Norwegian Air chief executive Bjoern Kjos resigned on Thursday amid news of major losses and large debts, a company press release revealed.
Chief Financial Officer (CFO) Geir Karlsen has been appointed as interim CEO until a permanent CEO found.
While its heavily discounted transatlantic fares have shaken up the market, Norwegian has been left with an unwieldy.
Some analysts said his departure could make it easier to sell the airline after talks about a deal with British Airways owner IAG fell through in January. "I am way overdue". A former fighter pilot, Kjos helped to expand what was a tiny Norwegian airline housed in pre-fabricated barracks on the edge of Oslo airport.
"People ask me 'isn't Norwegian your baby?' It is not my baby, it is the baby of 11,000 people", Kjos told a news conference, referring to the number of Norwegian's employees. He added that he hoped Norwegian could find other partners to build similar alliances such as the existing agreement with easyJet.
European airlines have been struggling with overcapacity and there has always been talk of further consolidation in the industry, with Norwegian Air seen as a prime target.
Under the leadership of Mr Kjos, aged 72, Norwegian Air developed from a small domestic airline into Europe's third biggest low-priced carrier.
"I look forward to spending more time working on specific strategic projects that are crucial to the future success of Norwegian", said Kjos.
The carrier's fleet consists mostly of Boeing aircraft and was forced to postpone sales of six 737 Max 8s, as well as take emergency actions since March to reduce profit losses with contingencies to minimise flight disruptions and cancellations. "And in the middle of this, the guy in the cockpit is taking a more peripheral role".
Its shares traded 2% higher at 0723 GMT.
Norwegian Air expects to be able to operate flights again in October this year with Boeing 737 MAX aircraft, which are now being grounded worldwide for safety reasons.
The 737 Max fleet of jets was grounded after two crashes, the first a Lion Air flight which crashed into the sea off Jakarta past year, and the second an Ethiopian Airlines' flight which crashed shortly after take off from Addis Ababa in March.
The chief executive of one of Europe's largest low-priced carriers stepped down Thursday from the company he founded and still partially owns. The company, which started with 130 employees and four planes, now has 162 aircraft.