Tuesday 7 January 2020 5:33 pm

Norwegian Air earnings rise as December capacity cuts take effect

Norwegian Air was forced to cut its capacity for the third month in a row in December, as it scrapped loss-making routes as part of a plan to return to profit.

The firm, which recently appointed a new boss, Jacob Schram, has struggled over the last year after rapid expansion.

In 2014, Norwegian introduced the UK’s first low-cost, long haul flights to the US, and it now flies to 11 US destinations, Buenos Aires and Rio de Janeiro from London. But the swift growth has caused the airline to haemorrhage cash in recent years.

Read more: Norwegian Air enters into joint venture to cut capital expenditure

It has also taken a hit from the forced grounding of its fleet of 18 Boeing 737 Max jets, which has forced it to fly passengers on planes bearing the branding of other airlines via a so-called wet-lease agreement.

Overall capacity, a measure of distance flown and the number of seats available, fell 25 per cent year on year last month.

But the airline’s yield – income per passenger carried and kilometre flown – rose 14 per cent to 0.43 Norwegian krone (£0.037), beating a 0.41 krone forecast.

The airline on average filled 83.5 per cent of seats in December, up from a load factor of 78.6 per cent in the final month of 2018 and beating an average forecast of 82.4 per cent.

“The ticket sales for the next months ahead are looking good, both for business and leisure travellers,” chief executive Jacob Schram said in a statement.

Shares rose 4.1 per cent today.

Norwegian carries almost 6m UK passengers each year from London Gatwick, Edinburgh and Manchester Airports to 30 destinations worldwide.

It is the third largest airline at London Gatwick, with 4.6m annual passengers and more than 1,500 UK-based pilots and cabin crew.

Routes between Ireland and the United States and Canada were cut from Norwegian’s schedule last September, and last month the company also announced the sale of its domestic business in Argentina to JetSMART Airlines.

The cutbacks may also alleviate the pressure on rivals such as Scandinavian Airlines, which now faces less head-to-head competition on routes between Europe and the United States and Thailand.

Read more: Norwegian Air appoints new chief executive to lead it back to profit

“Norwegian’s dedicated employees have made an impressive effort delivering on the strategy of moving from growth to profitability,” Schram said.

Norwegian was nearly the subject of a buyout by International Airlines Group (IAG) in 2018, but the British Airways owner pulled out of the deal.