Norwegian suffers as earnings slump

Budget carrier’s second-quarter results hit shares
As it struggles to take a bigger slice of the transatlantic market, low-cost carrier Norwegian posted disappointing second-quarter results on Thursday, admitting that the outlook for growth and for costs was worse than expected.
The strategy of Europe’s third-largest budget airline going head-to-head with well-established flag carriers comes with risks, such as having to buy or lease more expensive planes, and it has been hit by rising costs this year.
Second-quarter adjusted operating profit before leasing and depreciation (EBITDAR) fell 21% to NOK 1.19 billion (€126 million), well below a Reuters poll forecast of NOK 1.51 billion. The airline blamed the results on additional costs for leasing aircraft.
“Light years behind expectations,” was how one financial analyst, Swedbank’s Hans Ludvigsen, put it, as the airline’s shares fell by almost 15% to their lowest ebb since October 2014.
Norwegian now expects capacity, measured in available seat kilometres (ASK), to rise 25% this year, down from an earlier estimate of 30%. It has also raised its forecast for unit costs (CASK).
Norwegian’s chief financial officer suddenly resigned last week after 15 years in the job.


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