Norwegian beats quarterly profit estimates but cuts capacity

Norwegian Air Shuttle Exceeds Profit Estimates Despite Capacity Cuts

Norwegian Air Shuttle's Financial Performance and Strategic Adjustments

By Vera Dvorakova and Agnieszka Gosciak

Q3 Earnings Surpass Expectations

Oct 28 (Reuters) - Budget airline Norwegian Air Shuttle's core earnings beat market expectations on Wednesday, helped by high demand despite elevated jet fuel costs, which forced it to cut capacity.

Norwegian's operating profit came in at 2.7 billion Norwegian crowns ($289.4 million) in the third quarter, above the 2.3 billion crowns expected by analysts polled by the company.

Capacity Reductions and Market Response

The carrier, which flies mostly in Europe, cut its planned first-quarter 2027 capacity by more than 5%. This cut reflected a combination of higher fuel prices and the suspension of services to Dubai and Tel Aviv, CEO Geir Karlsen told Reuters.

The airline said it had also reduced monthly capacity by between 25% and 40% compared with October and forecast full-year capacity growth of 2%, saying growth would quicken to around 5% in 2027 as its fleet grows to about 100 aircraft.

Demand Trends and Cost Pressures

Strong Demand Amid Rising Costs

GOOD DEMAND BUT RISING COSTS

The airline said booking trends remained "encouraging," with ticket sales and load factors ahead of last year.

"Passenger demand for air travel with Norwegian grew significantly across markets into the peak summer travel season," the company said.

Challenges from Jet Fuel Prices

Despite strong autumn bookings, Norwegian faces a dilemma shared with other European budget airlines, as rising jet fuel costs threaten to squeeze margins while raising fares could weaken demand among price-sensitive passengers.

On a call with analysts, Karlsen said ticket prices rose temporarily before normalising following the war in Iran. "The customers were not willing to pay what we asked for at the time," Karlsen said.

Norwegian's unit costs—the average cost of flying an aircraft seat—rose 8% from a year ago to 0.69 crowns in the quarter.

Fuel Hedging and Cost Guidance

The airline said it had hedged about 30% of its first-quarter 2027 fuel consumption at around $660 per ton, while maintaining guidance for flat unit costs excluding fuel in 2026.

(Reporting by Vera Dvorakova and Agnieszka Gosciak-Rabalska in Gdansk; Editing by Mrigank Dhaniwala)