Norse Atlantic hammered by investors following latest trading update
Gary NoakesNorse Atlantic Airways has taken a beating from investors after it admitted late bookings were affecting cash flow and ticket prices had been lower than expected.
The transatlantic start-up, which is quoted on the Oslo stock exchange, saw its share price almost halve on Tuesday (2 July) following a trading update, which also detailed how talks to secure an airliner partner had collapsed.
Shares were trading on Wednesday (3 July) at below four Norwegian krona (£0.30), compared to NOK 21 (£1.55) a year ago.
The carrier said a “tail-heavy” summer booking curve “puts pressure on August cash position while awaiting credit card receivables being collected”.
Norse said it had $155 million (£122 million) of credit card receivables, including $41 million (£32 million) for flights already flown and had “various working capital initiatives ongoing”.
Norse, which flies transatlantic from Gatwick and will launch services to Cape Town this winter, said economy class transatlantic fares from all carriers had softened by between 10% and 20% in April and May.
It was affected by a 10% to 13% increase in total market capacity on its routes, but noted this growth had since levelled off.
Norse said its own Q2 performance was “below expectations due to lower than expected fare levels”. However, June load factors had reached 85%, up two points.
Bookings for July, it said, had been “satisfactory”, but were closer to departure “translating into later cash inflows from sales”.
The carrier, which has 15 Boeing 787s, three of which are leased out, said it expected to be in profit for Q3, the second half of its financial yearm and in 2025.
Norse investors were also spooked by the collapse of talks in June with a potential partner. It did not confirm its identity, but said the suitor had been “considering the opportunity to enter the long-haul market through an investment in and collaboration with Norse”.
However, it added: “The investor’s board made the strategic decision not to enter the long-haul market and consequently did not approve the transaction.”
Norse said there were “currently” no other advanced discussions with other prospective partners. It will reveal its first-half results on 28 August.
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Gary Noakes
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