Norwegian Air warns costs will rise as fuel bill increases

Norwegian Air Shuttle hiked its estimate for unit costs, a key measure exposing the airline's vulnerability to higher fuel prices and its low level of hedging compared with other airlines.

Costs for aviation fuel rose 85 per cent in the third quarter, driving a 2.3 percent increase in Norwegian’s top-end estimate for unit costs for all of 2018.

The company said in April that it may shed as many as 140 aircraft, and would present a solution by the end of the third quarter. Including two sales announced on Thursday, the company has so far confirmed the sale of eight planes. This means Norwegian hasn’t yet solved its cash problem.

Norwegian has expanded with transatlantic routes that go to secondary airports in the US. But it has discontinued, or plans to, city pairs including Edinburgh to Providence, Rhode Island, as well as to smaller airports in New York and Connecticut and similar routes from Belfast and Bergen, Norway.

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Norwegian said it was sticking to its breakneck-speed expansion, reiterating a forecast to add 40 per cent to capacity this year. It also plans to add 15-20 per cent of seats in 2019 as its expansion slows. – Bloomberg