Norwegian Air to cut costs by US$230m

Source: Xinhua | 2018-12-25

Norwegian Air announced a US$230 million cost savings program yesterday along with steps including the refinancing of one Boeing 787 Dreamliner that the budget airline said would generate more than US$30 million in liquidity.

It also said it was making several changes to its route portfolio as well as to its capacity.

“Combined these measures should improve the financial performance from the start of 2019,” it said in a statement.

The fast-growing carrier has been under pressure over the past 18 months to control costs and shore up its balance sheet as it looks to crack the transatlantic market by undercutting established rivals.

It said its new cost-saving program was expected to generate savings of at least 2 billion crowns (US$229 million) in 2019. The airline said it would provide an update on the program on April 25 with its first-quarter results.

Norwegian’s long-haul operations have been disrupted by challenges with the Rolls-Royce engines on the Dreamliner.

“The Company has now reached an agreement with Rolls-Royce which will have a positive effect from the first quarter of 2019,” said Norwegian Air.

“The commercial terms of the agreement remain confidential.”

It also said it had secured financing for all aircraft deliveries due in the first half of 2019.

“This also includes refinancing of one of the delivered (Boeing) Dreamliners, resulting in a positive liquidity effect of NOK 275 million in December 2018,” it said.