Third-largest budget carrier in Europe blames $170 million loss on engine issues, fuel and competition
For the second time in two years, Europe’s third largest low-cost airline, Norwegian, has reported a significant loss.
According to the carrier, the shortfall in revenue reached $170 million (NOK 1.5 billion) and occurred due to engine issues, fuel hedge losses and strong competition.
“The company was hit by several unforeseen challenges during 2018,” Norwegian said.
“Continued tough competition and high jet fuel prices affected the results, in addition to significant costs related to Rolls Royce engine issues on the [Boeing 787] Dreamliners.”
However, the carrier has confirmed it would make efforts to increase its profits in the future.
“The key priority going forward is returning to profitability through a series of measures, including an extensive cost reduction programme, an optimised route portfolio and sale of aircraft.”
Securing a deal with the engine manufacturer for Dreamliners, Rolls Royce, is one of the measures has Norwegian imposed.
“Norwegian has now reached an agreement with the engine manufacturer, which will have a positive effect in 2019. The Dreamliner operation is now running smoothly, and we don’t foresee that engine issues will affect our service going forward.”
The year 2019 will also see a reduction in growth and investments. An overall reduction in costs and an increase in revenue should provide for a return to profitability.
Despite the continuing financial troubles of the carrier, 2018 saw an improvement of 19 per cent from 2017. The net deficit of 2017 was $210 million (NOK 1.8 billion).
In 2018, Norwegian continued to sustain financial losses even though the number of passengers grew by 13 per cent to more than 37 million with a load factor of 85.8 per cent, as compared to the previous year.
The total revenue for 2018 grew to over $4.7 billion (NOK 40 billion), which meant a 30 per cent increase over 2017. The total capacity grew by 37 per cent as Norwegian’s fleet welcomed 25 new aircraft.