MIAMI – Norwegian Air (DY) Shuttle’s stock price plummeted 25% on Friday as a result of analysts estimating the projected losses for the airline in the coming months. This represents the lowest the stock price it has ever been in 15 years.
The airline’s stock prices have dropped over 70 percentage points in the last month.
Norwegian has already cut 22 transatlantic flights and is cutting costs to combat the substantially lower demand due to COVID-19 fears. In addition, in order to cut costs, the airline has already halted 15% of all its flights.
Although DY was initially expecting to turn a profit this year, they have since abandoned this expectation due to analysts predicting them to suffer losses in Q1 of this year.
Analysts are anticipating Norwegian to require another equity refill to stay afloat. The equity refill would give the airline a small layer of protection to deal with the fallout.
The airline industry has already been hit incredibly hard due to the coronavirus. The International Air Transport Association (IATA) estimates the fallout from the COVID-19 outbreak will cost airlines upwards of $113bn.
Airways will continue to post detailed reports on the deadly virus fallout and how the epidemic is dramatically affecting the commercial aviation industry.
Norwegian Air’s continued issues
Despite being the third largest low-cost carrier in Europe (following Ryanair and Easyjet), DY has faced continuous operational hurdles in the past few years.
In the past 10 years, Norwegian has gone through a rapid expansion, leading to it being overstretched.
The airline had many mechanical issues with their Boeing 787-9 fleet’s engines. They also operate 18 Boeing 737 MAX 8’s that are currently all grounded.
In 2018, after a period of extreme growth, the airline decided to switch their goal to profitability instead of growth. To comply with this new strategy, the carrier cancelled their whole order for Airbus a320neo’s.