It comes as the airline reports its “best-ever” quarterly financial result.
The deal with China Leasing International Corporation DAC (CCBLI) is said to be to finance, own and lease aircraft that Norwegian has on order.
“The agreement will strengthen Norwegian’s financials considerably,” the airline said.
Initially, the JV comprises 27 Airbus A320 Neo aircraft to be delivered from 2020-2023. CCBLI will also provide aircraft financing for aircraft within the JV.
CCBLI is a 100% owned subsidiary of China Construction Bank Corporation – “the world’s second largest bank by asset value”.
CCBLI will be the majority owner of the JV with a 70% share, with Norwegian, through its wholly owned subsidiary Arctic Aviation Assets DAC, holding the remaining 30%.
The JV will reduce Norwegian’s committed capital expenditure by approximately US $1.5 billion based on the initial 27 aircraft, the airline said.
Aircraft deliveries to the JV will commence in Q1 2020. CCBLI has committed to provide senior debt financing to the JV for the 27 aircraft.
“This agreement will contribute significantly to reducing our current and future capital expenditure. The JV is one of many important initiatives that need to be realised to deliver on our strategy of moving from growth to profitability,” said acting chief executive of Norwegian Geir Karlsen.
“This JV is an important first step in building a strong strategic partnership between our two companies,” Karlsen added.
Elsewhere, Norwegian has reported its “best-ever quarterly result”.
Profit before tax improved by 38% to Nok 2.2 billion (£187 million) compared to the same quarter last year.
Unit revenue and revenue per passenger kilometre (yield) both increased by 3% this quarter.
Total revenue was Nok 14.4 billion (£1.2 billion), an increase of 8% from the same period last year, primarily driven by intercontinental growth.
The load factor was 91.2%, up 0.7 percentage points.
“Norwegian’s third quarter results show that we are delivering on our strategy of moving from growth to profitability. We are delivering record-high earnings, record-high operating revenue and reduced unit cost, even when hit by operational issues outside of our control,” said Karlsen.
As Norwegian’s international foothold has continued to grow, the United States is now the largest market in terms of revenue, followed by Norway, Spain and the UK.
