How do airlines like Norwegian Air make money when selling dirt-cheap fares from the U.S. to Europe and back? The answer is: They don't.
Norwegian reported that it lost almost $172 million in the first three months of 2019. That's more than the airline lost in all of 2018, and it continues a string of heavy losses for the budget carrier.
Norway's largest airline has been in financial trouble for months, and it made moves late last year to try to shore up its business. Meanwhile, major U.S. airlines have been racking up profits for years.
There's no question that ultra-low cost airlines are struggling. Iceland's WOW air collapsed earlier this year, following the dissolution of Primera Air in the fall of 2018.
But Norwegian is perhaps the best-known and best-performing low-cost carrier of the bunch, offering cheap flights to Europe from nearly 20 U.S. cities. While it certainly offers no frills, we found it to be a great way to fly to Europe.
And there's no question that its financial problems have been exacerbated by issues with the Boeing jets it flies. In fact, no airline has been hit harder than Norwegian.
Many of its Boeing 787 Dreamliners – the workhorse of its fleet – were grounded last year due to engine problems. And the airline also uses 18 Boeing 737 Max planes, which have been grounded after two tragic accidents in the last six months.
The airline has publicly demanded compensation from Boeing for the ongoing issues. It's still unclear when the 737 Max will be allowed to fly again.
“We have had some productive meetings with Boeing where we have discussed how we can maneuver through the difficulties the MAX situation is causing Norwegian,” CEO Bjorn Kjos.
These losses are not sustainable.
Norwegian's struggles with Boeing have merely compounded the issues it faces as a low-cost airline trying to offer cheap fares to Europe and back. It's hard to make money when you're selling tickets for so cheap.
But it's a noble goal.
We routinely see round-trip fares to Europe under $400 – and often under $300. And not just from Norwegian, but legacy airlines like Delta, United, American, and more.
Budget airlines like Norwegian and WOW air are the primary reason it's cheaper than ever to fly to Europe. They've forced the airlines to compete on price, and that's a win for travelers.
But if Norwegian follows WOW air and fizzles out, that's bad news for cheap travel.
There's no fire yet, but there is smoke. Norwegian can't stay in business if it keeps losing money like this. After losing WOW air, Primera, and other low-cost carriers, the death of Norwegian Air would be a fatal blow to low fares across the Atlantic.
Lead photo courtesy of Norwegian Air
I flew a few times on Norwegian. Dismal service and there staff was cold and dead in the eyes repeating canned responses. Vi ses never again.