Norwegian Airlines today released its results from the first quarter of 2020. According to the airline’s figures, it suffered a loss before tax of NOK -3.28bn ($332 million). The figures were affected by the current crisis for around one of the three months of the reporting period.
Norwegian is currently in a period of hibernation. Only seven of the carrier’s 147 aircraft are now operational, while 80% of the airline’s workforce have been temporarily laid off. The airline is additionally undergoing a substantial restructuring, which has allowed it to secure NOK 3bn ($304 million) in funding from the Norwegian government.
Let’s look at the figures
The prominent figure that everybody is interested in when financial results are released is the profit or loss. In the case of Norwegian’s Q1 results from 2020, the airline posted a pre-tax loss. This amounted to NOK -3.28bn ($332 million). The figure is significantly more than Q1 of 2019, where the loss amounted to NOK -1.98bn ($200 million).
Unsurprisingly, revenue was down, however, not by a considerable amount. The total operating revenue amounted to NOK6.51bn ($658 million) Total operating expenses excluding lease, depreciation, and amortization was also slightly down, yet still exceeded revenue. The expenses amounted to NOK 6.92bn ($700 million).
Pandemic has an impact
Unsurprisingly, the current crisis that has brought the aviation industry to its knees has had some impact on Norwegian’s results. The effects of the pandemic began to be felt in Europe in March. Indeed, on March 16th, the airline canceled 85 percent of its planned flights. As a result, available seat kilometers (ASK) fell by 40% for the last month of the quarter.
The passenger load factor dropped by around the same percentage as ASKs year on year. This shows that while Norwegian was offering fewer flights, the flights it operated were also slightly emptier. Indeed, on average, 78.8% of seats were occupied in the last quarter.
However, there was one good point to Norwegian operating fewer flights. Its fuel consumption dropped by 34% to 294,000 metric tons.
What’s happening with Norwegian’s fleet?
As previously mentioned, Norwegian has 147 aircraft. Of these, 18 are grounded Boeing 737 MAX aircraft that haven’t flown passengers in at least a year. Its operation aircraft were flown on average for 10.8 hours each day.
As part of its agreement to reach the new Norwegian, the airline has reached agreements to drop lease payments by around $250-285 until next March. This will be accomplished by a ‘power-by-the-hour’ agreement put in place with aircraft lessors.
Commenting on the results, Norwegian’s CEO, Jacob Schram said:
“The first quarter figures are as expected and indicated to the market on several occasions severely affected by the COVID-19 crisis. The coming months will be challenging for Norwegian and the industry, but our goal is to ensure that Norwegian has a strong position in the future airline industry with a clear direction and strategy.”
What do you make of Norwegian’s first-quarter results? Let us know your thoughts in the comments!