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Norwegian Boeing 737 MAX 8 (image: Norwegian)

MAX crisis risks Norwegian’s return to profit

The company sees “increased risk related to the target of a positive net profit in 2019”, the airline warns.

Norwegian has said the ongoing grounding of the Boeing 737 MAX may stall its planned return to profit this year, Reuters reports.

“Due to the uncertainty related to the MAX grounding, the company sees increased risk related to the target of a positive net profit in 2019,” the airline said.

Before the MAX crisis, prompted after the crash of a second aircraft of the type in March, the loss-making carrier had embarked on a broad cost reduction programme including selling planes, postponing aircraft deliveries, reducing frequencies and cutting routes.

It posted a first quarter loss of NOK 1.49 billion (€154 million) last week, a significant increase on the NOK 46.2 million it announced for the same period last year.

Norwegian expects to incur costs of NOK 300-500 million over the coming six months as a consequence of the grounding of its MAX jets.

Order book
Norwegian has already significantly trimmed its order book, including the partial postponement of its order for dozens of new aircraft, forecast to save around €500 million over the next two years.

In its Q1 outlook it said it had also come to an arrangement with Boeing to postpone delivery of a further 14 MAX planes due for delivery in 2020 and 2021.

And it revealed further restructuring of its order with Airbus for new A320neo and long-range A321 aircraft, which it says will reduce capital expenditure by a further €600 million in 2019 and 2020 and €2.15 billion over the next five years.

Norwegian’s shorter-term negotiations with Airbus and Boeing will amount to savings of €1.9 billion over the next two years.

The airline posted total Q1 revenue of NOK 8 billion, up 14% year-on-year, while unit costs excluding fuel decreased 8% during the same period.

Passenger numbers rose 9% to 8.12 million on a load factor of 81%, down 3.5 percentage points on Q1 last year.

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