Norwegian Releases ‘Plan for Profitability’ Along with 4th Quarter 2018 Results

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It’s no secret that Norwegian has faced some testing times financially this winter, as the release of the 2018 results makes very clear. The latest report shows that Norwegian made a net loss of ~£130 million (NOK 1,454 million) in 2018, which clearly isn’t sustainable in the long run.

The company argues that it was hit by several unforeseen challenges during 2018, including:

“Continued tough competition and high jet fuel prices affected the results, in addition to significant costs related to Rolls Royce engine issues on the Dreamliners. Norwegian was forced to wetlease aircraft to avoid delays and cancellations on intercontinental flights. “

Substantial moves do now seem to be taking place to try and turn things around though, with Norwegian CEO Bjorn Kjos stating,

” 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.

“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,”

The company is also strengthening its balance sheet through a fully underwritten rights issue of NOK 3 billion in order to improve its financial position.

It looks like a sensible strategy, but whether Norwegian is really able to develop a profitable long term formula remains to be seen.

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