Norwegian Air Lowers Profit Forecast for 2024

By Agata Rybska

(Reuters) – Norwegian Air lowered the upper end of its 2024 profit forecast range after reporting third-quarter core earnings below market expectations on Friday. The airline stated that its 2025 capacity growth would slow due to delays in Boeing aircraft delivery.

As a result, its shares dropped over 12% in morning trade.

Analyst Marcus Gavelli from Pareto noted that costs excluding fuel exceeded expectations, indicating substantial cost pressures that could counterbalance an otherwise positive travel outlook. With unit costs increasing by 8%, Norwegian attributed the rise to crew costs, wet leases stemming from Boeing delays, additional maintenance costs, and adverse exchange rates.

In a company statement, Norwegian expressed that it anticipated capacity growth in 2024 would be lower than the 13% forecast.

During an analysts' call, CEO Geir Karlsen mentioned that the company would refrain from expansion outside the Nordic region in 2025, though it had sufficient capacity for its Nordic routes.

Karlsen remarked, "This is an industry-wide situation, of course, and it means that there is going to be less capacity coming into the market in 2025 especially, but I think this will last into 2026 as well."

Delays in aircraft deliveries from Boeing, compounded by a strike involving 33,000 workers, and from Airbus have forced airlines to lease planes externally to meet their capacity needs, consequently raising short-term costs.

"Going forward, we will continue to work on streamlining the operation and identify additional synergies with Wideroe," Karlsen stated.

Norwegian narrowed its 2024 operating profit guidance to a range of 2.1 billion to 2.4 billion crowns, which includes Wideroe, the domestic rival it acquired earlier in the year. In July, the airline revised its annual forecast, estimating an operating profit between 2.1 billion and 2.6 billion crowns for the current year.

Karlsen also commented on an encouraging booking momentum for the seasonally challenging fourth quarter, noting positive trends for both leisure and business travel.

The airline reported an operating profit of 2.13 billion Norwegian crowns ($194.74 million), missing a consensus forecast of 2.33 billion crowns and down from 2.17 billion crowns a year prior.

($1 = 10.9374 Norwegian crowns)