Budget airline Norwegian Air Shuttle beat expectations with strong first-quarter earnings on Thursday as it grabbed market share and grew its fleet even as it reduced costs.
Norwegian, which is expanding around northern Europe at the expense of established carriers such as SAS, swung to a 69 million crown ($11.9 million) operating profit in the first quarter from a 575 million loss a year ago.
That compared with an average analyst forecast for a 65 million crown loss.
The company placed Europe’s biggest-ever aircraft order last year when it ordered 222 short-haul jets from Boeing and Airbus, betting on rapid growth in the relatively healthy and fast-growing economies of the Nordics.
Its cost per seat kilometre in the first quarter, traditionally the weakest period for the airline industry, fell to 0.47 crowns from 0.50 a year ago, putting it on track to meet its full-year guidance of between 0.42 and 0.43.
Available seat kilometres, which reflects the airline’s capacity, will grow by over 25 per cent this year as it gets 14 new narrow body jets and starts long haul operations to both North America and Asia.
First-quarter numbers came ahead of forecasts as revenue grew faster than predicted, costs were lower and it did a better job turning around last year’s fuel hedging loss into a gain.
Norwegian added that only 4 per cent of its 2013 fuel exposure was hedged, indicating a recent oil price drop would continue to benefit the company.