Norwegian Air Shuttle hit by soaring fuel costs

AP News
Posted: Feb 16, 2012 12:22 PM
Norwegian Air Shuttle hit by soaring fuel costs

Norwegian Air Shuttle ASA said Thursday it was hit by tough competition and higher fuel costs during the fourth quarter of last year.

The budget airline, one of Europe's fastest-growing carriers, saw net losses widen to 133 million kroner ($23 million) from 23 million kroner the year before, despite an 18 percent growth in revenue to 2.5 billion kroner.

The company last month announced plans to buy more than 200 aircraft from Boeing and Airbus. It has expanded rapidly in Europe and plans to launch long-haul operations, with flights to New York and Bangkok scheduled to start in early 2013.

Some 4 million passengers traveled on the airline in the quarter, compared to 3.3 million a year earlier. In the full-year, almost 16 million passengers flew Norwegian _ up 20 percent over 2010.

Fuel costs grew 56 percent in the period while personnel expenses increased 13 percent in the period compared to a year earlier, Norwegian said.

The airline gave a mixed outlook saying bookings had been satisfactory at the turn of the year and that it would "continue to take advantage of its increasing competitive power," reached through savings and using larger aircraft with lower operating costs.

But it cautioned that competitive pressures, which hit its result in the quarter, would continue in 2012 because of the financial crisis in Europe and a global economic downturn.

"Future demand is dependent on sustained consumer and business confidence in the company's key Scandinavian markets," the airline said. "Fuel price and currency fluctuations are risks which can have a significant impact on Norwegian's business and financial results."

The airline's share price closed down 1.5 percent at 79.00 ($13.75) on the Oslo Stock Exchange.