Norse Atlantic Airways admits that it will be unable to achieve its ambition of full-year profitability this year, after its third quarter was affected by soft transatlantic demand and one-off costs.
The Scandinavian low-cost airline’s chief, Bjorn Tore Larsen, says there is “tough competition” on core transatlantic routes.
This softening, combined with non-recurring expenditure, means its aim of delivering full-year profits “will not be realised”, the company states.
Norse has been diversifying its business model into wet-leasing, in order to offset seasonal fluctuations, but this shift is still in progress.
It has agreed to lease six of its Boeing 787-9s to Indian carrier IndiGo and intends five aircraft to be delivered by the end of November with the sixth following early next year.
Training for the IndiGo wet-lease has resulted in non-recurring costs of $2 million.
Norse says the quarter has been impacted by other non-recurring expenses including $9 million relating to backdated salaries and “operational incidents”.
The airline says an engine was damaged during on-ground maintenance testing. While it has claimed $20 million from insurance in the third quarter, the airline recognised another $5 million in non-recurring costs not covered by insurance.
Norse states that further insurance proceeds and repair costs are expected in the fourth quarter. It adds that it foresees a “temporary” follow-on impact on engine maintenance and fleet uptime.
Although third-quarter revenues rose 12% to nearly $250 million, operating expenses increased by 17% to $228 million.
This resulted in a lower operating profit of $2.7 million for the three-month period, and the airline ended the quarter with its net loss deepening from $6.3 million to $7.8 million.
But Norse remains confident that its dual-activity strategy will improve the carrier’s position, with “de-risked” and “stable” cash-flow.
It expects “continuous” year-round high fleet utilisation in 2026, as a result of the IndiGo wet-lease, while it is refining its own scheduled network to cover 12-15 destinations.
Norse is axing seven transatlantic destinations with below-average pricing while keeping seven above-average routes, and adding capacity on winter routes to Asia. It says this “high-grading” of the network is “yielding positive effects”.
