Norwegian Air was flying high on the Oslo Stock Exchange Wednesday morning, and in general, despite reporting a heavy first-quarter loss. Investors and the traveling public clearly haven’t lost faith in the ever-expanding airline, which is recovering from a lengthy pilots’ strike and, ultimately, loosening its ties to Norway’s strict labour market.
The strike was earlier reported to have cost the airline NOK 350 million, and now it has reported a loss of NOK 777 million for the period when the strike grounded most of Norwegian’s flights within Scandinavia and disrupted service around Europe. Norwegian Air’s pre-tax results, however, were better than expected and better than those reported in the same quarter last year.
With the airline also showing no signs of bowing to regulatory and political pressure regarding its campaign to keep flying low-fare intercontinental routes with cheaper non-Norwegian crews, and continuing to add new routes, investors responded to its results by driving its share price up nearly 9 percent in early morning trading.
More revenues and passengers
Analysts told newspaper Dagens Næringsliv (DN) that they had expected a first-quarter loss of NOK 903 million, meaning that the loss reported was quite a bit better. The airline also reported a 14 percent increase in revenues, plus passenger growth despite the strike. Nearly 5 million people flew on Norwegian flights during the first quarter, up 2 percent over the first quarter of last year. Part of that, though, is a result of the Easter holidays beginning in late March this year, when the strike was over and Norwegian could include Easter traffic in its first-quarter numbers.
Norwegian nonetheless managed to fill 83 percent of its seats on average, up six percentage points from last year, and an important accomplishment in a quarter with a strike. In short, Norwegian’s founder and chief executive Bjørn Kjos could flash his well-known smile and laugh again. The quarterly results would have been quite good, he noted, without the strike.
So good that Norwegian’s stock took off like a rocket when they were released, and Kjos could also report that passenger growth outside Scandinavia is strong, “not least on our long-distance routes.” That’s where Norwegian continues to challenge regulations, labour unions and political pressure with its insistence on using cheaper foreign crews on the intercontinental flights it launched in 2013.
Fighting ‘persecution’
Norwegian is still waiting for regulatory permission to be the first European-based airline to use Asian personnel on routes between the US and Europe. Its temporary permission to use its Irish-registered aircraft on the intercontinental flights is about to expire, so the airline continues to face uncertainty. Norwegian wants to continue to use crews from Thailand, the US and the UK even if it has to re-register its aircraft in Norway.
DN reported last week that Norway’s immigration agency UDI (Utlendingsdirektoratet) is threatening to file charges against Norwegian if it moves its Boeing 787 Dreamliner aircraft from Ireland back to Norway and continues to use the foreign-based crews. Regulators and labour unions claim that use crews from other continents would violate Norwegian law. Norwegian officials defend their practice and claim they will react to any such “persecution,” on the grounds they are operating within the current regulatory framework.
As the airline continues to test regulatory limits, it also continues to launch new routes, with plans for non-stop flights to more US cities including Las Vegas and perhaps even Honolulu, along with more destinations in the Caribbean, South America. South Africa and Asia. The pilots’ strike earlier this year hasn’t changed founder Bjørn Kjos’ grand plan for the airline, which is nothing short of flying his Norwegian Air worldwide, without Norwegian working conditions for its crews.
“We need to fly (at low cost) where the major passenger traffic is,” he repeated to newspaper Aftenposten last month, “and that runs among the continents and the major capitals like Paris, Rome and London.” More long-distance routes will be added from Scandinavia and Norway in particular, also from smaller Norwegian cities like Bergen, Trondheim and Stavanger. Most of the airline’s operations, however, are likely to expand outside Scandinavia. As one airline analyst told Aftenposten, “we’ll see Norwegian’s ties to Norway steadily weakened.”
newsinenglish.no/Nina Berglund
