With Norse Atlantic Airways anticipating its first-ever profitable quarter in Q3 2023, has the airline finally cracked the code for long-haul low-cost flights?
In the company’s Q2 2023 results report, Bjørn Tore Larsen, the Founder, Chief Executive Officer (CEO) and largest shareholder at Norse Atlantic Airways, said: “Q3 is expected to be our first financial quarter generating a profit. The move to profitability is driven primarily by having all 15 aircraft generating revenue for the first time, from 1st July.”
Larsen clarified that of the 15 aircraft, 10 were operated by the airline, while five were generating revenue “through sublease”. The quintet “will be redelivered to Norse on a staggered basis from end of Q1 2024 through to end of Q2 2024”.
“A milestone was passed during Q3 as we surpassed one million booked passengers. By providing affordable air fares on competitive and established routes to key primary airports and destinations, we allow more people to explore the world and enjoy the experience of long-haul travel whether for leisure or business,” the CEO and founder continued.
In Q2 2023, Norse Atlantic Airways generated $100.1 million worth of revenue, operating 812 flights and carrying 204,564 passengers. During the first six months of 2023, the long-haul low-cost airline generated a revenue of $139.9 million while welcoming 314,827 passengers, averaging a load factor of 67% (Q2 2023: 75%).
Excluding leases, depreciation, and amortization, Norse’s operating costs in Q2 2023 were $97.8 million and $170.5 million across H1 2023. Notably, its earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) were positive in Q2 2023 ($2.2 million).
As such, it ended Q2 2023 with a net loss of $35.1 million and H1 2023 with a loss of $105.8 million.
Norse Atlantic has said that the Q2 2023 loss was expected, as it only began ramping up operations in the latter part of May 2023.
“The financial year 2023 will be Norse’s first year that has production through all months, though the first half will be of limited activity as Norse ramped-up from the end of May and through June, ahead of the peak summer months and onwards,” the airline’s report reads.
However, Norse did not provide guidance for the full year in its Q2 2023 report. In a previous interview with AeroTime, Charles Duncan, the President of Norse Atlantic Airways, said that while the airline does not have a clear passenger number goal in mind, it has targets related to “ancillary revenue, aircraft utilization, our crew utilization, air cargo revenue, charters, you name it”.
“Norse will be the first truly low-cost profitable long-haul airline,” Larsen concluded.
The carrier was born out of the ashes of Norwegian’s exit from the low-cost long-haul market, which occurred in January 2021 amidst the global pandemic. Norse acquired ex-Norwegian aircraft, with Duncan mentioning that Larsen had the idea to establish the low-cost long-haul carrier when lease rates for aircraft were at levels the industry had never seen before.
“We got very attractive pricing, because we were able to opportunistically sign the leases at the bottom of the market when no one else wanted these aircraft, and they’re on long term lease,” Duncan continued.