Source: ATW Daily News Author: Brian Straus 07/18/2008
Subject Concerned: Airlines
Expansion and fuel costs weighed heavy on Norwegian's bottom line in the second quarter as the LCC reported a NOK62.2 million (US$12.3 million) loss that represented a reversal from a NOK44.7 million profit in the year-ago period.
The carrier ended the quarter with 41 aircraft in operation compared to 24 one year earlier. It took delivery of six 737-800s, continued to integrate the former FlyNordic (now Norwegian.se) and settled into its new base at Oslo Rygge.
On Jul. 17, it unveiled a cooperation agreement with Copenhagen-based LCC Sterling Airlines that will feature reciprocal codesharing on CPH-Oslo Gardermoen and CPH-Stockholm Arlanda flights beginning Sep. 15. From the end of October the agreement will extend to six additional European destinations from OSL (operated mostly by Norwegian) and four from ARN (mostly by Sterling).
Norwegian CEO Bjorn Kjos said the agreement "enables both carriers to utilize the fleet and resources in a much more efficient way and further strengthen our position in the European market."
Norwegian's second-quarter revenue rose 52.3% year-over-year to NOK1.55 billion as passenger numbers climbed 50% to 4.3 million. EBIT swung to a NOK72.7 million loss from a NOK66.9 million profit in the year-ago period. The mainline flew 1.86 billion RPKs, up 33%, against a 34% rise in ASKs to 2.37 billion, driving load factor down 1 point to 78%. Norwegian.se flew 79% full with no year-ago comparison available. Mainline yield fell 7.4% to NOK0.63, unit revenue dropped 7.4% to NOK0.5 and unit cost rose 1.9% to NOK0.54. The company is entirely unhedged.
Looking ahead, it said third-quarter demand is "satisfactory" and it is "intensifying cost reductions as well as taking measures to increase revenues." A fuel surcharge introduced in May has covered 20%-25% of the increase in fuel costs, a ratio that should grow. It expects full-year unit cost of NOK0.55.