Norwegian Air’s future: profits, bigger fleet and partnerships

 

Recently, people might have not heard much of Norwegian Air and might be wondering if they still exist. Why? You ask, because, during the last couple of months, the financial solidity of the company had been put into question by a lot of specialists. Of course they still exist! However, recently the airline has been 100% focused on sorting out their financial struggles, therefore it has been quiet around Norway’s largest airline. We have gathered some interesting facts regarding the Norwegian airline and we’ll explain its recent profit issues.

 

Who is Norwegian Airlines?

 

Norwegian Air, or actually Norwegian Air Shuttle, was founded in 1993 and is one of the largest low-cost carriers in the world. The airline serves destinations across the globe, from Europe to South America. Nowadays, the airline operates under 170 aeroplanes, having the youngest (averaging around 3.8 years) and most sustainable fleet. Continuously adding aircraft that are simply better for the environment.

 

Why has Norwegian Air been struggling with making a profit?

 

Due to the low-cost model of the airline, it has experienced difficulties in budgeting. The fact that some of its long-haul journeys, for example from New York to London were priced at as little as EUR 90 one way left the airline struggling for profits. Furthermore, the airline has a huge amount of debt, its debt to assets ratio is outweighed by more than 60%.

 

The recent problems surrounding the Boeing 737 Max aeroplane has hit the airline hard, as around a tenth of their fleet consists of such model of aircraft. In efforts to save costs, staff were let go and more were told that they would get a year’s worth of unpaid leave, hoping to save many jobs in the long run. Despite the difficulties, Norwegian was officially named the best long-haul low-cost airline in the world in June 2019, for the fifth year in the row. It’s a tad mind-boggling, how the best low-cost airline in the world can’t seem to make a profit.

 

August 2019: What Ryanair’s CEO says about Norwegian Air

 

After Air Berlin, Monarch, Primera Air and Wow Air went bankrupt, the aviation industry was shaken up and was left thinking if the low-cost model was actually under threat, fearing that more budget airlines would fall. Fast forward to the Summer of 2019, when the CEO of Ryanair, Michael O’Leary, claimed that he was sure there would be “more failures” amongst the competitive low-cost airline market. He also claimed that he would not be surprised to see the end to the Norwegian airline and named it a “distant possibility” for the autumn months of October and November. As it would eventually show, he misjudged the capabilities of the airline.

 

October 2019: Norwegian Air makes a profit despite lower forecasts for third quarter

 

In the last 3 months, Norwegian Air successfully managed to outperform its profit forecast, making a net profit of 1.67 billion crowns (£1.9 billion). This bottom-line profit beat the forecasted one, of 1.47 billion crowns (£1.7 billion), by 200 million crowns and saw the airline’s shares rise by 23% in trade.

 

Norwegian Air obtains venture capital that will make it profitable again

 

Shortly after publicising the good news, the airline also announced that it had secured a joint venture with China Construction Bank Corp, a deal that will see both companies own a fleet of Airbus aircraft that Norwegian had already ordered. The Chinese company will retain most of the stake (70%) with the rest belonging to Air Arctic, another unit of Norwegian.

 

The investment will enable the Norwegian airline to introduce 27 more aeroplanes, model A320 NEO, to its fleet. The planes are expected to be delivered between the years of 2020 and 2030. Norwegian Air claimed that, through the above-mentioned investment, the company has been able to decrease its expenditure by £1.17 billion.

 

What changes is Norwegian Air making?

Norwegian Air's future and profitability

For the year 2020, the airline expects to decrease its capacity by 10%, in order to save further costs and increase profitability. The newly appointed Chairman, Niels Smedegaard, explains that “there will be tough decisions and we will be criticized for closing down routes or doing other things.”

 

Additionally, air passengers travelling on Norwegian Air can expect improvements in technology, revised pricing and better services. The carrier went even further and announced that because of its recent affiliation with Jet Blue, passengers will now be able to reserve connecting flights in one booking.

 

Norwegian flight delays, cancellations and overbooking

 

Has your flight with Norwegian been disrupted? Despite the airline’s efficiency and professional experience, many passengers who fly with this airline often suffer through delays and cancellations. It happens even to the best out there.

 

At Flight-delayed.co.uk we specialise in claiming the compensation that delayed passengers are entitled to. This can be as much as 600 euros per passenger! If you have been delayed in the last 6 years, you can use our free flight checker to see if you are entitled to claim compensation. We also work on a no-win-no-fee basis. That means that you only pay our 25% win-fee if we successfully claim your compensation. Best of all, our win-fee covers all possible costs associated with claiming your compensation. Even if we have to go to court for it. Check to see if you’re entitled and exercise your rights as a passenger.

 

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