Wednesday 28 September 2016

Norwegian Air's Irish unit posts near-$60m loss

Published 12/08/2016 | 02:30

Cabin crew at Norwegian Air Shuttle, the parent company of the low-cost airline
Cabin crew at Norwegian Air Shuttle, the parent company of the low-cost airline

Norwegian Air International (NAI), the Dublin-based carrier whose efforts to launch flights between Cork and America have been stymied by US officials, posted a $59.7m (€53.4m) loss last year.

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Total revenue at the airline, which is a subsidiary of Norwegian Air Shuttle, hit $719m (€644m), according to accounts for the Irish carrier.

That included ticket and ancillary revenue of $577.7m and so-called wet lease revenue of $141.2m.

The airline operates services throughout Europe, and also to Asia. The wet lease revenue is turnover NAI generates from leasing its aircraft and crew to group companies.

The airline received an air operator's certificate from the Irish Aviation Authority in 2014.

But a delay by the United States Department of Transportation in granting NAI a permit to allow it fly to America has sparked a major political row between the US and the European Union.

NAI applied for a permit over two years ago. Earlier this year, the US Department of Transportation signalled it intended to grant the permit. But since then, the process has stalled. It's likely it will be left to the next the US administration to deal with the matter.

Last month, the EU's Transport Commissioner, Violeta Bulc, warned US Secretary of Transportation Anthony Foxx that the failure to issue a permit to NAI could damage plans for the proposed EU-US Transatlantic Trade and Investment Partnership.

"At a time when closer bilateral ties are being put into question by many sectors of our societies, we should carefully consider the implications that this long and protracted dispute could have," she told Mr Foxx.

NAI has established operations in Dublin to benefit from the Open Skies agreement that exists between the United States and the European Union. It enables any airline based in the EU to fly from any location in the EU to any location in the US, and vice versa.

If it secures a US permit, NAI has said it will launch a low-cost service between Cork and Boston initially, and eventually, another to New York.

US aviation unions claim NAI has based itself in Ireland to circumvent more stringent labour rules in Norway, something that NAI has consistently denied. The Irish Airline Pilots'Association has also opposed NAI's plans to use Ireland as a base to fly to the US from Europe.

The delay by US authorities in issuing NAI a permit has prompted the EU to seek arbitration on the matter.

NAI notes in its accounts that the granting of a permit is thought to be imminent. But the assertion is certainly optimistic.

NAI said that it made a loss last year due to off-off new base set-up costs, as well as aircraft and financing costs, and that it expects to be profitable in future years.

The airline's fuel costs totalled $153.3m last year, while its operational staff costs were $99.2m.

NAI has 50 of its own employees, who work in administrative roles, and hires operational personnel from group companies.

Catering costs totalled $22.5m, while its airport costs were $106.2m.

Irish Independent

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