Norwegian Posts Large 2018 Losses, Will Cut Fleet and Routes in 2019
Norwegian Air has been in financial trouble for some time now, and things were getting so serious that the airline had to issue a statement denying rumors that it would shutdown by the end of 2018. On Thursday it released its financial reports for last year, and the numbers still don't look great.
In 2018, the carrier reported a net loss of 1.5 billion Norwegian kroner ($175 million USD). Norwegian did report a net profit of $155 million in the third quarter of 2018, but it wasn't enough to help the low-cost carrier who posted a $209 million loss in 2017. This is despite the fact that it carried 13% more passengers and increased revenue by 30% over 2017s numbers.
The airline blames its poor financial performance on high fuel prices, strong competition and the extensive problems its faced with Rolls Royce engines on its Boing 787 Dreamliners.
Norwegian says it has a path to profitability including a cost cutting program that it announced at the end of last year. It plans on delaying the delivery of some 787s this year, expecting to take just 5 new aircraft by the end of 2019, which would bring its long-haul fleet to 37 aircraft.
"Going into 2019, we will enter a period of slower growth and fewer investments, while constantly looking for new and smarter ways to improve our efficiency and offer new products and services to attract new customers," said Chief Executive Bjorn Kjos.
Norwegian says it will sell some aircraft and optimize its route portfolio, which really means its going to cut more flights like its already done with a number of US routes.
"The demand for traveling with Norwegian has been satisfactory, and advance bookings have been acceptable entering the first quarter of 2019," Kjos said.
A rescue by IAG, the conglomerate that owns British Airways, Iberia and more, was called off when it announced it had no interest in buying Norwegian and would actually be selling off its 4% stake in the company. Norwegian's turned to shareholders to raise an additional $350 million to help keep itself solvent.
Financial troubles aren't the only issues the budget airline has to contend with — one its pilots union in Spain is now threatening to strike if it doesn't get clarity on the future of the airline.
“Norwegian must be clear about our future, and we will not hesitate to mobilize if necessary, as the discontent and uncertainty in our group is increasing every day,” the Sepla pilots' union said, reports the Financial Times.
“Such warnings, which have not been communicated to the company in any formal manner, are far from constituting a strike notice according to Spanish law, and therefore the company cannot comment further,” a Norwegian spokesperson told the Financial Times.
H/T: Travel Weekly
