Norwegian widens losses in 1Q as expansion continues

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Norwegian widens losses in 1Q as expansion continues

Unread post by bimjim » Sat Apr 23, 2016

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Norwegian widens losses in 1Q as expansion continues
Alan Dron
Apr 22, 2016

Low-cost carrier (LCC) Norwegian has reported a first-quarter net loss of NOK800 million ($96 million), widened from a net loss of NOK538.3 million a year ago. Revenue for the period was up 23% at NOK4.96 billion, compared to NOK4.03 billion last time.

Fast-expanding Norwegian, which has a large European short-haul network and an increasing number of long-haul—primarily transatlantic—sectors saw ASKs rise 17% in 1Q to 11.8 billion. However, passenger numbers more than kept pace, with RPKs up 20% at 10 billion.

Passenger numbers increased 17%, rising to 5.82 million compared to 4.96 million a year ago, with load factor of 85%, up 2 points, a record for the quarter that is traditionally the lowest-demand period of the year.

Norwegian said the increased losses were the result of a combination of a weakening of the Norwegian krone against the dollar and the effects of fuel-hedging contracts. Together, these contributed losses of NOK528 million.

Norwegian reported its strongest growth from its London Gatwick base, from which many of its long-haul services operate. “The long-haul operations are becoming significantly more important,” CEO Bjørn Kjos said. “We also see growth in the Nordics and in Europe in general.”

The carrier’s long-haul operations will strengthen further if the US DOT’s recent tentative approval for new transatlantic services by the airline’s Ireland-based long-haul subsidiary Norwegian Air International survives objections from US carriers and trade unions. The deadline for such objections is May 6.

“We also see that the Scandinavian and European route networks both play an increasingly important role in our long-haul strategy, as many of our passengers connect from short-haul to long-haul and vice versa,” Kjos said. This connectivity may increase if an agreement between the Oslo-based carrier and Ireland-based LCC rival Ryanair for the latter to feed short-haul passengers into Norwegian’s long-haul flights is consummated.

Kjos added that increasing numbers of business travelers were choosing Norwegian for flights, which would repeat a pattern seen in recent years with LCCs Ryanair and easyJet. Kjos said Norwegian had signed agreements with several large corporations in recent months to provide travel for staff.

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