Norwegian Air flies into loss in 2017

OSLO: Budget carrier Norwegian Air Shuttle suffered a worse than expected loss in the last three months of 2017 and ate into its cash reserves as the cost of expansion weighed.

Unlike other budget airlines that focus on shorter routes, Norwegian is trying to crack the transatlantic market by undercutting established rivals but faces pressures to control costs and shore up its balance sheet to weather competition.

The carrier swung to a net loss of 919 million Norwegian crowns ($118 million) from a year-ago profit of 197 million crowns, while analysts in a Reuters poll anticipated a quarterly loss of 598 million.

“We are not at all satisfied with the 2017 results,” chief executive Bjoern Kjos said, while adding that major investments made in 2017 had put the company on course for growth.

“We truly hope 2017 will be the last year with loss. We are very optimistic for 2018. Bookings are looking good and cost is on track,” he told a news conference yesterday.

The full-year net loss came in at 299 million crowns, down from a profit of 1.14 billion in 2016.

The airline has embarked on an ambitious expansion plan, buying more than 200 new fuel-efficient jets yet investors worry its drive to put more passengers on more planes is pushing up costs quickly without producing higher returns.

Norwegian’s fate rests on the still unproven strategy of adapting the success of low-cost short-haul travel to long-haul routes, as well as making a parallel bet on leasing out jets to rival carriers pay off.

After launching its London-to-Buenos Aires flight this week, Norwegian said on Tuesday that it planned to introduce more routes to South America, as well as adding more destinations in the United States and Asia in coming years.