Norwegian Air Shuttle ASA extended (20-Oct-2011) its current aircraft order with Boeing for an additional 15 B737-800s to be delivered between 2015 and 2018. The total order for purchased aircraft now stands at a total of 78 where 22 have been delivered. Norwegian has 12 remaining purchase rights for aircraft of the type. All future B737 aircraft will be fitted with CFM Evolution engines, Boeing SKY interiors and in-flight Wi-Fi. Norwegian Air Shuttle ASA has also entered into a Letter of Intent to lease one new B787-8 from ILFC. The aircraft is the third leased B787 from ILFC, and the sixth B787 on order for Norwegian. Norwegian will take delivery of the aircraft in early 2014, with a lease term of 12 years. The LoI is entered into as part of Norwegian’s set up for long-haul operations. [more - original PR]
Norwegian extends order with Boeing for 15 B787-800s; LoI to lease one new B787-8 from ILFC
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Norwegian Air continued its trend of improving profitability in 2Q2016, when it marked its sixth successive quarter of year-on-year increases in its operating margin. It achieved a further gain in load factor, in spite of double-digit capacity growth. The biggest sources of its growth were its US widebody routes and its operations in Spain, where it has recently opened a seventh base at Palma de Mallorca.
To a large extent its recent positive trend of growing profits has been the result of lower fuel prices. Ex fuel unit costs have been rising for several quarters, outpacing increases in unit revenue. Norwegian has only managed to achieve margin gains because of lower fuel CASK.
Norwegian's operations should become more efficient if it received US foreign airline permits for its Irish and UK subsidiaries, although there is currently little sign that this is about to happen. A new order for 30 A321LRs (part of the A320neo family) should also help Norwegian's unit cost performance and give it more choice over aircraft deployment on shorter long haul routes.
Norwegian Air: 1Q results continue improving trend thanks to lower fuel. Long haul strategy develops
The Norwegian Air Shuttle group is enjoying a period of good news. It narrowed its underlying operating loss for the seasonally weak first quarter, after returning to full-year profit in 2015 following a loss in 2014. Its 1Q2016 results demonstrate that this improving trend is continuing. Norwegian's 1Q results came soon after the US Department of Transportation (DoT) had given tentative approval of a US foreign carrier permit to Norwegian's Irish-registered subsidiary, NAI.
However, this is not the time for Norwegian to sit back and relax. Its improved profitability is in no small measure due to lower fuel prices, while ex fuel unit cost increased in 1Q2016. In addition, contracts for the leasing out of Norwegian's first A320neo deliveries have been temporarily delayed, highlighting the added challenge of running this new and growing line of business. Moreover, until the DoT approval is final, there may be some nervousness surrounding it.
Meanwhile, Norwegian is growing NAI at its new Rome Fiumicino base, which joins Madrid and Barcelona as major NAI airports with no Norwegian intercontinental routes. As it pursues 40% pa ASK growth over the next several years, these are likely candidates to be its next long haul bases.