Norwegian Air Shuttle: strong growth in 2Q2013 profits, but the challenges are only just beginning

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.