Norwegian has reported a net loss for the full year 2018 of NOK 1,454 million (approx.. £131.4m/$169.4m). Norwegian’s unit costs, excluding fuel, decreased by 12% during the same period. The company’s total revenue was more than NOK 40 billion, an increase of 30% compared to 2017. A total of 25 brand new aircraft entered the fleet, contributing to a production growth (ASK) of 37%. The load factor was 85.8% with more than 37 million passengers chosing to travel with Norwegian, an increase of 13% compared to the previous year.
The airline said that the figures were “strongly affected by engine issues, fuel hedge losses and tough competition in a period of strong growth”.
For the fourth quarter of 2018, Norwegian discloses that the company incurred losses of NOK 1.8 billion on its current hedge positions, although some of that loss was since reversed due to the latest increase in the jet fuel price.
The airline says that its priority remains focused on returning to profitability by cutting costs, optimising routes and selling aircraft. Norwegian has strengthening its balance sheet through a fully underwritten rights issue of NOK 3 billion in order to increase its financial position.
“We have taken a series of initiatives to improve profitability by reducing cost and increasing revenue going forward. We have optimised our base and route structure to streamline the operation as well as divested aircraft, postponed aircraft deliveries and not least started an internal cost reduction program, which will boost our financials and bring us back to profitability,” said CEO of Norwegian Bjørn Kjos.
In its results, Norwegian explains how it was hit by several unforeseen challenges during 2018. These include continued tough competition and high jet fuel prices, as well as what it describes as “significant costs related to Rolls Royce engine issues on the Dreamliners”, which forced Norwegian to wetlease aircraft to avoid delays and cancellations on intercontinental flights. The airline confirms that it has reached an agreement with the engine manufacturer, which will have a “positive effect in 2019” and that it does not foresee that engine issues will affect its service going forward.
“Going into 2019, we will enter a period of slower growth and fewer investments, while constantly looking for new and smarter ways to improve our efficiency and offer new products and services to attract new customers,” Kjos added.