Norwegian Air back in profit, signals aggressive long haul expansion. DoT help would be welcome
Norwegian resumed positive financial progress in 2015, returning to profit after two years of deteriorating results, including losses in 2014. The positive results of 2015 are welcome, but Norwegian's margins were unimpressive by comparison with other leading European LCCs. Even SAS achieved a higher operating margin in 2015.
Norwegian's profit slide coincided with the launch of its long haul network in 2013, and the recovery has coincided with the fall in fuel costs. This, together with a lack of separate data by network, makes it impossible to assess the relative profitability of the different parts of its network.
Nevertheless, Norwegian remains firmly committed to long haul, which it plans to grow at an average ASK growth rate of 40% pa to 2020, compared with 10% pa for short haul. Although not conditional on US approval of applications for traffic rights by its Irish and UK subsidiaries, its long haul growth options would be wider if 2016 became the year when it finally received this approval.
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