Norwegian Air Expected to Slow Growth Amid Weak Earnings
Blaming rising fuel bills, fierce competition and a strong dollar, transatlantic budget carrier Norwegian Air reported weaker-than-expected earnings on Thursday.
The Scandinavian low-cost airline reported a net profit of 1.3 billion Norwegian kroner (about $155 million USD) in the third quarter of 2018. Reuters reports analysts had been expecting the carrier to post a net income of 1.74 billion kroner (~$208.5 million USD). Norwegian said that in the third quarter, 11 million passengers flew with the airline.
The airline said in its quarterly report that its fuel bill increased 85% in the third quarter, compared to the same time period in 2017.
Norwegian's CEO Bjorn Kjos said the airline, which has been the fastest growing low-cost carrier to date, would slow its expansion in the near future due to current forces in the aviation market.
"Going forward the growth will slow down, and we will begin to reap the large investments we have made over the years," Kjos said in a statement on the airline's earnings. "However, there is no doubt that tough competition, high oil prices and a strong dollar will affect the entire aviation industry, making it even more important to further streamline our operations and continue to reduce costs."
In addition to high fuel costs, Norwegian's operations have also continually been snarled by problems with its fleet. It has had to inspect all 21 of its Boeing 787 Dreamliners due to problems with the Rolls-Royce Trent 1000 engine. Several of the aircraft were grounded due to those engine issues. Norwegian brought in wetlease operators to replace its grounded Dreamliners, and at times those operators have been less-than-reliable. (British Airways, ANA and Virgin Atlantic have all had similar problems with the Trent 1000.)
The weak earnings are not reassuring for Norwegian — an airline which analysts and industry experts have been pegging as on the brink of total shutdown for a while. Smelling blood in the water, larger airline groups like IAG, which owns British Airways and other carriers, have attempted to bid on a buyout of the Scandinavian carrier. IAG made three attempts to buy Norwegian earlier this year, all of which failed.
More recently, fellow European low-cost carrier Ryanair fired a shot across the bow at Norwegian: On Monday, the Dublin-based airline's CEO Michael O'Leary said it would be "inevitable" that faltering low-cost airlines will fold in the next few months, CNN reports.
"Our focus will be on one of the two major Scandinavian airlines," O'Leary said, referencing Norwegian. "We think one or the other of those are the most likely to fail this winter."
*This post has been updated to state that all 21 of the airline's Boeing 787 engines have been inspected. The post previously stated that all 21 had been grounded, which was incorrect.
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 5X | New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App. |
| 3X | Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines. |
| 2X | Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Pros
- Valuable dining and food-related credits
- Flexible rewards with airline and hotel transfer partners
- Multiple travel and purchase protections
- No foreign transaction fees
- Access to Amex Offers for additional savings (enrollment required)
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $8,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App.
- Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines.
- Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- Pay It® lets you tap in the American Express® App to quickly pay for small purchase amounts throughout the month and still earn rewards the way you usually do. Plan It® gives you the option to split up big purchases into equal monthly payments with a fixed fee. You’ll know upfront exactly how much you’ll pay.
- Updated! $120 Dining Credit: Earn up to a total of $10 in statement credits monthly when you pay with the Gold Card at Grubhub (including Seamless), Buffalo Wild Wings, Five Guys, The Cheesecake Factory, and Wonder. This can be an annual savings of up to $120. Enrollment required.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year at over 10,000 qualifying U.S. Resy restaurants after you pay for eligible purchases with the American Express® Gold Card. That’s up to $50 in statement credits semi-annually. Enrollment required.
- $84 Dunkin' Credit: Earn up to $7 in monthly statement credits after you pay with the American Express® Gold Card at U.S. Dunkin’ locations. Enrollment required.
- $120 Uber Cash on Gold: Enjoy up to $120 in Uber Cash annually with your Gold Card. Just add your Card to your Uber account and you'll get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an Amex Card for your transaction.
- New! As an American Express® Gold Card Member, you can enjoy complimentary Hertz Five Star® Status. Enjoy benefits like skipping the counter at select locations, adding an additional driver at no additional cost*, and vehicle upgrades**. Benefit enrollment and Hertz Gold+ registration are required. *Additional drivers must meet standard rental qualifications and must be a spouse or domestic partner to qualify as complimentary. Other additional drivers subject to fees. **Benefits are subject to availability and vary by location. Additional Hertz program Terms and Conditions including age restrictions apply.
- Take advantage of a $100 credit towards eligible charges* at over 1,300 upscale hotels worldwide when you book The Hotel Collection through AmexTravel.com or the Amex Travel App **. *Eligible charges vary by property. **The Hotel Collection requires a two-night minimum stay.
- Book your travel through the Amex Travel App with added peace of mind – backed by American Express® service and support. Only for American Express® Card Members.
- Whenever you need us, we're here. Our Member Services team will ensure you are taken care of. From lost Card replacement to statement questions, we are available to help 24/7.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.