October 25, 2018 / 5:28 AM / 10 months ago

Norwegian Air hit with rising costs due higher fuel prices

OSLO, Oct 25 (Reuters) - Budget airline Norwegian Air said its unit cost has increased due to higher fuel prices as it posted a third-quarter pre-tax result that lagged forecasts on Thursday.

Europe’s third-largest budget carrier by passenger numbers is trying to crack the transatlantic market by undercutting established rivals, but has faced pressures to control costs and shore up its balance sheet in the face of competition.

It also rebuffed takeover advances by British Airways parent firm IAG earlier this year.

The firm’s 2018 unit cost is now expected in a range of 0.435-0.440 Norwegian crowns, up from a previous guidance of 0.425-0.430 crowns. The company blamed higher fuel prices for the increase.

Chief Executive Bjoern Kjos reiterated that the growth in Norwegian’s investment would slow down and that the company would reap the benefits.

“However, there is no doubt that tough competition, high oil prices and a strong dollar will affect the entire aviation industry, making it even more important to further streamline our operations and continue to reduce costs,” he said in a statement.

The company reported a pre-tax result of 1.60 billion crowns ($191.86 million), a 13-percent increase from a year ago and lagging the 1.74 billion crowns expected in a Reuters poll of analysts.

Shares in Norwegian Air are down 28 percent over the past year and back to the level they were before news of the IAG’s interest in the airline.

$1 = 8.3393 Norwegian crowns Reporting by Gwladys Fouche, editing by Terje Solsvik

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