Published on May 1st, 2019 | by Mark Dwyer0
Norwegian Reports Increased Revenues But Losses Continue
Norwegian’s first quarter of 2019 was characterised by reduced costs, increased revenue and significantly improved on-time performance. The net loss was NOK 1,489 million (€143.38m), while the company’s unit cost excluding fuel decreased by 8 per cent during the same period. The total revenue was NOK 8 billion (€824m), up 14 per cent.
Norwegian’s key priority is returning to profitability through a series of measures, including an extensive cost-reduction program, an optimised route portfolio and sale of aircraft. The company’s internal cost reduction program #Focus2019 has been implemented, achieved cost reductions were NOK 467 million (€48.1m) this quarter. The company has also strengthened its balance sheet through a fully underwritten rights issue of NOK 3 billion (€309m), which secures a stronger financial position. The company is well positioned to continue to attract new customers, not least in the long-haul market, where the development is stronger than in the short-haul market.
For the first quarter, the total revenue was NOK 8 billion (€824m), an increase of 14 per cent from the same period last year, primarily driven by intercontinental growth and increased traffic in the Nordics. More than 8 million passengers flew with Norwegian this quarter, a growth of 9 percent. The load factor was 81 per cent. The company’s unit cost excluding fuel, decreased by 8 per cent compared to the first quarter in 2018. The punctuality increased significantly this quarter, from 73 to 81.3 percent. The regularity was unchanged at 98.7 percent.
“I’m pleased with the positive developments this quarter, despite the 737 MAX issues. We have taken a series of initiatives to improve profitability by reducing costs and increasing revenue. We are optimising our base structure and route network to streamline the operation as well as divesting aircraft, postponing aircraft deliveries and not least implementing our internal cost reduction program, which will boost our financials. I am also pleased that booking figures and overall demand for the coming months look promising,” said CEO of Norwegian, Bjørn Kjos.
Arctic Aviation Assets, an Irish subsidiary of Norwegian Air Shuttle, reached an agreement in principle with Airbus regarding a restructuring of the fleet delivery schedule, including both A320neos and A321LRs. The restructuring will reduce capital expenditure by approximately €598m for 2019 and 2020 and €2.14bn over the next five years. Arctic Aviation Assets also reached an agreement with Boeing to postpone the delivery of 14 B737 MAX aircraft originally due for delivery in 2020 and 2021.
Boeing 737MAX Groundings Drag On
In March, Norwegian temporarily suspended operation of 18 Boeing MAX 8 aircraft. The company combined flights and booked customers to other departures within Norwegian’s own network, consequently reducing the impact on passengers. The company will continue to limit passenger disruptions by also offering flights with wetlease companies whenever necessary. The number one goal is to operate its schedule according to plan.
“Our dedicated colleagues at Norwegian have been working day and night to find solutions for our customers. They will continue to do their utmost to ensure that all flights continue to depart as planned, regardless of how long the MAX stays out of service,” Kjos continued. “We have had some productive meetings with Boeing where we have discussed how we can manoeuvre through the difficulties the MAX situation is causing Norwegian,” Kjos added.
As things stand, Cork and Shannon are both to lose their Norwegian Airways transatlantic services for summer 2019 and the Dublin service has been cut back by 50pc. OAG filings for Norwegian transatlantic B737s for July show no Cork-Providence, Shannon-Providence or Shannon-Stewart filings (3w, 4w and 3w last year), Dublin-Providence down to 4w from daily, and Dublin-Stewart down to daily from twice daily, probably driven by concerns of non-availability of B737 MAX aircraft.
Norwegian wins ‘Best Low-Cost Carrier in Europe’ at the 2019 Passenger Choice Awards™
Norwegian has been named ‘Best Low-Cost Carrier in Europe’ at the prestigious 2019 Passenger Choice Awards™. The APEX Passenger Choice Awards are based on passenger feedback gathered through APEX’s partnership with TripIt® from Concur®, the world’s highest-rated travel-organising app. Using a five-star scale, more than one million flights were rated by passengers across nearly 500 airlines from around the world between 1 July 2017 and 31 June 2018. First, passengers rated their overall flight experience from one to five stars. On the same screen, passengers were given the opportunity to provide anonymous ratings in five subcategories: seat comfort, cabin service, food and beverage, entertainment, and Wi-Fi. The single screen rating allows airline passengers to easily rate their flight in less than 15 seconds. The Passenger Choice Awards were independently certified by a professional external auditing company hired by APEX.