Bjorn Kjos, a pioneer of low-cost travel as co-founder of Norwegian Air Shuttle ASA, is stepping down as chief executive officer after making progress toward resolving the carrier’s debt crisis.
Kjos, who helped found Norwegian in 1993 and led its rapid growth, will leave the post immediately, the company said Thursday in a statement. Chief Financial Officer Geir Karlsen will become interim CEO until a permanent successor is found.
A former fighter pilot, Kjos established Norwegian as a major force in the European short-haul market, taking on no-frills giants led by Ryanair Holdings Plc. After that market proved tough to crack, he altered course to target low-cost long-haul flights, challenging giants such as British Airways on trans-Atlantic routes.
His heavily discounted fares proved popular with the public but margins were thin and fleet costs stretched the balance sheet to breaking point. Over the past year, Kjos, 72, has tempered growth to stabilize the company and preserve profit.
“You shouldn’t lead an airline past your 70s,” Kjos said on a video call after the company reported second-quarter results. “I’m way overdue to retire.”
The turnaround picked up pace in the second quarter, as earnings before interest and tax more than tripled to 622.8 million kroner ($73 million). The improvement has been secured by dropping the worst-performing routes, slowing aircraft deliveries and generally reining in the pace of growth. Capacity gained 6% in the period versus a 48% surge a year ago.
Still, Norwegian shares declined 5.8% to 42.10 kroner as of 11:48 a.m. in Oslo, dragging the return to negative 69% in the past 12 months, during which British Airways owner IAG SA dropped a takeover bid and a rights offering announced in February diluted equity.
Analysts at DNB suggested the CEO change without a permanent replacement, along with further cuts to growth plans and a smaller cash balance than expected, were negatives for the stock and would trigger a revision to full-year earnings estimates. A 700 million-kroner hit from the grounding of the Boeing Co. 737 Max, as well as Norwegian’s low fuel hedges, have also left the carrier exposed, Goodbody analysts said in a separate note.
Succession Plan
Kjos was the driving force behind the airline and “built it from nothing,” said Davy Stockbrokers analyst Stephen Furlong.
He has been CEO since 2002, while taking stints as chairman, guiding the company from a regional operator with 130 staff and four planes to a global airline employing more than 11,000 people and operating 162 aircraft.
“This was my last presentation, you can be happy with that,“ Kjos said with a wide grin, his arms outstretched. “Geir is awesome,” he said in a subsequent interview.
He had been saying for months that he wanted to retire after earnings showed signs of a recovery. Kjos will remain an adviser to Chairman Niels Smedegaard, 57, who plans to take on a more active role as the company shifts its focus toward profitability.
The ultimate fate of Norwegian remains unclear, with a report last week suggesting IAG is planning a fresh bid after earlier approaches were rejected — though the London-based group said that wasn’t the case.
Deutsche Lufthansa AG also examined a purchase and the departure of Kjos following the exit in May of his ally, former chairman Bjorn Kise, may stoke further interest among major industry players.
“Whether it’s IAG or someone else, all this must be dealt with by the board,” Kjos, a significant owner, told Bloomberg. “We’re just a shareholder with less than 20%, so we’ll follow the stream.“
Another major item on the to-do list is securing a joint-venture plan that would bring in new financing for the airline’s fleet and help fund a bond maturity later this year. Interim CEO Karlsen said Thursday that talks on the JV are progressing and the company expects clarity within weeks.
“We’ve had many interested parties who wanted to be part of this, and we chose one that we believe is a good fit and has good penetration in Asia, that was a criterion,” Kjos said.
More must-read stories from Fortune:
—Switzerland’s stock-trading standoff with the EU provides a glimpse of life after Brexit
—The Bahrain Conference: What the experts and the media missed
—Ford’s new plan for Europe: Fewer jobs, more SUVs
—The British Royal Family’s costs are skyrocketing. Here’s why
—Listen to our new audio briefing, Fortune 500 DailyCatch up with Data Sheet, Fortune‘s daily digest on the business of tech.
