Norwegian Air Shares Jump After Reporting Surprise Profit

(Bloomberg) -- Norwegian Air Shuttle ASA rose the most in three weeks after record revenue and a surprise profit added an unexpected sheen to the low-cost carrier that’s getting takeover interest from competitors.

The shares gained as much as 8.2 percent after Norwegian reported record second-quarter revenue of 10.2 billion kroner ($1.3 billion) and net income of 296 million kroner, when analysts expected a loss. The carrier swung to a profit as a currency gain lowered the dollar cost of some euro debt obligations.

“Despite being at the peak of our growth phase, we have been able to present a profit and decreased unit costs during the second quarter,” Chief Executive Officer Bjorn Kjos said in a statement. “Going forward, the growth will slow down and we will reap what we have sown for the benefit of our customers, staff and shareholders.”

The results included a 445 million kroner gain classified as “other financial items.” A spokeswoman said Norwegian has euro debt in a dollar company, and the company booked a gain on its debt portfolio as the dollar has strengthened. Analysts had expected Norwegian to report a loss of 468 million kroner.

Norwegian shares advanced 6.7 percent to 254.8 kroner as of 11:31 a.m. in Oslo, after earlier reaching 258.5 kroner, giving the company a market value of 11.6 billion kroner.

The company has attracted takeover interest from multiple potential bidders but made no mention of the interest in the report. While British Airways owner IAG SA has had two offers rejected and Deutsche Lufthansa AG is looking at submitting a proposal, Kjos said in an interview last month that “several others” are also interested.

The company said that its expected capacity growth for 2018 is unchanged at 40 percent. But due to higher-than-expected fuel prices, the carrier said it expects unit costs including depreciation for the full year to be in the range of 0.425 to 0.430 kroner, up from a previous guidance of 0.415 to 0.420 kroner.

The capital spending forecast for this year was lowered to $1.75 billion from $1.9 billion and to $2.2 billion from $2.6 billion in 2019.

--With assistance from Benjamin Katz.

To contact the reporter on this story: Stephen Treloar in Oslo at streloar1@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, ;Jonas Bergman at jbergman@bloomberg.net, Tara Patel

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