Norwegian flagged improved yields and load factors, together with a boost from the less seasonally affected Wideroe business, during a first quarter in which the airline narrowed operating losses to NKr763 million ($70 million).
It marked an improvement on the NKr917 million loss Norwegian incurred in the first quarter of 2023 and came despite the impact of a weaker Norwegian krone.
Notably it is the first set of results since the carrier acquired Wideroe in January, a business which is less seasonally impacted than Norwegian. Wideroe accounted for only NKr23 million of the operating loss in the first quarter.
Group revenues increased 55% to NKr6.14 billion, in part reflecting the inclusion of Wideroe. The latter delivered revenues of NKr1.49 billion in the first quarter, almost one-quarter of the group total.
However, revenues at Norwegian were also up 17% in the quarter, to NK4.65 billion. Norwegian chief financial officer Hans-Jorgen Wibsted notes the biggest contributors to this were yield improvement and higher load factors – delivering revenue improvements of NKr451 million and NKr209 million, respectively.
The remaining revenue growth came from additional capacity, though Norwegian only increased available seat kilometres 3% in the first quarter despite operating 15 more aircraft than the same period in 2023. That reflects the carrier’s efforts to reduce capacity during the off-season winter months.
Norwegian chief executive Geir Karlsen says: “The significant improvement compared to 2023 is a clear sign that our many initiatives, both on revenues and costs, have the desired effect and move us in the right direction.”
As a result of the positive first quarter, Norwegian is retaining its full-year guidance – even with increased cost pressures. ”We have a weakening currency that is hitting us, not only on fuel but on other parts of the cost base,” says Karlsen. “But we are sticking with an EBIT guidance of NKr2.5 billion to NKr3.2 billion with the same currency assumptions we used last quarter.”
POSTIVE IMPACT FROM WIDEROE
Norwegian’s full-year guidance does not yet include Wideroe, which will be added from the second quarter. However, Karlsen is already striking a positive note about the regional carrier’s contribution.
”We joined forces with Wideoe in January. It has been working very well,” he says. ”It is complementary. We were not competitors and we were trying to combine these two networks in a better way. Wideroe has one-fifth of the seasonality we have at Norwegian, which is a very good thing.”
He also cites the positive impact on demand a recent lowering of the fares cap on public service obligation routes, cost control measures and developing interline traffic between the two airlines is having. “Interline traffic has increased by 42% in the quarter. It shows that what we are now in the process of doing is already starting to have an effect,” Karlsen says.
”We are already way into the process of working on the synergies. You will see results already in 2024, but the full effect – especially on the commercial side – will be in 2025. It looks good. We are definitely sticking with the in excess of NKr300 million synergies.”
Norwegian is also taking its first steps to develop beyond its home Nordic markets – since its major restructuring before the pandemic. That includes a base at Riga in Latvia, where it this summer opened routes to Corfu and Tivat in Greece and Montenegro alongside flights to Nordic destinations.
”The bookings are looking very promising. It’s not massive, it’s two aircraft,” he says. ”It is a test rocket we are sending up. So far it works.”
It is doing likewise using its Spanish bases, serving Munich from Alicante and Malaga this summer, forward bookings for which Karlsen says are promising.
”Hopefully this will start a process where we are going to build on it. And I think you will see in 2025 more growth outside the Nordics,” he says.
”We are trying to optimise the base structure, both from a cost side but also from the network side. So opening up a base in Riga, a summer base in Palma this summer. We are keeping Barcelona as a 12 month base, and we have also said we will open up a 12-month base in the Canary Islands from the fall.”
