Loading profile info

Norwegian Air Shuttle's fall in 3Q profit underlines the challenges faced in 2014

Analysis

Norwegian Air Shuttle reported its third fall in quarterly profits this year, with the seasonally strong 3Q2014 seeing a 14% drop in its net result. It has been an unusual year. Additional costs associated with the introduction of its 787 fleet on its nascent long-haul network, delays to its US foreign carrier permit application and currency movements have weighed on this year's profits.

But Norwegian cannot blame these factors entirely. It has also experienced heavy falls in unit revenue in 2014, not entirely unrelated to its very rapid capacity expansion. Unit cost has declined too, but not fast enough. Pioneering a new business model on long-haul and growing very rapidly certainly provide challenges.

Norwegian's 2013 profits were lower than in 2012 and it now looks certain to make a significant loss in 2014. In 2015, it is planning much slower growth, which should be beneficial to unit revenue. It must also silence its detractors by proving that it can generate a more favourable profit trend next year, while also managing its new aircraft leasing subsidiary.

Read More

This CAPA Analysis Report is 2,269 words.

You must log in to read the rest of this article.

Got an account? Log In

Create a CAPA Account

Get a taste of our expert analysis and research publications by signing up to CAPA Content Lite for free, or unlock full access with CAPA Membership.

InclusionsContent Lite UserCAPA Member
News
Non-Premium Analysis
Premium Analysis
Data Centre
Selected Research Publications

Want More Analysis Like This?

CAPA Membership provides access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.
Find Out More