Norwegian Air Shuttle
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Operating as ‘Norwegian’, Norwegian Air Shuttle (NAS) is the largest airline in Norway. Based in Oslo, Norwegian has several secondary hubs including Alicante, Copenhagen, Gran Canaria, Helsinki and London Gatwick. Norwegian operates 331 routes to 120 destinations and has approximately 2,500 employees. The carrier plans to launch long-haul services starting with New York and Bangkok utilising Boeing 787 equipment.
Location of Norwegian Air Shuttle main hub (Oslo Airport)
Norwegian share price
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider Norwegian Air Shuttle fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
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103 total articles
In 3Q2013, IAG continued the turnaround in its operating result that began in 2Q2013. All three of its main brands – British Airways, Iberia and Vueling – saw an increase in their result from the same quarter of 2012. The improvement was mainly driven by healthy unit revenues, although these were diluted by currency effects, and the addition of LCC Vueling in the full quarter for the first time.
It seems that IAG’s prediction that Iberia’s restructuring programme would start to bear fruit in the second half of the year is being proven correct.
Moreover, new FY2013 guidance, for an operating result of around EUR740 million, is ahead of IAG’s previous target, even allowing for the Vueling acquisition. After its 2Q2013 results, we asked if that was a turning point for IAG? At the moment, it would seem that the answer is yes.
Finnair celebrates its 90th birthday on 1-Nov-2013, making it one of the world’s oldest airlines. It also has one of the newest CEOs, Pekka Vauramo, who joined on 1-Jun-2013.
Finnair’s strategic niche is based on using its Helsinki hub to connect Europe with Asia. While it saw traffic growth and market share gains in both regions in 3Q2013, the weakness of the yen led to a collapse in Asia revenues. The approval on 16-Oct-2013 of Finnair’s application to join the BA/JAL revenue-sharing joint venture on routes between Europe and Japan could not have come at a more opportune moment. The resulting coordination of pricing and schedules should help to counter revenue weakness.
Nevertheless, the fall in Finnair’s 3Q2013 profits and its consequent profit warning for the full year highlight the scale of the challenge facing Mr Vauramo. Although Finnair achieved a further reduction in unit costs, he will need to push through more cost cuts, while simultaneously seeking to shore up unit revenues.
Norwegian Air Shuttle: Asia's longhaul LCC model comes to the N Atlantic (but watch falling profits)
Norwegian Air Shuttle reported a fall in 3Q2013 net profit, affected by Boeing 787 disruptions and weaker demand as a result of the good northern European summer weather. Nevertheless, Norwegian continues to build for the future and announced its first UK-US trans-Atlantic routes on 17-Oct-2013.
In Jul-2014, Norwegian will launch three long-haul routes from London Gatwick to Los Angeles, New York and Fort Lauderdale, in addition to the trans-Atlantic routes operated from its Scandinavian bases. The airline is already using 787-8s on its Bangkok service.
This will be the first modern attempt to introduce the successful Asian long-haul LCC model to the North Atlantic from the UK, a concept that Ryanair's Michael O'Leary has often floated in the past. Earlier this month Qantas subsidiary Jetstar took delivery of the first of a fleet of 787-8s that it will be using on long-haul routes in Asia. SIA subsidiary Scoot will receive 787-8/9s from late 2014 and AirAsia X will use A350-900s from 2018.
Finnair’s operational result fell by EUR10 million in 2Q2013 compared with the same period of 2012. Moreover, the carrier lowered its full year revenue outlook from expected growth to “approximately at the 2012 level”, due to the weak Japanese yen. Nevertheless, there are also some more positive signs for new CEO Pekka Vauramo, who joined on 3-Jun-2013.
First, without the impact of its fuel hedging programme, Finnair's operational result would have improved by EUR12 million. Second, its strategic focus on carrying passengers between Europe and Asia was reflected in strong traffic growth and market share gains in these two regions. Third, Finnair’s cost reduction programme reached its EUR140 million savings target six months ahead of schedule and the company remains committed to achieving a further EUR60 million in savings by 2014, mainly through labour productivity improvements.
This is the second in a three part series of reports on the Southeast Asia-Western Europe market. The first part analysed the position of Southeast Asian carriers as Philippine Airlines (PAL) and Garuda Indonesia prepare to join four peers in operating non-stop flights to Europe. This part looks at the position of European carriers, where there also has been a new entry along with expansion by some of the existing carriers.
Norwegian became the eighth European carrier and first LCC to serve the Southeast Asian market in Jun-2013, when it launched services to Bangkok from Oslo and Stockholm. Norwegian brings a return of low-cost services to the Asia-Europe market following the withdrawal of AirAsia X, which dropped its A340-operated London and Paris routes in Mar-2011. AirAsia X is now focusing on routes within the Asia-Pacific region and flights of less than nine hours, using A330-300s.
Norwegian has big ambitions for Southeast Asia and is preparing to open a base at Bangkok which could support additional flights to Europe. But for now Norwegian's main focus is on more rapid expansion in the North Atlantic, where flights are shorter and potentially more conducive to the long-haul low-cost model.
Announcing 2Q2013 net profits that were more than twice those of the same period last year, Norwegian Air Shuttle’s CEO Bjørn Kjos said: “This has been a very good quarter for Norwegian. We have finally started our long-haul flights and we have opened a new base in London”.
Unit costs fell faster than unit revenues and both will continue to fall as average sector lengths grow.
The challenge for Norwegian will be to retain some pricing power as rapid seat growth continues, thereby maintaining this balance between unit revenues and unit costs. This may not be easy given the price sensitivity of the European short/medium-haul market and the superior route networks of major long-haul competitors.
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