However, Norwegian said its ongoing cost-saving measures – part of its planned transition from growth to profitability – helped it reduce its ongoing losses, which fell from from NOK 2.5 billion (£208 million) to NOK 1.7 billion (£141 million) during the 12 months to 31 December 2019.
Norwegian revealed the ongoing grounding of the 737 Max, which was pulled from service last March after two fatal crashes in just five months, contributed to a NOK 1 billion hit (£83 million) as Boeing’s efforts to fix a vital flight control system continue. The carrier has 18 Max aircraft in total.
Full-year revenue, meanwhile, came in up 8% at NOK 43.5 billion (£3.6 billion), and Norwegian said its cost-saving measures clawed back NOK 2.3 billion (£192 million) last year. These included cutting capacity by 1% and axing several routes; disposal of its holding in a Norwegian financial firm; and the sale of its Argentinian subsidiary to JetSmart Airlines.
The airline though plans to make further, deeper capacity cuts next year in an effort to turn a full-year profit for the first time since 2017. Norwegian will reduce capacity, measured in terms of available seat kilometres (the ratio of available seats to distance flown), by 13% to 15% next year, up from a previously forecast 10%.
Its guidance is based on the 737 Max returning to service in September. Boeing has set a "mid-2020" target for the Max’s return, although the US Federal Aviation Administration has said there is yet "no timescale" for the aircraft to resume operations.
Norwegian has another 92 Max aircraft on order, with negotiations over compensation from Boeing ongoing, according to Reuters.
Norwegian said 2019 had been a “challenging year”, marked by a “tough trading environment”. “Significant costs caused by the global grounding of the Boeing 737 Max and the ongoing Rolls-Royce engine issues on the Dreamliner fleet meant the company was forced to wetlease additional aircraft to avoid cancellations and delays throughout the network,” said Norwegian.
The airline said thanks to its “young and more fuel-efficient fleet”, it had removed 1.7 million metric tons of carbon from its operations “compared to the industry average”. Norwegian said it also offset 40% of its total CO2 emissions through the EU’s emissions trading system.
Geir Karlsen, Norwegian chief financial officer, said the carrier had achieved its initial goal of saving NOK 2.3 billion as part of its ongoing #Focus2019 strategy to transition from growth to profitability.
Chief executive Jacob Schram added: “Throughout 2020, we will turn challenges into opportunities as we remain committed to offering greater choice to customers, contributing to a sustainable aviation industry and refining our products and services.”
