Norwegian Posts Surprise Profit, Sending Shares Flying

Norwegian Air Shuttle reported a hefty profit on Thursday, dramatically wrong-footing industry analysts who had expected a big loss as the low-cost airline burns through cash in its drive for growth, especially on ultra-competitive transatlantic routes.

Oslo, (APP - UrduPoint / Pakistan Point News - 12th Jul, 2018 ) :Norwegian Air Shuttle reported a hefty profit on Thursday, dramatically wrong-footing industry analysts who had expected a big loss as the low-cost airline burns through cash in its drive for growth, especially on ultra-competitive transatlantic routes.

Shares in the airline, which have been volatile since Norwegian started undercutting large rivals on long-haul routes, jumped in response to the surprise second quarter figures showing a net profit of 300 million kroner ($37 million, 31.7 million Euros).

Financial analysts had been expecting a net loss of around 428 million kroner, according to consensus forecasts compiled by FactSet, a data provider.

"Despite being at the peak of our growth phase, we have been able to present a profit and decreased unit costs during the second quarter," Norwegian said in a statement.

The airline said it managed to cut costs by nine percent in the second quarter, and 19 percent excluding fuel.

Revenue rose by 31.5 percent to nearly 10.3 billion kroner, a record high, in the second quarter.

"Norwegian surprised the markets today," Hans Jorgen Elnaes, an independent aviation advisor, said in a tweet.

In closing trade on the Oslo stock exchange, Norwegian's share price was up nearly two percent at 243.5 kroner, having earlier gone as high as 258.50.

Norwegian CEO Bjorn Kjos hailed the results, saying the company's growth drive would flatten, leading to a decreasing ramp-up costs.

"Going forward, the growth will slow down and we will reap what we have sown for the benefit of our customers, staff and shareholders," he said.

The group, which had previously planned to invest $1.9 billion for this year and $2.6 billion for 2019, lowered the amounts to $1.75 billion and $2.2 billion, respectively.