Low-cost, long-haul airline Norwegian, which has cut back its Irish routes to the US in recent months, struggled to fill its aircraft in November as capacity growth far outpaced demand.
Shares in the company plunged up to as 14% at one stage, as a loss on fuel hedge contracts also added to the airline’s woes. The company, in which British Airways and Aer Lingus-owner IAG has a small stake, is now valued at €1bn, still up 6% from a year ago.
Norwegian earlier this year axed its winter routes from Cork and Shannon to Providence in Rhode Island following a review of what it called “a changing market environment and seasonal lower demand”.
The Cork-US route, the first direct transatlantic flight ever out of Cork Airport, will return for the summer schedule, the airline has said. Its decision to axe its Belfast routes to the US was slammed by the airport’s management, who called the decision “moronic”.
Norwegian, which has been courted by IAG, has ramped up its transatlantic business but has also said that growth will slow as it prioritises profitability over expansion.
“Several of our summer routes have been extended into November, which has affected the load factor,” said chief executive Bjorn Kjos.
The airline’s capacity increased 34% year-on-year in November, and revenue-generating passenger kilometres increased by 26%, its monthly traffic report showed.
The load factor, a measure of how many seats are sold on each flight, fell to 79% for the month, the lowest since May 2014, and down from almost 84% a year ago.
“Overall, we find the traffic figures to be soft,” Danske Bank analyst Martin Stenshall.
While the recent fall in crude oil prices will eventually bring down fuel costs, the company is expected to first book substantial losses from hedging positions it entered into at higher prices, Pareto Securities said.
IAG boss Willie Walsh said in August that his firm will sell its 4.6% stake in Norwegian if the airline does not entertain a takeover bid within a year.
Norwegian said in October that it would sell five Airbus 320neo aircraft as part of a plan to ease capital commitments and strengthen its balance sheet.
‘Irish Examiner’ staff and Reuters