bariloche, and Ushuaia. In contrast, JetSMART Argentina operates four A320-200s on scheduled flights connecting its main hub, Buenos Aires El Palomar, with Cordoba, Iguazu, Mendoza, Neuquen, Salta, San Carlos de Bariloche, Santiago de Chile Int'l, Tucumán, and Ushuaia. It also connects Rosario, SF with Iguazu, Mendoza, and Neuquen and runs various other point-to-point routes between Tucumán, Salta, Mendoza, Iguazu, and Córdoba.

“As Norwegian moves from growth to profitability, we are taking all the necessary actions required to ensure that Norwegian is well-positioned going forward. Over the past few months, we have made important changes to our route network to ensure long-term profitability. Attaining satisfactory profitability for a relatively small domestic operation has proved difficult to achieve, given the overall situation in the country. While most of NAA’s costs are denominated in dollars, revenue is obtained in pesos only, and the sharp depreciation of the peso against the dollar has created a significant gap between costs and revenue,” acting CEO and CFO of Norwegian, Geir Karlsen, said.

“We believe that the agreement we have signed today with JetSMART secures a significant part of what we have built over these two years; continuity of the network and opportunities. It brings the two newest airlines in Argentina into a stronger combined entity that currently carries about 10% of the domestic market and will become the third-largest operator in the country,” he continued.

“We are very excited about the opportunity to combine Norwegian Argentina with our current JetSMART operations. JetSMART has a long-term commitment to Argentina as well as of our vision of becoming the leading ultra-low-cost airline in South America. With this transaction we will continue providing affordable air travel to our customers both from Aeroparque and El Palomar airports,” Estuardo Ortiz, CEO of JetSMART, said.

The terms and value of the transaction were not disclosed.