Business Irish

Wednesday 18 September 2019

Norwegian upbeat as loss hits share price

Norwegian Air Shuttle chief executive Bjorn Kjos
Norwegian Air Shuttle chief executive Bjorn Kjos
John Mulligan

John Mulligan

Analysts have warned that Norwegian Air Shuttle needs to plot an "improved trajectory" during 2018 after racking up another quarterly loss and missing estimates as the low-cost carrier continues to expand its fleet.

CEO Bjorn Kjos admitted that he was "not at all satisfied" with the airline's performance in 2017, as it notched up a €30.6m (298.6m krone) loss. That compared to a €116m profit in 2016.

It made a fourth-quarter loss of €94.2m compared to a €20.2m profit in the final quarter of 2016.

Its shares slumped more than 4pc at one stage yesterday.

While the airline's revenue shot up by 19pc to €3.17bn (30.94bn krone) as its network widened, its unit costs, excluding fuel, rose 6pc. Maintenance, aircraft wet-leasing, handling as well as sales and distribution all contributed to the higher costs.

"For Norwegian's investment case to stand up to scrutiny, this trend will need to show an improving trajectory, making 2018 an especially important year," said Davy Stockbrokers of the airline's fourth-quarter results.

Norwegian added 32 brand-new aircraft to its fleet last year, resulting in a 25pc increase in its available seat kilometres - a standard industry capacity measure. It carried 33.1 million passengers past year, which was 13pc more than in 2016.

The carrier, which has poached pilots from Ryanair's 737 fleet, also said that its personnel expenses in the fourth quarter of 2017 jumped 36pc to €153m. It said its unit cost for personnel rose by 5pc in the last quarter of 2017 compared to the final quarter of 2016.

"Ramp-up costs for preventing pilot shortages in the busy season and to prepare for future growth have affected the unit cost in the fourth quarter," it noted. Norwegian added that currency swings had also adversely hit the figure.

"Norwegian is far better positioned for 2018, with stronger bookings, a growing network of intercontinental routes complementing our vast European network and not least, a better staffing situation," said Mr Kjos.

"Our major global expansion reaches its peak in the second half of 2018, when 32 of our 42 Dreamliners on order will have been put into service."

Norwegian Air has aggressively expanded its global network, relying on a new generation of aircraft to help drive its low-cost operating model.

Its fuel-efficient Boeing 787 Dreamliners and 737 Max aircraft are used to ply routes around the world.

The carrier's Norwegian Air International unit launched services from Ireland to the United States last year.

It recently announced that some of those services will have extra flights for the summer season.

Norwegian Air has about 145 owned aircraft in its fleet.

Irish Independent

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