It is still early days, but the deep and painful restructuring at Norwegian seems to be bearing fruits. The low-cost airline, much reduced in size compared to the pre-Covid era, reported some positive results on August 31. It even thinks that growth is on the agenda already for next year. Restructured Norwegian slowly getting back on track. Remember the state Norwegian was in back in early 2020: heavily indebted at NOK 58.2 billion, far too optimistic growth and fleet plans, and on the brink of collapse and insolvency. It entered examinership in Ireland and filed a reconstruction plan in Norway to refocus on cost reductions and, more importantly, restructure its balance sheet and debts. A fresh capital increase, a debt for equity swap, a drastic fleet reduction, the cancelation of aircraft orders, the reduction of 6.000 employees, and the end of its long-haul operations have resulted in a reborn Norwegian. For months last year, the airline sat out the Covid-crisis and only operated limited domestic operations before recommencing services to some key European destinations. It ended 2020 at a NOK 23 billion net loss or NOK -16.6 billion in Q4, improving this to NOK -1.189 billion during the first quarter of this year. Net profit of NOK 1.590 billion It is in Q2 that Norwegian seems to have really turned the corner. It reported a net profit of NOK 2.779 billion with an operating loss of NOK 766 million and revenues of NOK 335 million. For HY1, it produced a net profit of NOK 1.590 billion thanks to NOK 3.818 billion in restructuring benefits. The operating result was still a negative NOK 2.228 billion. Revenues totaled NOK 591 million compared to NOK 7.138 billion in 2020, but that was a different situation. Capacity in HY1 this year was 94 percent down on that of last year and the average sector length decreased by 62 percent as the airline mostly operated on short domestic trips. Graphic showing Norwegian’s HY1 net results since 2017. (Norwegian) Ongoing travel restrictions have continued to impact the results and operations. Only up to 32 out of its 51 Boeing 737-800s and MAX 8s (on average only nine aircraft) were active, carrying 590.000 passengers compared to 5.31 million in HY1 2020. This should be better in Q3, as capacity in July has been 250 percent higher than in June. Norwegian operates out of Oslo, Copenhagen, and Stockholm. The carrier is cautiously optimistic about the coming months. Forward bookings have increased, including sales for the 2022 summer period. Restrictions are relaxed and vaccination rates in the Nordic countries have gone up. Visibility is too blurred to provide any guidance for the full year. Yet, based on the expected upward trend, Norwegian is already scanning the market for additional Boeing 737s and grow its fleet in a controlled manner from 51 to 60 or 70 next year. Actually, this is in line with what the airline said in April. It can operate the fleet at 35 percent lower ownership costs compared to pre-restructuring and benefits from power-by-the-hour rates from lessors until April 2022. Equity bolstered by NOK 10.7 billion The restructured Norwegian is slowly getting back on track. It is thanks to the drastic measures that Norwegian is having a second lease of life. Norwegian is now in a much stronger financial position and is able to plan for the future with renewed confidence and focus", said CEO Geir Karlsen. As it exited the examinership and restructuring period in May, slashed its debts, liabilities, and (fleet) commitments by NOK 140 billion and bolstered equity by NOK 10.7 billion. This results in a net cash position of NOK 7.5 billion. The net-interest-bearing debt is down from NOK 40.2 billion in December 2020 to NOK 1.728 billion by the end of June. Its workforce has been reduced to 3.000, of which almost a quarter is still furloughed, notably in Spain. All crew in Norway will have been recalled in October. In its HY1 report, the Board of Directors says: “When conditions normalize, Norwegian will solidity and develop its position as a market leader in its four core markets of Norway, Denmark, Sweden and Finland with a balance of intra-Nordic and domestic routes and routes to key cities and popular leisure destinations across Europe.” It wants to do so as a price leader.
