Norwegian Air’s 2019 profit target in doubt after Boeing Max groundings

Airline raised cost target by up to €51.6m

Photograph: Johan Nilsson/Reuters

Photograph: Johan Nilsson/Reuters

 

Norwegian Air said the grounding of its fleet of Boeing 737 MAX aircraft may scupper the carrier’s plan to return to profitability this year, while posting a wider first-quarter loss on Thursday.

“Due to the uncertainty related to the MAX grounding, the company sees increased risk related to the target of a positive net profit in 2019,” Norwegian said.

The firm’s fleet of 18 MAX planes has been forbidden from flying following the deadly crash of an Ethiopian jet last month, forcing Norwegian to lease other aircraft as the peak summer season nears.

The airline raised its 2019 cost target by up to 500 million Norwegian crowns (€51.6 million), while adding that its efforts to cut other operating expenses were moving at a faster-than-expected pace.

The budget carrier posted a quarterly net loss of 1.49 billion Norwegian crowns (€153.8 million), versus a 46.2 million crowns loss a year earlier, while analysts in a Reuters poll on average had expected a deficit of 1.65 billion crowns.

Norwegian, which has cut costs and raised money from shareholders in recent months, said late on Wednesday it had agreed with Boeing and Airbus to postpone more aircraft deliveries as it seeks to preserve cash.

The Oslo-listed airline has shaken up the long-haul market by offering cut-price trans-Atlantic fares, but its rapid expansion has left it with hefty losses and high debts.

In February, Norwegian announced it would start prioritising earnings over growth, slashing its target for 2019 capacity increases to just 9 per cent from 15-20 per cent, while on Thursday it predicted growth of 5-10 per cent. – Reuters