Norwegian has just released its quarterly profit report, revealing that the airline group generated £121 million between July and September.
However, believe it or not, this is below their expected return of £149 million.
What happened to Norwegian?
Turns out that due to rising fuel prices, Norwegian is way off the mark of what they wanted.
Despite attempts to make their fleet more cost-effective (reducing costs by 10% compared to last year, by employing more planes such as the Boeing 787 Dreamliner over Airbus alternatives, and by selling off their used 737’s to reduce their debt), the fuel prices rise has still impacted their bottom line.
But its a far cry from 2017, where the company posted losses after losses.
“I am very pleased to present a solid result this quarter with a reduced unit cost despite strong growth,” Bjorn Kjos, Norwegian CEO.
But they are in a much better financial position, having more jets flying than ever before and expanding into new and profitable markets (Such as Argentina).
What does this mean for the industry?
If Norwegian, a powerhouse in the low-cost carrier market is having their profits sucked away by fuel prices, one only has to wonder how the rest of the industry is performing.
“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.”
And even the bigger players on the market are starting to slow down. WOW Air, the big Iceland airline, canceled three routes recently to mid-west America, suggesting that they need to ‘focus on more profitable routes’.
This is due to a combination of increasing fuel prices and the start of the low season. Fewer passengers traveling between the big destinations of Europe and North America, and fewer tourists from elsewhere coming to visit (After all, who wants to come to a freezing cold region when its summer back home).
But Norwegian is not worried that they will share the same fate, closing off their press conference with this quote from the CEO.
“Going forward the growth will slow down, and we will begin to reap the large investments we have made over the years, which will benefit customers, employees and shareholders.
Only time will tell if Norwegian will survive the long winter. Do you think Norwegian is doing well? Let us know in the comments!