Low-fare airline Norwegian has revised its profit outlook for 2024 from NOK 2.5 billion to 3.2 billion to NOK 2.1 to 2.6 billion (including Widerøe) for the full year as softer traffic demands and Boeing delivery delays constrict the group.
June 2024 welcomed higher passenger traffic and seat capacity numbers than last year. Passenger traffic was up 16% compared to the same period last year, whilst seat capacity was up 18%. Passenger loads also increased by 11% and 6% for regional airline, Widerøe.
“Primarily due to a significant capacity increase on longer flights, Norwegian experienced a slight decrease in yield and load factor. We are excited to continue serving a growing number of customers as they embark on their summer holidays,” said Geir Karlsen, CEO of Norwegian.
Norwegian has also expanded its number of routes, launching several new routes – around 50 this year. Norwegian has also announced 10 new routes between Northern Norway and European cities. It now offers 340 routes to over 120 destinations. The airline operates 86 aircraft – a mixed Boeing 737 fleet of 737-800s and 737 MAX 8s.
“We are enthusiastic about the growing interest in Northern destinations from Europe. The extensive networks of Norwegian and Widerøe in Norway, along with our new routes in Sweden and Finland, allow us to connect European travellers with the best that the North has to offer,” added Karlsen.
Photo: Norwegian
Boeing delays and increased operating costs
In Feb 2024, the airline recorded its highest-ever operating profit for FY2023, at NOK 2,232 million. However, this year’s revised profit outlook can be put down to four factors, according to the airline.
The first is softer traffic demand during Q2 2024, as Norwegian saw a reduction in load factor and yield compared to Q2 2023; in its first quarter, it also saw an operating loss of NOK 763 million. Secondly, in light of the agreement reached between Norwegian and the Norwegian Pilot Union, the airline has paid a “higher than projected” wage settlement for its pilots.
Aircraft delivery delays from Boeing – following its restrictions from the FAA on boosting production for its 737 MAX aircraft – have forced the airline to source external capacity between one to two aircraft during the summer. Finally, the NOK to US exchange rate has been weak, with 1 NOK converting to roughly 0.09 US dollars. The airline also expects fuel costs to increase compared to 2023, further raising operating costs.
