Norwegian Air shares dive on transatlantic costs

Norwegian Air Shuttle, the carrier trying to grab a larger slice of transatlantic flights, reported a slump in earnings and said the outlook for both growth and costs was worse than expected.

Shares in Europe’s third-largest budget airline (it is behind Ryanair and EasyJet) dropped as much as 11% to their lowest since October, 2014, taking this year’s losses to 34%. The airline has launched transatlantic flights from Cork to Boston, and from Belfast to Boston and New York. Its strategy of taking on more established flag carriers has risks, such as buying or leasing larger, more expensive planes.

Norwegian Air’s operating expenses jumped 45%, driven by a 56% increase in technical maintenance costs. Despite the cost problems, Norwegian said securing financing for new planes, due to be delivered in 2018, would not be a problem. “Anyone who believes we can’t pay for the aircraft will be disappointed,” chief executive, Bjoern Kjos, said.