Norwegian Air (NORR.OL) has sacked Chief Executive Jacob Schram who led the budget carrier through restructuring and said it was promoting Chief Financial Officer Geir Karlsen to the top job with immediate effect.
The board voted on June 20 to end Schram’s 18-month tenure but the airline said he would support the carrier on a full-time basis during his notice period up to March 31.
“The board’s decision to fire me came as a big surprise,” Schram said.
His replacement, Karlsen, has been chief financial officer since 2018. For six months in 2019, he was acting CEO for the carrier, which is recovering from bankruptcy protection after the COVID-19 pandemic plunged the heavily indebted airline into a financial crisis.
“It’ll be very exciting to see whether we can make this company profitable,” Karlsen said. “We have a unique opportunity now with Norwegian to create the company I have wanted for a long time.”
The survival plan ended Norwegian’s long-haul business, leaving a slimmed-down carrier with Nordic and European routes.
The company declined to elaborate on Schram’s departure but said his replacement was the right person for the job.
“Karlsen has successfully led the financial reconstruction of Norwegian and has the competencies, focus, trust and dedication that makes him the best choice as CEO of Norwegian,” said Svein Harald Oeygard, the chair of Norwegian’s board.
Karlsen’s annual base salary will be 4.5 million Norwegian crowns ($521,000), unchanged from his CFO’s wage, but he will also receive a performance based bonus and share options. The fixed salary was less than Schram’s pay of 7.0 million crowns.
The board tussled with Schram over his severance package, which gives him the right to 15 months pay on top of the nine-month notice period, or 14 million crowns over 24 months.
“An effort has been made by the board to bring the severance payments to a level reflecting the challenges of the industry, but no agreement could be reached,” Norwegian said.
Schram said he had been willing to make concessions to adjust his pay, but also said no agreement had been reached.
Bankruptcy courts in Oslo and Dublin last month gave their approval for Norwegian to sharply cut its debt by converting it to stock and to raise new capital.
The chair, Oeygard, was appointed in early June after those proceedings were completed and new equity capital was secured.
The search for a new CFO commences immediately.
($1 = 8.6455 Norwegian crowns)