MIAMI — In just under six years of operation, Norwegian Air, known for its low-cost tickets and long-haul transatlantic travel, has managed to take hold of the coveted number-one spot for passenger travel in the New York City area for a foreign-based airline.
In addition to this, following the airline’s first-quarter results for 2019, the carrier has managed to reduce its costs, increase its revenue, and significantly improve its on-time performance.
Even though the airline continues to post a net loss of NOK 1,489 million, the company’s unit cost, excluding fuel, decreased by 8% compared to the same period in last year. This has seen the airlines total revenue rise to NOK 8 billion, up 14%.
The 1Q Numbers
Despite a rough end to 2018, Norwegian has shown incredible resilience as it seeks to cement its position as a leading low-cost carrier.
Key to Norwegian’s road to recovery has been the cutting of unprofitable routes, along with better aircraft and crew utilization.
This change has led the airline to close some of its European bases in an endeavor to consolidate its operations.
While such moves have not come without publicity, it does show the airline’s willingness to make such changes to ensure its future operations continue.
In the first quarter, the total revenue was NOK 8 billion—an increase of 14% from the same period last year—primarily driven by intercontinental growth and increased traffic in the Nordics.
More than 8 million passengers flew with Norwegian in this first quarter, a growth of 9%. The average load factor was 81%.
Norwegian’s unit cost, excluding fuel, decreased by 8% compared to the first quarter in 2018. The punctuality increased significantly this quarter, from 73 to 81.3%, and the airline’s dispatch reliability was unchanged at 98.7%.
These 1Q results show that Norwegian is well positioned to continue to attract new customers, especially so in the long-haul market, where the carrier has proven that yields and development can be far stronger than in the short-haul market.
Cost Reductions: Fleet Goes First
While it could be easy to look at the overall picture presented in this 1Q results as positive, it can be easy to forget the tremendous impact the temporary grounding of the Boeing 737 MAX fleet has had on the airline.
As the airline prepared to cease transatlantic services from Edinburgh Airport at the end of March 2019, the grounding of the type led to an early exit on the route and the consolidation of some flights to Norwegian’s key sun-and-fun routes.
The company was forced to look for alternate flights and book customers to other departures within Norwegian’s own network, consequently reducing the impact on passengers.
The airline will continue to limit passenger disruption, where possible, by also offering flights with wet lease companies whenever necessary.
In the meantime, Norwegian’s has postponed the delivery of brand-new Airbus A321neo LR aircraft, as well as some A320neos, which were due for delivery at the end of 2019.
Further to these, several factory-fresh Boeing aircraft, including the 737 MAX and 787 Dreamliners, have all been delayed until 2021-2022, which in turn, frees up capital for the airline in the short-term.
Cost-Saving Initiatives Working Well
Commenting on the first quarter results, CEO of Norwegian, Bjørn Kjos admitted being “pleased with the positive developments this quarter, despite the 737 MAX issues.”
“We have taken a series of initiatives to improve profitability by reducing costs and increasing revenue. We are optimizing our base structure and route network to streamline the operation as well as divesting aircraft, postponing aircraft deliveries and not least implementing our internal cost reduction program, which will boost our financials,” he said.
New York: Norwegian’s Cash Cow
Overhauling Air Canada out of the previously-held top spot in passenger volume as the largest foreign-based carrier in the New York area, and garnishing the Big Apple as their prize, Norwegian served 2,078,847 passengers from February 2018 to the same month this year in a rolling twelve-month period.
Since its induction in 2013 to 2018, over 4.6 million passengers have flown with Norwegian to New York and New Jersey.
The airline credits its success to several factors, including being the first airline to offer free inflight wi-fi on transatlantic flights, and also offering the most nonstop European routes out of the Los Angeles and California area.
“If New York City is the barometer for success in the airline industry, our rapidly growing passenger numbers are proof positive that Norwegian is here to stay,” said Kjos.
“Competition is at an all-time high and our business model of low fares and new planes is unmatched and attracting new travelers every day.”
The budget carrier took its inaugural flight from the United States at John F. Kennedy Airport in 2013, with only a couple direct route offerings to Oslo and Stockholm.
This network has elaborated today into 11 nonstop routes to Europe from all three major New York City airports, also including Newark-Liberty International Airport and New York-Stewart International Airport.
“New York City sets the bar very high for us around the world, and we are ready to forge forward as the innovator in low-cost air travel as we continue to soar to the top,” added Kjos.
Written by Jonathan Winton and Leila Chaibi