Thursday, 2 August 2018

NORWAY: Norwegian Air Expanding So Fast

Fast-growing, low-cost European carrier Norwegian just announced four more new U.S. routes coming in 2018, leading some to wonder if the ambitious airline is growing too fast for its own good.

The company’s latest plans include new service from Los Angeles to Milan Malpensa; and from LAX to Madrid beginning July 15.

It will operate four flights a week on both routes. From New York JFK, Norwegian will operate new service to Amsterdam starting May 7, with four weekly flights; and to Madrid July 18, with three flights a week. All the new routes will be served with 787-9s.

No-frills fare, high fee fares from LAX will start at $229 one-way, while New York fares will begin at $199 to Amsterdam and $229 to Madrid.

Premium cabin fares start at $729 and $739 from LAX to Madrid and Milan respectively, and at $619/$649 to Amsterdam and Madrid from JFK.

These four routes are just a part of new Norwegian service already announced for 2018.

Other new routes and starting dates include Oakland to Rome; Newark to Paris; Chicago to London; Austin to London; Denver to Paris; Oakland to Paris, and Boston to Paris;

All that is on top of 25 U.S. routes that the carrier inaugurated in 2017. And look for more new service in the months ahead: Norwegian said it has just acquired another 28 weekly takeoff and landing slots at London Gatwick, available starting next summer.

Planning work is now underway to allocate the newly acquired slots, and will be announced at a later stage, the company said.

This explosive growth is leading some investors in the company to worry that the airline might be overextending itself, considering its financial performance.

Norwegian’s fleet added 32 aircraft in 2017, for a total of 145; and will keep growing to 193 planes by the end of 2019.

The report said Norwegian had a second-quarter operating loss of $104 million, while its unit costs rose by 6 percent in the third quarter.

The company’s share price has plunged 40 percent this year, the report said, while its European competitors’ stock has been rising sharply.

Norwegian has new aircraft coming online so fast that it can’t absorb them all, so it has started leasing some to other companies and selling older ones.

It also quoted a senior banker in Norway as saying that Norwegian is in trouble. They are over-extended and it’s clear that they have to do something.

Have you flown Norwegian or benefitted from its impact on transatlantic fares this year? Say something here

Tourism Observer

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