Norwegian has revealed increasing losses for the forth quarter of 2018. The budget airline group blames engine issues, fuel hedge losses and tough competition in a period when it grew significantly.
Net results for Q4 were a loss of NOK -3,011.9m (-£271m) against NOK -712.8 (-£64m) in the same quarter of 2017, while full year results were NOK -1,454,1 (-£131m) versus NOK -1793.9 (-£161m) a year ago.
Norwegian's total revenue was more than NOK 40bn (£3.6bn), an increase of 30% percent over 2017. However, 25 new aircraft entered the fleet and capacity grew by 37% while passenger numbers increased by only 13% to 37m. The airline's load factor (the proportion of seat occupied) was 85.8%.
Norwegian has delayed some Boeing 737-MAX deliveries from 2020 to 2023
and 2024 to help constrain growth and contain losses. (Anna Zvereva)
The company says it was hit by several unforeseen challenges during the year. Continued tough competition and high jet fuel prices affected the results, in addition to significant costs related to Rolls Royce engine issues on its Boeing 787 Dreamliners. The airline was forced to wet lease aircraft to avoid delays and cancellations on intercontinental flights, but has since reached an agreement with the engine manufacturer which it says will have a positive effect in 2019.
Norwegian CEO Bjørn Kjos said: "We have taken a series of initiatives to improve profitability by reducing cost and increasing revenue going forward. We have optimised our base and route structure to streamline the operation as well as divested aircraft, postponed aircraft deliveries and not least started an internal cost reduction program, which will boost our financials and bring us back to profitability."
He continued: "Going into 2019, we will enter a period of slower growth and fewer investments, while constantly looking for new and smarter ways to improve our efficiency and offer new products and services to attract new customers."
The airline has recently announced a NOK 3bn rights issue, six crew base closures, and has agreed to defer some aircraft deliveries. Norwegian Air Shuttle's leasing arm, Arctic Aviation Assets, has reached an agreement with Boeing that will result in 12 Boeing 737 MAX aircraft that were originally expected in 2020, being handed over in 2023 and 2024. Four Airbus A321LRs will also be delayed from this year to 2020.
Text © The Aviation Oracle