06 November, 2018

Slowing growth makes cost cutting more important for Norwegian.

Norwegian, Europe’s best low-cost carrier for the last six years, flew nearly 3.4 million passengers during the month of October, 8% more than it did last October. Yet, despite this growth, the airlines boss Bjoern Kjos warned that cost-cutting would be increasingly important during this winter period,   “We are now entering a period of lower demand, tough competition and high oil prices, making it even more important for the company to continue reducing its costs,” Bjoern Kjos said on Tuesday, November 6th.

The airline carried 3,388,898 passengers in the last month, while 99.4% of its flights operated as scheduled and its on-time performance crept up 1.4% to 79.7%. Norwegian also saw total traffic growth (measured in RPK) increase by 25% driven by a 29% capacity growth (ASK) and the carriers load factor, down by over 2% was still 85% which is rather impressive considering all the new routes it has introduced over the last couple of months. It is, therefore, no wonder then that Kjos is happy with the latest results, “We are very pleased that an increasing number of passengers choose Norwegian for their travels. The long-haul routes represent the largest growth this month and the demand is satisfactory.” he says. Indeed, many airline CEO's must be silently envious as they look over Norwegian's latest figures, market position and reputation.  

The airline also took delivery of two new Boeing 737 MAX 8 aircraft last month and is scheduled to take delivery of 11 Boeing 787-9 Dreamliners,12 Boeing 737 MAX 8 and 2 Boeing 737-800 aircraft before the end of the year. However, the airline has said it is going to concentrate more on profitability than grwoth for the present.

Already some of Norwegian's competitors have highlighted the carriers yield was down as a negative result for the company. However, as Norwegian is operating more longer long-haul flights - 12% longer in fact, than it did last October, the average revenue per passenger kilometre would be lower when spread over those longer flights. 

The long-term future of Norwegian, whilst may not be quite as rose-tinted as previously envisioned, it is still looking much healthier than many other comparable airlines of the same size around the world. Indeed, many financial analysts predict this is an ideal time to buy Norwegian shares as even better times are ahead for the carrier that has been voted ‘Europe’s best low-cost carrier’ by passengers for six consecutive years at SkyTrax World Airline Awards from 2013-2018, along with being awarded the ‘World's best low-cost long-haul airline’ in 2015, 2016, 2017 and 2018.  

(Images Norwegian)