Low-cost, long-haul airline Norse Atlantic Airways has posted a net profit for the first time in the third quarter of 2023, it announced this Tuesday (October 31). The company registered a profit after tax just below USD1.6 million for total revenues of USD204.8 million, a net margin of 0.778%.
The third quarter in Europe tends to catch the peak Summer season, where earnings are the best. That is particularly true for leisure and Transatlantic travel, the two segments Norse is most focused at.
Norse’s number compares to a net loss just below USD56 million — with revenues around USD54.9million — in the same period of 2022, the first full quarter of operations for the airline.
The result in the second quarter of this year was “challenged by high fuel prices, a weak cargo market and some softening of demand towards the end of the quarter”, stated Norse Atlantic’s founder, CEO and relevant shareholder Bjørn Tore Larsen in the airline’s earnings report.
“From an operational perspective it is highly satisfying to see the Norse organisation delivering a robust performance throughout this quarter while integrating substantial growth into the network”.
The following quarters, however, tend to be very weak for Transatlantic travel, and the airline registered a decrease in its cash position from the previous quarter to USD42.6 million (of which USD15 million is restricted), which Norse justified, in a press release, with “an adverse working capital movement”.
As such, the earnings report says “the Board of Directors has concluded to explore the possibility to raise more capital”. The press release says that fundraising would amount up to USD45 million to get the company through Winter, until bookings for Summer stabilize its cash position. Norse’s two most important shareholders, B T Larsen & Co Ltd and Scorpio Holdings Limited (currently amounting to a 40.08% stake in the airline) “have both expressed strong support” to take part in the capital increase.
In Oslo this Wednesday (November 1st), as Norse shared its results with investors, analysts and media, the Norwegian press, citing Larsen, reported that two airlines have approached Norse for talks about a potential investment.
To business website E24, Larsen did not reveal which airlines are the two, but said that “we are talking about two quite different actors who have different approaches” and that “they have different route compositions. One is a very large company, while the other is still large but not of the same size”.
In his own results presentation, Norwegian Air Shuttle’s CEO Geir Karlsen denied the speculation that his airline — which itself almost shut down after trying the low-cost, long-haul model — would be one of the two, according to business newspaper DN.
“Norse Atlantic is not on our agenda. What is on the agenda is to buy Widerøe”, said the executive, mentioning the purchase of the Norwegian regional airline, still to be judged by the country’s Competition Authority.
After closing at NOK18.06 (about USD1.62; exchange rate for November 3) in October 31st, before the results announcement, Norse’s shares in Oslo closed at NOK14.75 (USD1.32) in November 1st and at NOK12.48 (USD1.12) the following day.
