By Agata Rybska
(Reuters) -Norwegian Air’s shares rose as much as 7% early on Friday after the budget airline reported second-quarter core earnings above market expectations despite lower demand which impacted ticket prices.
The airline said the quarter was characterised by strong capacity and passenger growth, but that the growth is projected to slow down for the upcoming year due to aircraft delivery delays from Boeing.
Delays in aircraft deliveries at Boeing and Airbus are putting a strain on airlines, forcing them to lease aircraft externally to meet capacity needs.
Norwegian said last week the delays had forced the company to source external capacity. It also said demand had been lower than expected in the second quarter, which prompted it to cut its profit outlook.
Norwegian said on Friday cash flow improved in the quarter and unit costs fell 2% from a year ago, to 0.70 crowns.
Kenneth Sivertsen, analyst at Pareto, said with better-than-anticipated costs, in-line revenues and solid results from its subsidiary Wideroe, which flies regional-only, the company has offset some of the unfavourable wage settlement and inflationary pressure (as well as fx pressure) though operational efficiency.
The airline last week had cited higher-than-expected wage hikes for pilots, aircraft delivery delays from Boeing and the weak Norwegian crown as factors putting pressure on the profit outlook.
The Norwegian carrier sees its overall production in 2024 growing by about 12% compared to the previous year.
The airline reported an operating profit (EBIT) of 593 million Norwegian crowns ($55.32 million) for the quarter, beating a company-compiled consensus of 386 million crowns but falling almost 9% from 650.5 million crowns a year earlier.
Norwegian had said last year that it had seen particularly strong demand last summer, a season which typically is the busiest for the carrier that flies Nordic customers to warm vacation destinations.
Shares in Norwegian Air pared gains and were up 4.44% at 11.04 crowns per share at 0734 GMT.
($1 = 10.7203 Norwegian crowns)
(Reporting by Agata Rybska; Editing by Kim Coghill, Rashmi Aich and Jane Merriman)
