Norwegian airline revenue jumps 16 per cent but shares fall on expansion costs as carrier ramps up transatlantic operations
Despite reporting a record annual result with net profit of £109m, Norwegian shares had fallen nearly five per cent at the time of writing as its costs are rising faster than expected.
The airline is ramping up its transatlantic operations and plans to announce new routes from Ireland and Scotland in the coming weeks.
The figures
Net profit was 1.1m NOK (£109m), while load factor was at 88 per cent, while total revenue was 26bn NOK (£2.5bn), an increase of 16 per cent.
The airline said global expansion driven by new routes and continued fleet renewal had contributed to its best annual result. It has focused on increasing its presence in both the UK and Spain, establishing new UK headquarters at Gatwick and launching 10 new routes from airports in the UK.
Norwegian took delivery of 21 brand new aircraft last year and the airline carried 29.3m passengers travelled with the carrier last year – up 14 per cent on 2015.
Why it's interesting
Analysts were less sure on an underwhelming cost performance after the airline said its underlying unit cost, which excludes fuel, was 0.32 crown for the fourth quarter, down one per cent year-on-year. That wasn't low enough for some analysts – Davy had forecast it down three per cent.
Norwegian also said 2017 unit cost will be higher than previously expected, guiding for a range of 0.39-0.40 crown, against 0.38-0.39 previously.
What the company said
Norwegian chief executive Bjorn Kjos said:
Through our global strategy, we are contributing an economic boost and increased employment at our destinations, as well as ensuring that more people can afford to fly.
We enter 2017 with the ambition to increase and strengthen our foothold in established markets, while simultaneously developing our route network in new parts of the world.
This year, 32 brand new aircraft will enter service, including nine Boeing 787-9 Dreamliners.
We will launch more than 50 new routes and recruit over 2,000 new colleagues worldwide.