Norwegian Air’s Shares Surge Following Strong Second-Quarter Earnings

Norwegian Air experienced a notable rise in shares after reporting second-quarter core earnings that surpassed market expectations. The earnings boost came despite a slight decrease in demand impacting ticket prices, thanks to a strategic handling of rising unit costs.

The airline highlighted strong performance metrics for the quarter, including robust capacity and a surge in passenger numbers. However, anticipated growth faces potential hurdles due to ongoing aircraft delivery delays from major manufacturers, Boeing and Airbus. These delays have prompted Norwegian Air to lease additional aircraft externally to maintain its service levels.

CEO Geir Karlsen expressed concerns about the delivery delays, estimating a postponement of 11-to-13 months. He emphasized the airline’s negotiation efforts with Boeing, focusing on securing compensation and clarity on future aircraft deliveries to better plan their network.

Despite these challenges, Norwegian reported a 2% reduction in unit costs—the average cost of flying an aircraft seat—compared to the previous year, bringing it down to 0.70 crowns. This efficiency helped mitigate some financial pressures from wage increases and other inflationary impacts.

Analyst Kenneth Sivertsen of Pareto highlighted the airline’s operational efficiencies and solid results from its subsidiary, Wideroe, which operates within the Nordics. These factors contributed to an optimistic production growth forecast of 12% for 2024.

For the quarter, Norwegian Air posted an operating profit (EBIT) of 593 million Norwegian crowns ($55.32 million), significantly ahead of the consensus estimate of 386 million crowns. This figure, however, marked a decrease from the 650.5 million crowns reported a year earlier.

Following the earnings announcement, shares of Norwegian Air climbed by 7% at market opening, later stabilizing to a 5.5% increase, trading at 11.16 crowns per share as of 1034 GMT. This positive financial performance signals a resilient adaptation to ongoing industry challenges and sets a confident tone for the airline’s future operations.