Norwegian reports turbulence from costs of rapid expansion with full-year loss

 
Rebecca Smith
The airline expects a brighter outlook for 2018
The airline expects a brighter outlook for 2018 (Source: Norwegian)

The boss of Norwegian today said he was "not at all satisfied" with the low-cost airline's results for 2017, after it reported a loss of 299m kroner (£27.4m) for the year.

Norwegian also reported a net loss of 919m kroner for the fourth quarter compared to 197m kroner profit last year, as it weathered the impact of increased fuel prices.

The total revenue was 7.8bn kroner, a rise of 30 per cent on the same time last year, primarily due to the airline's aggressive expansion plans.

Read more: IAG warns air passenger duty could keep its low-cost airline out of the UK

Overall, revenue for the year was nearly 31bn kroner (£2.8bn) while just over 8m passengers flew with Norwegian this quarter, a rise of 12 per cent.

Norwegian chief executive Bjorn Kjos said:

We are not at all satisfied with the 2017 results.

However, the year was also characterised by global expansion driven by new routes, high load factors and continued fleet renewal.

He added that the airline was "far better positioned for 2018" with stronger bookings, a growing network of routes and a better staffing situation.

The carrier has been looking to tap into the lucrative potential of transatlantic routes, but some analysts have raised concerns over its speedy expansion.

Earlier this week, Norwegian said its growth was not letting up anytime soon, pledging to keep the UK at the heart of future expansion with aims to grow long-haul flights from the UK to Asia and more South America destinations. It launched flights from London Gatwick to Buenos Aires on Wednesday 14 February.

Today, analysts at Goodbody Stockbrokers said headline results "made pretty grim reading, as expected".

They said one of the headwinds behind the loss was Norwegian's investment for future growth, with ex-fuel unit costs up four per cent year-on-year for the fourth quarter.

"This raises the critical question of how much of this investment-related inflation will really be recouped in the current year, with Norwegian growing capacity by 40 per cent in 2018 vs. the 25 per cent seen last year," they added.

Norwegian also warned of the challenges for the wider airline industry "as a consequence of Brexit and strong competition" after last year's troubles with Monarch, Air Berlin and Alitalia.

Read more: Norwegian to press on with expansion of more long-haul routes from London

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