Quarterly revenue rose 33%, but earnings before tax increased by the lesser rate of 13%.
Norwegian has announced buoyant results for the third quarter, traditionally the strongest period of the year.
But while the quarterly report shows revenue growth of 33% to almost NOK 13.4 billion (€1.4 billion), earnings before tax amounted to NOK 1.6 billion, up 13% – a rate that is some way less than the revenue growth.
In its report Norwegian focuses on the fact that it has managed to cut unit costs, excluding fuel, from 0.33 to 0.30 Norwegian kroner per seat kilometre.
“I am very pleased to present a solid result this quarter with a reduced unit cost despite strong growth. Going forward the growth will slow down, and we will begin to reap the large investments we have made over the years, which will benefit customers, employees and shareholders,” says CEO Bjørn Kjos.
“However, there is no doubt that tough competition, high oil prices and a strong dollar will affect the entire aviation industry, making it even more important to further streamline our operations and continue to reduce costs.”
However, unit costs have in fact increased to 0.43 kroner per produced seat kilometre when including fuel, Check-in.dk points out.
Fuel costs have risen by 85% from NOK 1.99 billion to almost NOK 3.7 billion compared with the same quarter last year.
Fuel hedging is weak, and by the end of the third quarter Norwegian hedged 31% of the remaining fuel consumption in 2018 at an average price of US$555 per ton and 22% of the total consumption in 2019 was secured at a price of $663 per tonne.
The current price of aviation fuel is $750 per tonne, so there is likely to be a bigger bill waiting around the corner.
Year to date, Norwegian has realised a negative EBIT result of NOK 250 million, and with a challenging fourth quarter ahead it will probably emerge with a loss, as was the case last year.