Norwegian Air passenger income growth misses expectations in March

Norwegian has curbed its rapid growth this year to focus instead on cutting costs and turning a profit, while also raising 3 billion crowns from shareholders to boost its balance sheet. (Reuters)
Updated 04 April 2019
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Norwegian Air passenger income growth misses expectations in March

  • The grounding last month of its Boeing 737 MAX jets following the deadly crash of an Ethiopian jet, has forced Norwegian to lease other aircraft, further complicating its drive for profitability
  • The airline’s load factor stood at 85.4 percent for the month, beating a forecast 82.7 percent but was still down from 86.7 percent a year earlier

OSLO: Norwegian Air earned less money than expected from each traveler in March but its aircraft filled up at a faster pace than analysts anticipated, the budget carrier’s monthly traffic report showed on Thursday.
The grounding last month of its Boeing 737 MAX jets following the deadly crash of an Ethiopian jet, has forced Norwegian to lease other aircraft as the peak summer season nears, further complicating its drive for profitability.
While Norwegian has said it would seek compensation from Boeing for the cost of grounding its eighteen MAX fleet, its chief executive has also defended the aircraft model.
“We have had some productive meetings with Boeing where we have discussed how we can manoeuver through the difficulties the MAX situation is causing Norwegian,” Chief Executive Bjoern Kjos said in a statement.
Kjos, a former fighter pilot, on Wednesday said he had tested Boeing’s new flight control software in a simulator, finding it foolproof and adding he would gladly take his own family on board a Norwegian MAX aircraft.
Norwegian’s March yield, a measure of revenue per passenger carried and kilometers flown, rose to 0.33 Norwegian crowns ($0.0385) from 0.32 crowns in February, while analysts in a Reuters poll expected an increase to 0.34 crowns.
The airline’s load factor, showing how many seats are sold on each flight, stood at 85.4 percent for the month, beating a forecast 82.7 percent but was still down from 86.7 percent a year earlier.
While the yield lagged expectations, the higher load factor helped compensate the shortfall, said brokerage Pareto Securities, which has a buy recommendation on Norwegian’s stock.
The carrier’s first-quarter adjusted earnings before interest, tax, depreciation and amortization will likely swing to a profit of about 600 million Norwegian crowns ($69.93 million) from a year-ago loss of 880 million, Pareto added.
Norwegian has curbed its rapid growth this year to focus instead on cutting costs and turning a profit amid stiff competition, while also raising 3 billion crowns ($349.71 million) from shareholders to boost its balance sheet.
Its capacity expansion, as measured by available seat kilometers (ASK), peaked at 51 percent growth year-on-year last June and has since declined, hitting 11 percent in March, lower than the 12.4 percent that analysts forecast.
The mid-April Easter holiday is expected to boost Norwegian’s traffic numbers, the company said while noting that last year’s Easter had been in March.
“Easter will always affect the figures positively,” it said.


Gulf countries strengthen oil coordination amid tensions: Kuwait

Updated 20 May 2019
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Gulf countries strengthen oil coordination amid tensions: Kuwait

  • ‘It is normal amid this escalation that Kuwait and the Gulf Cooperation Council countries take these steps’
  • Kuwait was in ‘constant contact’ with its ally, the US

KUWAIT CITY: Kuwait’s deputy foreign minister said countries in the Gulf have strengthened coordination to provide oil to global markets amid increased regional tensions.
“It is normal amid this escalation that Kuwait and the Gulf Cooperation Council (GCC) countries take these steps,” Khalid Al-Jarallah told reporters late Sunday on the sidelines of a Ramadan sit-down organized by the Iraqi embassy.
“There is cooperation and coordination between Kuwait and the Gulf countries to provide guarantees for oil tankers and continuous supply of energy to global markets.”
Jarallah’s comments come days after sabotage attacks against tankers in highly sensitive Gulf waters and the bombing of a Saudi pipeline — the latter claimed by Iran-aligned Yemeni rebels.
Both attacks targeted routes built as alternatives to the Strait of Hormuz, the conduit for almost all Gulf exports.
The US Fifth Fleet headquartered in Bahrain said the six-nation Gulf Cooperation Council began “enhanced security patrols” Saturday in international waters, in “tight coordination with the US navy.”
Iran has repeatedly threatened to close the strait in case of war with the United States, which earlier this month announced it was sending an aircraft carrier and strike group to the region.
Kuwait’s deputy foreign minister said “tension was escalating quickly” but he remained hopeful.
He added Kuwait was in “constant contact” with its ally, the US.
On Saturday, OPEC giant Saudi Arabia called for urgent meetings of the GCC and the Arab League to discuss recent “aggressions and their consequences” in the region.
The two summits are scheduled to be held in Makkah on May 30.
Jarallah welcomed the kingdom’s invitation, saying Kuwait was keen to take part in discussions on issues “potentially dangerous” to the region.