Norwegian Air shares soar on Q4 beat, possible record 2024 profit

By Gwladys Fouche and Stine Jacobsen

OSLO (Reuters) -Norwegian Air shares jumped on Friday after it reported forecast-beating operating earnings in the fourth quarter, lifting its full-year result to an all-time high, and said it expected its profit to hit a new record this year.

The results mark a turnaround for the budget carrier, which only a few years ago could have stopped flying altogether, straining under heavy debts and hit by the pandemic. From once flying transatlantic, it now focuses on its core Nordic market.

The fourth quarter is normally a slow period for holiday travel in the northern hemisphere but Norwegian last month raised its earnings forecast for 2023 on the back of strong demand in the final two months of the year.

Shares in the company were up 13% at 0956 GMT on an Oslo benchmark index up 0.7%, up 43% over the past year.

The carrier's October-December operating profit came in at 328 million crowns ($31.08 million), above the 177 million forecast in a poll of analysts compiled by the company, and against a loss of 39 million a year earlier.

"It proves that the earnings recovery Norwegian has been through ... they can still deliver record numbers, even though they fly significantly less than they used to," said Sydbank analyst Jacob Pedersen.

"It has become a less complex company, and complexity is incredibly expensive within aviation."

BOOKING MOMENTUM

The budget carrier said it had increased passenger numbers in the fourth quarter to 4.7 million passengers from 4.6 million passengers a year ago.

Its capacity - as measured by available seat kilometres (ASK) - is expected to rise by 12% this year, while it expects 2024 operating profit of between 2.5 billion and 3.2 billion crowns, up from 2.2 billion crowns in 2023.

Analysts participating in the poll predicted on average an operating profit for 2024 of 2.56 billion crowns.

"Booking (NASDAQ:BKNG) momentum (for the summer) is looking good ... very good," CEO Geir Karlsen told an earnings presentation.

He added a note of caution, however, with inflation and a weak Norwegian crown currency continuing to push up costs, including fuel, and with airport fees increasing across the board in Europe.

The airline would focus on controlling costs in the months ahead, he said.

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Norwegian's Nordic rival SAS last month said it expects 2024 revenues to exceed 48 billion Swedish crowns, and expects to emerge from an amended Chapter 11 plan of reorganisation by mid-year.

Separately, Karlsen said the lack of snow in the Alps this winter was encouraging tourists to hit the slopes in Scandinavia instead.