Higher fuel costs burn low-cost airline Norwegian Air as it unveils larger loss than expected

Rebecca Smith
Norwegian has run into turbulence from higher fuel costs
Norwegian has run into turbulence from higher fuel costs (Source: Norwegian)

Low-cost airline Norwegian has flown into turbulence caused by higher fuel costs and currency effects with a worse-than-expected quarterly loss.

However, the airline said it maintained its outlook for the period with production growth of 30 per cent.

Read more: Norwegian boss Bjorn Kjos shrugs off IAG’s low-cost, long-haul push

The figures

The carrier reported a loss of 1.5bn Norwegian krone (£136m) after losing 800m krone a year earlier, citing higher fuel charges and tough competition, as well as the stronger krone. Fuel costs soared by 77 per cent to more than 1.5bn krone.

The rise in passenger numbers was not enough to offset the loss; growing 14 per cent to 6.7m as 39 new routes were added.

Overall capacity grew by 24 per cent year-on-year to give a load factor of 84 per cent during the first quarter.

The airline said its strongest growth for the first three months of the year was in the US, Spain and France.

Read more: Norwegian launches Gatwick flights to Seattle and Denver from £199

Why it’s interesting:

The airline that has become well-known for its low-cost offers and transatlantic push has been buffeted by rising costs as the firm builds its fleet.

It has been eyeing rapid expansion with the launch of 39 new routes this quarter, making its much-anticipated transatlantic approach after receiving US approval in December for its Irish subsidiary to operate routes across the Atlantic.

But is there a risk of the airline’s low fares being priced up amid a difficult climate? Not just yet, as Norwegian boss Bjorn Kjos says the airline’s “well-established” long-haul operation proves that “customers want affordable fares” along with new aircraft on intercontinental routes. And Norwegian says its global growth strategy will provide economies of scale and lower unit costs.

What the company said:

Norwegian chief executive Bjorn Kjos said: "In this quarter, we particularly see the effects of higher fuel costs combined with a strengthened krone against the British pound, euro and Swedish krone, which accounts for almost half of our sales."

In addition, the figures are affected by the fact that Easter was not in the first quarter, like last year. At the same time, we are filling aircraft and attracting more passengers both in new and more established markets.

Read more: Norwegian has launched a new London to Singapore flight – from just £179

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