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15 Jun 2018

BY Rob Gill

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Norwegian reaches ‘peak’ in route growth

Low-cost carrier Norwegian is set to focus on adding more flights on profitable routes instead of introducing new destinations.

Geir Karlsen

The airline, which has rejected takeover bids from British Airways’ owner International Airlines Group (IAG), is also considering selling some of the 200 aircraft it currently has on order.

 

Geir Karlsen, Norwegian’s chief financial officer, said the airline had now “reached the peak in the growth story”.

 

“Net growth is not going to be as high as the market might think,” added Karlsen. “We will have less aircraft coming into production, so we can have more focus on existing route planning.

 

“I don’t think we will be opening up very many new routes. We would rather focus on adding frequency on routes that we know can make us a good return.”

 

Karlsen said some of the new aircraft on order would be used to replace older parts of the fleet, while up to 140 aircraft could be “divested” through being sold or leased to third parties.

 

“This might be a lower number of aircraft,” he added. “We have several interested parties approaching us wanting to discuss these aircraft.”

 

Karlsen admitted Norwegian’s first quarter results, which saw the airline record a loss of £4.3 million, was “not a great quarter”. But he added the next six months “looked promising” and the company should “make very good profits” during this period.

 

“The focus for the company is now on next winter,” he said. “We are looking at route combinations and we will probably be changing the routes for winter more than we have done before.

 

“We will fly less on destinations that we know are difficult during the winter and shift that capacity to more leisure destinations.”

 

Karlsen added the airline “will do something” about routes that had not become profitable.

 

Norwegian is also taking action to mitigate the rising price of jet fuel through an increase in ticket prices and “other internal measures”.

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