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Friday, June 21, 2024

Norwegian Air flies on good news

Long-troubled Norwegian Air was finally flying on the Oslo Stock Exchange Thursday after it reported both strong earnings and a new “cooperation” with a large Chinese bank. Its share price had soared a stunning 25 percent by closing time in Oslo, after even higher gains earlier in the day.

Norwegian Air’s stock took off on Thursday, on strong earnings and a long-awaited financing deal. PHOTO: Norwegian Air

“There was a lot of good news from Norwegian, so it’s not so strange that its shares skyrocketed,” airline analyst Hans Jørgen Elnæs at Winair told news bureau NTB. He noted that given all the trouble at Norwegian in recent years, the airline can be subject to major spikes on good news and steep dives on bad news.

Elnæs thinks the airline “is now on the right course” after reporting record results of NOK 2.2 billion in third-quarter pre-tax earnings, up from NOK 1.6 billion in the same quarter last year. The unexpectedly strong results were attributed to higher revenues, lower costs and more moderate growth, all of which are in line with the company’s new strategy after years of rapid expansion.

Now the priority is to move from growth to profitability. Acting chief executive Geir Karlsen, who recently took over for founder and retiring CEO Bjørn Kjos, thanked “everyone in Nowregian who has contributed to delivering considerable cost cuts so far this year.” Even as growth tapers off, the airline’s international presence continues to expand, with the US now taking over as the airline’s market with the highest revenues followed by Norway, Spain and Great Britain.

There was more good news as well. After recently reporting a new alliance with JetBlue of the US, that can ease travel and connections for its intercontinental passengers, it could also report a new deal with China Construction Bank Corporation (CCB) (external link to the Oslo Stock Exchange) to finance, own and lease out new aircraft ordered by Norwegian.

“Today was Norwegian’s day on the Oslo bourse,” declared commentator Thor Christian Jensen of newspaper Dagens Næringsliv (DN). He claimed that the deal with CCB was most important, since it gives the airline “very welcome relief in its investment obligations.” The airline’s operating results were also the best in its history, with Jensen noting how Norwegian ended its results presentation with the words “our actions are working,” and claiming that more was yet to come. Berglund



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