Monday, 4 May 2015

Norwegian Airlines Losses Will Not Halt US Expansion

Norwegian emerged from the first quarter of 2015 with a loss of 790 million kroner. A pilots’ strike that cancelled many flights and sent passengers to other airlines was largely responsible. “The first quarter is usually seasonally weak, and this quarter the figures were also affected by the weakness of the Norwegian kroner against the dollar and euro,” said Norwegian CEO Bjørn Kjos. “At the same time, the pilots’ strike sent many customers to competitors.” The loss was actually less than then 802 million kroner that some analysts had predicted.

Norwegian’s total revenue of about 3.6 billion kroner was also slightly better than expected. “On the positive side, passenger growth outside Scandinavia has been good, especially on long-haul routes,” said Kjos. “In particular, passenger growth on the London-Gatwick route has been very solid.” Norwegian Long Haul has also set its sights on opening its maiden US West Coast base at Los Angeles International Airport.  

Kjos said Los Angeles was a natural choice given the large amount of passengers the city generates., passengers on the budget carrier's flights from Los Angeles to Copenhagen Kastrup, Oslo Gardermoen, and Stockholm Arlanda are generally filled with Americans who number between 40 and 50%, he said, adding that many use Norwegian for its onward connections to Europe and Asia.  "It is because we fly so much in to/out of Los Angeles. Logistically it is much easier to have a base where you have many routes from," he said. "It's going to get more connections."

In addition to Copenhagen, Oslo, and Stockholm, Norwegian also connects Los Angeles with its London Gatwick base with plans to boost Oslo to a year-round operation.

Concerning the status of its stalled subsidiary Norwegian Air International (Dublin Int'l), Kjos said Norwegian expected NAI to secure its foreign carrier's permit from the US Department of Transportation (DOT) next year but that its absence would not impact the airline financially this year. He added that demand on the airline's existing network was enough to sustain twice the B787-8s it currently has on its books. "We have many options and we can fly virtually unencumbered to the US, but opening up more destinations can be difficult," he said.