Brexit and strong competition blamed for ‘challenging time
Low-cost airline Norwegian made a net loss of 300m kroner (£27.4m) in 2017, particularly hit by a sluggish performance during the last three months of the year. The carrier said: “The airline industry is undergoing a challenging time as a consequence of Brexit and strong competition.”
Between October and December, the airline lost 918m kroner, representing over £10 for every passenger carried in the fourth quarter.
Bjorn Kjos, Norwegian’s chief executive, said: “We are not at all satisfied with the 2017 results.
“However, the year was also characterised by global expansion driven by new routes, high load factors and continued fleet renewal.
“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 was founded 25 years ago, with a single route from Bergen to Trondheim. It has grown from a tiny regional operation to become Scandinavia’s largest airline and the third-biggest budget carrier in Europe, carrying 33 million passengers during 2017.
It has an expanding base at Gatwick, where the maiden Norwegian flight from Buenos Aires arrived in the early hours of Thursday morning. It uses a Boeing 787 Dreamliner jet.
Norwegian is opening an Argentinian subsidiary to fly domestic and regional services, with connections from the Gatwick service.
Services from the Sussex airport to Chicago and Denver begin next month.
Yesterday Norwegian outlined hopes for further expansion to Asia and the Americas. But British Airways has been aggressively targeting Norwegian, setting up routes from Gatwick to Oakland in California and Fort Lauderdale in Florida, in direct competition with the budget airline.
Writing ahead of the results, analyst Bjorn Fehrm of Leeham News and Comment said: “A fast expansion costs money. This is fine if done by a company with a solid balance sheet and enough cash reserves. Norwegian has neither.”
The airline itself said: “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.”
But Norwegian concedes: “Future demand is dependent on sustained consumer and business confidence in the company’s key markets.