Norwegian improves its 1Q2013 results, but widebody profits may be one for the long-haul

Norwegian Air Shuttle narrowed its net loss in 1Q2013 and turned its operating result around from a loss of NOK574.6 million (USD99 million) to a profit of NOK69.2 million (USD12 million). Capacity continues to grow rapidly, with ASKs up 21% (11% due to longer average sectors), but load factor dipped by 1ppt to 76%.

Nevertheless, RASK grew 2% and revenues were up 23%, while unit costs were down 8%. Further CASK reduction remains a key target and the establishment of new bases outside high wage Scandinavia, both in Europe and in Asia, provides an opportunity to lower labour costs.

Norwegian recently announced a seventh widebody route (Oslo-Fort Lauderdale) for its long-haul network, which will launch on 30-May-2013 along with Oslo-New York. Its strategy of growing long-haul operations through new routes at the expense of frequency will help it to establish a wider presence more rapidly, but will reduce the available cost efficiencies at remote bases and restrict its appeal mainly to the leisure passenger. Norwegian's long-haul network may struggle to be profitable for some time.