Norwegian Air Passenger Income Growth Misses Expectations In March
Norwegian Air earned less money than expected from each traveller in March but its aircraft filled up at a faster pace than analysts anticipated, the budget carrier's latest monthly traffic report has shown.
The grounding of its Boeing 737 MAX jets following the deadly crash of an Ethiopian jet last month has forced Norwegian to lease other aircraft as the peak summer season nears, further complicating its drive for profitability.
While Norwegian has said it would seek compensation from Boeing for the cost of grounding its eighteen MAX fleet, its chief executive has also defended the aircraft model.
"We have had some productive meetings with Boeing where we have discussed how we can manoeuver through the difficulties the MAX situation is causing Norwegian," CEO Bjoern Kjos said in a statement.
Last week, Kjos, a former fighter pilot, said that he had tested Boeing's new flight control software in a simulator, finding it foolproof and adding he would gladly take his own family on board a Norwegian MAX aircraft.
Norwegian's March yield, a measure of revenue per passenger carried and kilometres flown, rose to 0.33 Norwegian crowns ($0.0385) from 0.32 crowns in February, while analysts in a Reuters poll expected an increase to 0.34 crowns.
The airline's load factor, showing how many seats are sold on each flight, stood at 85.4% for the month, beating forecast of 82.7% but was still down from 86.7% a year earlier.
While the yield lagged expectations, the higher load factor helped compensate the shortfall, said brokerage Pareto Securities, which has a buy recommendation on Norwegian's stock.
The carrier's first-quarter adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) will likely swing to a profit of about 600 million Norwegian crowns ($69.93 million) from a year-ago loss of 880 million, Pareto added.
Norwegian has curbed its rapid growth this year to focus instead on cutting costs and turning a profit amid stiff competition, while also raising 3 billion crowns ($349.71 million) from shareholders to boost its balance sheet.
Its capacity expansion, as measured by available seat kilometres (ASK), peaked at 51% growth year-on-year last June and has since declined, hitting 11% in March, lower than the 12.4% that analysts forecast.
The mid-April Easter holiday is expected to boost Norwegian's traffic numbers, the company said, while noting that last year's Easter had been in March.
"Easter will always affect the figures positively," Norwegian said.