Norwegian reports strong improvement in earnings in 2015

Norwegian has reported its 2015 financial and operating results featuring a net profit of NOK75 million, which was heavily influenced by an unrealised loss on fuel hedging for 2016 and 2017, which makes up NOK800 million.

Adjusted for such unrealised hedging, the 2015 pre-tax results was NOK875 million. This was a strong improvement compared with last year’s loss of NOK1.168 million. The 2015 pre-tax result improved by NOK1.7 billion, compared with 2014.

The company’s total revenue was NOK22.5 billion, an increase of 15% over 2014. The production growth (ASKs) increased by 5%, which Norwegian described as “a breather in the company’s expansion, explained by phasing out older aircraft whilst adding new aircraft to the fleet”. The load factor remained high at 86% in 2015, up 5 percentage points from the year before. Norwegian carried almost 26 million passengers in 2015, up 7% from 2014.

For the fourth quarter (4Q15), the underlying result increased by approximately NOK 500 million. The net loss before tax of NOK 703 million was mainly related to fuel hedging for 2016 and the depreciation of the Norwegian krone. By transferring Norwegian’s fleet to its subsidiary Arctic Asset Aviation (AAA), the value of the aircraft has increased in line with the dollar. This has had a positive effect of NOK88 million on the equity for the fourth quarter and NOK421 million for 2015.

The company’s total turnover in 4Q15 was NOK5.3 billion, an increase of 16% from 4Q14. The load factor in 4Q15 increased by 4 percentage points to 85%. The airline carried 6.13 million passengers during 4Q15, up 9% over 4Q14.

“We enter 2016 with favourable fuel costs and one of the youngest fleets in Europe, which presents a significant competitive advantage,” declared CEO Bjørn Kjos. “We see a good demand for quality flights at affordable fares, but the unpredictable political decision to introduce passenger tax in Norway is creating an uncertain situation in this market. It is a paradox that the company with the lowest emissions seems to be punished the hardest.”

The market in Norway is being influenced by a slowdown in the economy and there is increased competition in the Danish market, the airline noted. The demand for travelling with Norwegian (plus advance bookings) has been satisfactory entering the first quarter of 2016. Norwegian plans to introduce 17 new 737-800s and four new 787-9s in 2016. In addition four Airbus 320neos will be delivered in 2016, which will be leased to the Asian low-fare airline, HK Express.

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