Share

Norwegian Air tries to raise cash after warning on profits

Share

COPENHAGEN, Denmark (AP) — Norwegian Air Shuttle on Tuesday became the latest budget carrier to cut its earnings outlook amid tough competition and after British Airways’ parent company, IAG, ruled out a bid for the loss-making company.

Norwegian’s CEO, Bjoern Kjos, said the airline “has been through a period with significant growth” that left it with hefty losses and high debts. He said in a statement that the company needed more capital and was selling shares worth 3 billion kroner ($350 million).

The airline’s problems echo those of rivals, with Ryanair — Europe’s biggest airline by passengers — issuing recently its second profit warning in four months as tough competition pushed down fares over the winter. Other budget carriers, like Iceland’s Wow, have needed financial rescues or takeovers.

According to preliminary figures, Norwegian Air is expected to report next month that its revenues last year were 40.3 billion kroner ($4.7 billion), leading to an operating loss of approximately 3.8 billion ($ 446 million) kroner.

“Now we will concentrate on optimizing our international business and reducing costs,” Kjos said.

Trending:
USA Today Changes Trump Headline Shortly After Getting Chewed Out by the Biden Campaign

To cut costs, the airline will sell aircraft, possibly establish a new holding company for parts of the aircraft fleet, and postpone aircraft deliveries. It aims to reduce costs by at least 2 billion kroner in 2019.

Kjos also said the cost reduction plans included compensation from British plane engine manufacturer Rolls Royce related to engine problems on the company’s Dreamliner operation. Last year, the British company discovered problems with its Trent 1000 engines, which power Boeing’s 787 Dreamliner aircraft.

Shares in Norwegian Air dropped some 25 percent in early trading in Oslo on Tuesday but later recovered somewhat to trade down 14 percent.

Norwegian claims to be the world’s 5th largest low-cost airline operating 500 routes to 150 destinations across the world. In 2018, Norwegian had 11,000 employees, carried more than 37 million passengers last year and has a fleet of more than 150 aircraft with an average age of nearly 4 years.

The Western Journal has not reviewed this Associated Press story prior to publication. Therefore, it may contain editorial bias or may in some other way not meet our normal editorial standards. It is provided to our readers as a service from The Western Journal.

Truth and Accuracy

Submit a Correction →



We are committed to truth and accuracy in all of our journalism. Read our editorial standards.

Tags:
Share
The Associated Press is an independent, not-for-profit news cooperative headquartered in New York City. Their teams in over 100 countries tell the world’s stories, from breaking news to investigative reporting. They provide content and services to help engage audiences worldwide, working with companies of all types, from broadcasters to brands. Photo credit: @AP on Twitter
The Associated Press was the first private sector organization in the U.S. to operate on a national scale. Over the past 170 years, they have been first to inform the world of many of history's most important moments, from the assassination of Abraham Lincoln and the bombing of Pearl Harbor to the fall of the Shah of Iran and the death of Pope John Paul.

Today, they operate in 263 locations in more than 100 countries relaying breaking news, covering war and conflict and producing enterprise reports that tell the world's stories.
Location
New York City




Conversation