Budget airline Norwegian Air Shuttle posted deeper-than-expected losses for the first quarter on Thursday, hit by expansion costs, and said 2008 would be marked by bigger seasonal fluctuations than before.
Losses before interest, tax, depreciation and amortization rose to NOK226.1 million kroner (USD$44.82 million) in the three months to the end of March from NOK8.9 million in the year-ago quarter.
"As previously communicated the Group expects significantly larger seasonal fluctuations in 2008 than previous years," Norwegian Air Shuttle said in a statement, citing more international routes, expansion in Sweden and the start-up of its new base at Rygge Airport in Norway.
"During first quarter 2008 the fuel price has increased and will significantly affect the fuel costs in the coming quarters," Norwegian said, adding that it currently has no fuel hedges but has hedged some of its dollar and euro exposure.
It said the new unit cost estimate assumed an average fuel price of USD$980 per tonne.
"Continued intense competition is expected to impact Group yield," it said.
The small competitor to Scandinavian carrier SAS has expanded rapidly, targeting -- among others -- passengers in Eastern Europe which it serves with a hub in Poland.
"The Warsaw base continues its positive development, however the base is not expected to be profitable in 2008 as capacity is added with another aircraft introduced to the base later this year," Norwegian said.
In August, the airline placed a huge order with Boeing for Boeing 737-800 planes. It received and put into operation the first two aircraft out of 53 planes during the quarter, it said.
