Norwegian Air deepens cutbacks as 737 Max crisis weighs
Norwegian Air has posted a loss of 1.87bn Norwegian krone (£155m) in the fourth quarter as the Boeing 737 Max crisis continued to take its toll on the airline.
This was narrowed from the 3bn krone loss posted in the same period in 2018, but lagged behind analysts’ forecasts.
Operating revenue also fell seven per cent in the final three months of the year, which Norwegian said was the result of capacity reductions and changes to routes across its network. The budget airline’s full-year loss widened 11 per cent to 1.61bn krone.
Norwegian blamed the loss on the ongoing saga surrounding Boeing’s 737 Max jets, which were grounded following two crashes that together killed 346 people. The firm also pointed to ongoing problems with the Rolls Royce engines used on its Boeing 787 Dreamliner aircraft.
However, the company has rolled out a cost-cutting plan designed at returning the airline to profitability, which it expects to achieve in 2020. Shares in the company rose more than six per cent following the announcement.
Norwegian has sold aircraft and postponed the delivery of new ones in order to save costs alongside selling its domestic operation in Argentina.
The firm, which carried 36m passengers last year, said it would make capacity cuts of between 13 and 15 per cent in the coming year — deeper than the 10 per cent decrease previously forecast.
“2019 marked a new flight path for Norwegian as the company changed its strategy to move from growth to profitability,” said chief financial officer Geir Karlsen.
“The focus of returning to profitability will continue as we focus on Program Next to build a strong, sustainable and profitable business to benefit our customers, employees and shareholders.”
Norwegian is known for utilising the advanced Dreamliner to provide low-cost services on long-haul routes.
It also uses the 737 family, including the MAX, for short-haul flights and joins other airlines in being affected by the type’s continued grounding.
The airline also reported improved punctuality and decreasing levels of CO2 during 2019.