Norwegian Air's growth plans could be hit by engine problems on Boeing 787 jets
The formidable growth of Norwegian Air Shuttle continues, with a capacity of 36 per cent in the first quarter of 2018. But problems with the engines on Boeing 787 Dreamliner aircraft could affect its ambitious plans for 2018, the airline said in its Q1 results.
The airline made a loss of 46.2 million Norwegian krone (£4.16m) between January and March, a tiny figure compared with the NOK1.49bn (£134m) loss in the same quarter previous year. But the result was “positively affected by a financial gain from reclassification of the investment in Norwegian Finans Holding of NOK1.9bn”.
Without it, the airline’s operating loss before interest was NOK2.18bn (£197m), up 36 per cent on the loss last year — exactly in line with the increase in capacity expressed in available seat-kilometres.
The number of passengers increased by 12 per cent to 7.5 million in the first quarter. The reason capacity grew three times faster is that the length of the average flight increased by 17 per cent to 1,786km (1,110 miles). New routes from Gatwick include links to Buenos Aires, Singapore and several US cities.
Norwegian’s chief executive, Bjorn Kjos, said: “Our long-haul operation is now well established, proving that customers want affordable fares on intercontinental routes”.
The airline’s load factor (the proportion of seats filled) was fractionally higher at 84.5 per cent: better than many “legacy” carriers but well behind its giant rivals, easyJet and Ryanair.
Growth plans for 2018 could be hit by problems with a batch of Rolls-Royce Trent engines fitted to some of Norwegian’s 787 aircraft. Parts are wearing out much faster than expected, and European and US safety regulators are imposing restrictions on the operations of the affected Dreamliner aircraft.
The airline said: “Norwegian and several airlines worldwide have unfortunately been forced to conduct extraordinary inspections on a number of Boeing 787 Dreamliner aircraft due to issues with the specified type of Rolls Royce engines.
“This will affect our operations going forward, but it is too early to predict the scale of the issue.”
Norwegian was recently revealed to be a possible acquisition target for IAG, the parent company of British Airways, which has bought a 4.6 per cent share.
The airline said it was also considering other expressions of interest: “The Norwegian Board of Directors has established a steering committee and engaged financial and judicial advisors to review the situation, handle relevant enquiries and to safeguard the interests of all shareholders.”
