Norwegian Air Says Dreamliner Defects Hurt Third-Quarter Profit
Norwegian Air Shuttle AS (NAS), the Scandinavian low-cost airline, said third-quarter profit retreated 31 percent as warm weather and costs associated with the newly added Boeing Co. (BA) 787 Dreamliners weighed on earnings.
Earnings before tax declined to 603.5 million kroner ($102.3 million) from 872.9 million kroner a year earlier, the Fornebu, Norway-based company said in a statement today. Total operating revenue rose 15 percent to 4.88 billion kroner.
Norwegian Air has sought to leverage the 787’s lower operating costs in a push to offer discounted trans-Atlantic trips at a profit. Glitches with the airline’s first two Dreamliners, ranging from a brake fault to a cockpit oxygen-supply flaw, led to repeated groundings of the jets, hampering the carrier’s plans. Costs associated with leasing replacement aircraft totaled 101 million kroner.
“Our results this quarter are significantly affected by the additional costs associated with replacement aircraft for the Dreamliner,” Chief Executive Officer Bjoern Kjos said in the statement. “In addition, Northern European sun seekers chose to enjoy the warm summer at home instead of flying south.”
The airline carried 6 million passengers in the quarter, up from 5.19 million a year earlier. Ticket revenue per unit dropped by 13 percent, reflecting lower yields and a “marginally lower” load factor because of greater competition in leisure markets and more capacity.
Norwegian Air announced plans on Oct. 17 to fly to three U.S. cities from London’s Gatwick airport starting next year, serving New York’s John F. Kennedy airport three times a week and Fort Lauderdale, Florida, and Los Angeles twice weekly. It will have seven Dreamliners by the end of 2014.
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