NEWS SPECIAL REPORT


Budget carrier Norwegian Air hopes a new year sale will bring a cash boost. Ian Taylor reports


Bjorn Kos (top) and Geir Karlsen, who admits the carrier ‘struggled’ with high oil prices


Norwegian rejects cash crisis claim


Norwegian Air launched a new year sale of lonhaul flihts fro atic last ee after disissin reports it faced a cash crisis over hristas.


The carrier has one-way


transatlantic fares on sale from as low as £135 for departures up to the end of May. Fares from Ireland are even lower at €99 one way. Passengers departing from atic can fly to oston or Chicago from £135 one way, New York from £145, Orlando from £150, Las Vegas from £165 and Los Angeles from £170, while one-way premium fares start from £420. Norwegian is due to launch


flights from atic to an Francisco, Miami and Rio de Janeiro in March. Yet it continues to grow faster than it appears able to fill the additional seats. The airline carried more than


37 million passengers in 2018, adding 35 routes and 25 aircraft in the year. It is now the third-biggest operator at Gatwick, with capacity across its network up 34% year on year in December. However, Norwegian’s revenue


per available seat kilometre (Rask) was down four percentage points at the end of the year on December 1. That folloed a near five


“We have launched a series of cost-cutting measures to boost our financials in 2019”


point fall in the carrier’s load factor – a standard industry measure of efficiency  in ovemer. At the same time, Norwegian’s fuel costs continue to rise. The airline lost an estimated $170 million on its fuel hedging in October and November alone.


Trio of challenges


oregian confirmed a £185 million cost-cutting programme on Christmas Eve as it dismissed media reports that it risks breaching an agreement with its banks following an analyst’s report for candinavias anse an hich descried the carriers figures as soft. In a statement issued on


Monday (January 7), Norwegian chief eecutive jorn jos insisted ur international footprint continues to gro stronger. ut he noted tough competition,


high oil prices and operational challenges have particularly


14travelweekly.co.uk10 January 2019


affected our longhaul operations. jos said The company ill


now enter a period of slower groth. e have adjusted and optimised our route portfolio and capacity. We have also made seasonal adjustments for the winter. We have launched a series of cost-reduction measures to oost our financials in 1. The carrier faces three


overriding issues the fuel price, the problems with the Rolls-Royce engines on its oeing  long haul fleet and the cost of a large number of aircraft it has ordered ut can no longer profitaly deploy. hief financial officer eir


arlsen told Travel Weekly in ovemer e are struggling ith high oil prices. t the time, the carrier was 31% hedged on fuel for the final uarter of 1 and 22% hedged for 2019 – a fraction of the rates at which most major airlines hedge. oregian suseuently sought


to catch up, noting in this week’s statement uring the last period, Norwegian has hedged fuel for 1. oever, the oil price has fallen sharply since early November, forcing Norwegian to report The company has an unrealised loss on this hedging.


Divesting aircraft


Norwegian has reached an unspecified compensation deal with Rolls-Royce over the problems ith its engines, hich arlsen reported in ovemer had a huge effect on our profit and loss. e have struggled ith the compensation due to passengers, [and] the costs of leasing to replace the grounded aircraft, he said. oregian noted his ee


The company has reached an agreement with Rolls-Royce, which will have a positive effect from the first uarter of 1. However, efforts to establish a


joint venture ith an aircraft leasing company – to take Norwegian’s aircraft orders off its hands – appear to have stalled. The carrier has more than 200 aircraft on order. arlsen said in ovemer e


are discussing ho to finance these orders, looking for a partner investor. t a minimum, he said e aim to have financing in place for deliveries for the first half of 1. n the event, it managed to secure financing for deliveries up to June. t announced on onday The process of divesting aircraft continues. The discussions about forming a joint venture for aircraft onership also continue.


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