Norwegian Air Pulls 2020 Guidance, Cuts Flights on Coronavirus
Norwegian Air Pulls 2020 Guidance, Cuts Flights on Coronavirus
(Bloomberg) --
Norwegian Air Shuttle ASA withdrew its financial guidance for 2020 as the coronavirus outbreak wreaks havoc on the airline industry.
The troubled Nordic carrier said Thursday it can no longer stand by the goals it gave investors less than a month ago, adding to the list of airlines warning of the impact of the epidemic that has led to lower demand and flight cancellations. The shares fell as much as 5.6%.
Norwegian is trying to return to profitability this year by selling assets, trimming routes, delaying aircraft deliveries, changing loan terms and raising fresh cash. Yet the outlook for the industry is souring, with the U.K’s Flybe collapsing into administration earlier in the day after last-ditch talks on a government bailout failed.
“Given the uncertainty and ongoing impact on overall demand for air travel, Norwegian withdraws its 2020 guidance provided to the market,” on February 13, it said in a statement. “It is too early to assess the full impact on our business.”
Norwegian is canceling 22 long-haul flights between Europe and the U.S. between March 28 to May 5. The airline has a limited number of flights to northern Italy, the epicenter of the outbreak in Europe, and other regions heavily affected by the virus, and said it depends more on leisure traffic than business travel, which has been more affected by the virus.
Norwegian is slowly emerging from a debt crisis brought on by years of aggressive growth. The company turned around its strategy last year, vowing to reduce capacity and focus on profitability. Fears about the impact of the virus has taken the value of shares down by more than half since mid-February.
Europe’s biggest airlines including IAG SA have already cut back on flights to cope with the coronavirus and are now bracing for a bigger test of how business holds up during the coming Easter travel peak.
To contact the reporter on this story: Stephen Treloar in Oslo at streloar1@bloomberg.net
To contact the editors responsible for this story: Mikael Holter at mholter2@bloomberg.net, Tara Patel
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