Norwegian Air Third-Quarter Profit Falls on Permit DelaysKari Lundgren
Norwegian Air Shuttle AS, the Scandinavian low-cost airline, said third-quarter profit fell 16 percent as some U.S. routes were held up by a permit delay and a weak Norwegian kroner weighed on earnings.
Pretax profit fell to 505 million kroner ($76.3 million) from 603.5 million kroner a year earlier, the Fornebu, Norway-based company said in a statement today. That missed the 664.2 million kroner average of nine analyst estimates by Bloomberg. Operating revenue gained 30 percent to 6.34 billion kroner.
Norwegian Air is pursuing one of the industry’s most ambitious growth plans, rolling out a long-haul operation with 17 Boeing Co. Dreamliners, while swelling its European fleet. Growth will slow next year, as it seeks to bed-in long-haul operations and juggles resistance from U.S. airlines and pilots to its plan to fly using an Irish-registered subsidiary.
“Looking into 2015, we will see a year of consolidation and lower growth,” Chief Executive Officer Bjoern Kjos said in the statement. “Our results are affected by additional costs related to the pending U.S. permit for our subsidiary in Dublin, consequently reducing our ability to optimize our fleet of aircraft.”
The stock slumped as much as 15.2 kroner, or 6.9 percent, to 205.2 kroner in Oslo, the most in more than two weeks. The shares have gained 11 percent this year.
Available seat kilometers, a measure of an airline’s passenger carrying capacity, will drop to 5 percent in 2015, from 35 percent in 2014, the airline said.
Costs associated with irregular long-haul flights totaled 74 million kroner in the third quarter, with U.S. permitting delays adding an additional 63 million kroner, Norwegian said.
The airline carried 7.1 million passengers in the quarter, up from 6 million a year earlier. Ticket revenue per unit dropped by 7 percent, as average fares declined.
The company began flying between London’s Gatwick airport and New York’s John F. Kennedy International on July 3. The airline is bolstering its European fleet with 222 mainly re-engined Boeing Co. 737s and Airbus Group NV A320s arriving from 2016, in addition to the Dreamliners.