Norwegian ended 2022 with a loss-making fourth quarter, but overall the year has been profitable and demonstrated that the airline has recovered well from the Covid-years and the earlier restructuring. Bookings for 2023 are “encouraging” but remain close in, so the carrier has little visibility on how inflation and higher interest rates are panning out, it said today in its FY22 earnings report. Early winter dip pushes Norwegian back into the red in Q4.
The airline with the red-nosed aircraft reported a full-year net profit of NOK 1.006 billion, which is down from NOK 1.871 billion in 2021. Total revenues were significantly higher to NOK 15.869 billion from NOK 5.068 billion. Of this, passenger revenues consisted of NOK 15.198 billion (2021: NOK 3.912 billion) and ancillary revenues of NOK 2.870 billion (NOK 942 million). Norwegian carried 17.8 million passengers at 83.1 percent load factor, up from 6.2 million and 72.8 percent in 2021.
Flying at more capacity with seventy aircraft contributed to higher operating expenses of NOK 17.615 billion (NOK 6.584 billion), but fuel costs increased to NOK 7.371 billion from NOK 1.414 billion. The operating profit/EBIT was NOK 1.502 billion versus a NOK-2.786 billion loss in 2021.
After a busy summer and a strong Q3 that produced a NOK 909.7 million net profit, Norwegian slipped into the quieter winter season and flew fewer block hours. It is reflected in the Q4 net loss of NOK-118.9 million versus a NOK 111.8 million profit in the same period of 2021. Total revenues from 4.6 million passengers carried were higher to NOK 4.969 billion (NOK 2.550 billion), while expenses increased to NOK 4.559 billion (NOK 2.436 billion). The operating loss was NOK 39.3 million versus NOK -262.7 million the year before. Cash flow from operating activities was a positive NOK 56 million but a far cry from NOK 1.707 billion in Q3. The load factor was 81.4 percent in Q4, up from 77 percent.
Thanks to NOK 346 million lower lease liabilities from currency evaluations, net interesting-bearing was reduced to NOK 2.3 billion. Norwegian ended 2022 with NOK 7.8 billion in cash and cash equivalents, up NOK 64 million year on year.
Dispute over offsetting obligations
In its report, the airline says that is having a dispute since December with the Norwegian Ministry of Climate and Environment, which claims that Norwegian is liable to pay a fee of close to NOK 400 million for the failure to meet its EU ETS carbon offsetting obligations for 2020. That year, the carrier was restructuring which prevented it from fulfilling its obligations. “Norwegian disputes the fee and has sought judicial review to resolve the matter,” the airline says.
As reported, Norwegian has signed a Letter of Intent with Air Lease Corporation (ALC) for the lease of six Boeing MAX 8s for the coming summer. These former Flyr-aircraft will counteract the delivery delays from Boeing of other (leased) aircraft. This summer, Norwegian plans to operate 81 aircraft at a 24 percent higher capacity over 2022. During the current winter season, the airline operates at just thirty percent capacity and is able to keep costs down thanks to power-by-the-hour lease contracts for nineteen aircraft until late March.
Norwegian is expanding its Reward program for loyal customers to include new benefits at 32 flights and new digital products and services.
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
In 2022, he has gone full-time freelance. Richard has been contributing to AirInsight since December 2018. He is also writing for Airliner World and Aviation News. From January 2023, he will add a part-time role with Dutch website and magazine Luchtvaartnieuws. Twitter: @rschuur_aero.