Norwegian: Chinese to buy up aircraft orders as it posts profits

Norwegian has posted profits that on paper look remarkably good and suggest it’s beginning to turn itself around.

Too often with Norwegian has a profit been followed by a momentous loss. Profits are often underwritten by some kind of background sale of assets and rarely amount to much more than a wooden dollar transaction. Until the airline can produce a full year of reasonable profits based just on airline operations, its position remains dubious, and financial analysts aren’t being duped so easily.

Meanwhile it’s share price rose yesterday – not on the basis of profits which can be fleeting, but on the announcement of a joint venture with China Construction Bank to establish a lease company 70% owned by the Chinese firm.

The deal will see the new company buy up the nearly 100 A320neo’s Norwegian ordered but can’t afford to pay for. These will be sold or leased out through the new joint venture, removing the liability from Norwegian’s books.

While shares not worth very much rising by 23% in a day sounds good, they’re still not worth enough to be safe if an aggressive investor makes a move.

It’s possible that having posted €183 million profit from the busiest quarter of the year, they may be turning a corner – but winter can be harsh and advanced bookings across Europe are down.

If Norwegian can get through the winter, then reintroduce the MAX to service, it has a chance at last of getting through 2020 and a stable future may lie ahead.