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Norwegian Air Postpones 16 Aircraft Deliveries In Shift Towards Profitability

Published on Feb 11 2019 9:00 AM in General Industry tagged: Trending Posts / norwegian air

Norwegian Air Postpones 16 Aircraft Deliveries In Shift Towards Profitability

Norwegian Air has postponed delivery of 16 aircraft from Boeing and Airbus to cut its capital expenditure as part of a broader strategy shift to focus on profitability over growth.

Norwegian will put off delivery of 12 Boeing 737 MAX aircraft from 2020 to 2023 and 2024, and four Airbus 321LR from 2019 to 2020, reducing its investments this year and leading to a further significant cut next year, it said.

"The postponements are in line with the company's strategy of capitalising on the scale built up over the last few years," Norwegian said in a statement.

The airline, which has rapidly expanded its transatlantic business, recently announced plans to cut costs and raise cash from owners after IAG, British Airways' parent company, abandoned its attempt to buy the firm.

It did not say whether the changes of delivery schedules would affect prices for the aircraft.

Norwegian made more money than expected from each passenger in January but was less successful in filling its planes as it resisted slashing fares to sell tickets, its monthly traffic report showed.

"Norwegian has been through a period with significant growth, but now the company will change its strategic focus from expansion and growth to profitability," Chief Executive Bjoern Kjos said, echoing recent statements by the board.

The airline has shaken up long-haul rivals by offering cut-price transatlantic fares, but its rapid expansion has left it with hefty losses and high debts, leading it to shift recently to focus on bolstering its finances.

Statistics

For the quarter-to-date, Norwegian Air estimated a gain of NOK 627 million from hedging, including NOK 701 million related to unrealized hedge positions.

Norwegian's yield, a measure of revenue per passenger carried and kilometres flown, grew to 0.35 Norwegian crowns from 0.32 crowns a year earlier. Analysts had expected an increase to 0.33 crowns.

Norwegian expanded its capacity in January by 27% year-on-year but revenue-generating passenger kilometres increased by only 18%, lagging a forecast of 20.1% passenger growth in a Reuters poll of analysts.

The airline's load factor, a measure of how many seats are sold on each flight, fell to 76.1% in January, traditionally a time when travel ebbs following the holiday season. Analysts had forecast a load factor of 79.1% compared with 82% a year earlier.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition. 

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