The airline is marked as a key priority return to profitability
Norwegian Air Shuttle closed 2018 with losses of NOK 1,454 million (€ 150 million), which represents a decrease of 19% in its ‘red numbers’ compared to the previous year, and a 30% increase in revenue, up to 40,265 million Norwegian crowns (4,128 million euros) in 2018.
Of its total turnover, 580 million euros originated in Spain, 26% more, which consolidates the Spanish market as the third one for the company by revenue, behind Norway and the USA.
In the last quarter, it incurred losses of NOK 1,800 million (€ 185.76 million) due to its fuel hedging positions and its turnover was NKr 9,700 million (€ 1 billion), an improvement of the 2. 3%.
During 2018, the gross operating profit (Ebitda) of the Norwegian low cost company was negative with losses of NOK 2,183 million (€ 224.5 million) compared to gains of NOK 58.9 million (€ 6 million) of euros) of the previous year. The net operating profit (Ebit) registered losses of NOK 3,851 million (396 million euros), 92% more.
Norwegian points out that this result has been negatively influenced by the problems in the Rolls-Royce engines of its ‘Dreamliners’ aircraft that forced it to lease planes to avoid delays and cancellations, losses in fuel coverage and stiff competition in a period of strong competition.
The company has reached an agreement with the British engine manufacturer regarding compensation for interruptions in its long distance operations already agreed in December, which will have a positive effect. The current operation of its aircraft ‘Dremaliner’ works without mishap, says the airline.
Last year the company added 25 new aircraft to its fleet, which contributed to a 37% growth in capacity in 2018 in a year in which its passengers increased by 13% (37 million). It closed the year with a fleet of 164 aircraft.
RAISES 37% OF ITS GLOBAL COSTS
The gross operating profit before amortizations and rents (Ebitdar) during 2018 was reduced by 45%, to 2,171 million dollars (223.2 million euros). Its unit costs (excluding fuel) were reduced by 12% during 2018.
In 2018, its expenses increased by 37% to NOK 42,448 million (EUR 4,365 million). Among the biggest increases are personnel costs (+ 25%) with an increase of 19% in the last quarter, the maintenance item (+ 29%), aircraft leases (+ 12%), as well as fuel, with an annual invoice of NOK 12,562 million (1,291 million euros), 71% more.
At the end of 2018, its net debt including interest amounted to NKr 31,917 million (€ 3,282 million), which represents an increase of 43%.
THE PRIORITY, RETURN TO PROFITABILITY
Looking ahead to 2019, the company has changed its strategy and will “significantly” reduce growth and investments while undertaking a series of measures to return to profitability, including the optimization of bases – it will close three in Spain– , the postponement in the delivery of 16 aircraft and the sale of aircraft. In addition, it will increase capital of NOK 3,000 million (€ 309 million). Your key priority in the future, says Norwegian, is to return to profitability.
“We have taken a series of initiatives to improve profitability by reducing costs and increasing revenues in the future, we have optimized our structure of operational bases and routes to improve operations, as well as disinvest in airplanes and defer aircraft deliveries; We have started an internal cost reduction program that will boost our finances and return us to profitability, “said Norwegian founder and CEO Bjorn Kjos.
“Starting in 2019, we will enter a period of slower growth and with fewer investments, while constantly seeking new and smart ways to improve our efficiency and offer new products and services to attract new customers,” he added.
Norwegian will convene an extraordinary shareholders meeting, to be held on February 19, for the capital increase. According to the company, 33% of investors have already committed to vote in favor. The transaction was announced days after IAG dismissed a takeover bid and announced its intention to exit the capital.