* Shares down 6.1 pct vs flat Oslo bourse
* Cost cuts in focus -analyst
* CEO says talks with Boeing remain on hold
(Adds share, CEO, analysts)
OSLO, July 17 Norwegian Air Shuttle
reported disappointing second-quarter results on Thursday hit by
competition and one-off costs, prompting the budget airline to
trim its growth plans and sending its shares lower.
Europe's third-largest low-cost airline by revenue said its
costs would be higher than expected due to an earlier strike and
unexpected leasing expenses.
Norwegian has taken market share from Scandinavian flag
carrier SAS for several years and fended off repeated
challenges from Ryanair.
But the company has struggled this year with high fuel
costs, a strike, stiffer competition and troubles with long-haul
Its shares were down 6.14 percent at 0817 GMT, lagging a
flat Oslo benchmark index.
"They have lower revenues, their ancillary revenues, on
extra services like luggage and food, were disappointing too,
and they have higher costs than the market had expected," said
Martin Stenshall, an analyst at brokerage Danske Bank Markets.
"The market expected a negative forex effect due to the weak
(Norwegian) crown and a little higher costs due to fuel costs.
But it was still worse than expected," he said.
Operating profit before leasing and depreciation fell to 535
million crowns ($86.36 million) from 699 million a year earlier,
missing a consensus analyst forecast of 698 million.
"The most important thing for Norwegian Air going forward is
that they deliver on cost cuts," said Haakon Aschehoug, an
analyst at brokerage DNB Markets.
Competition has increased in Norwegian Air's core Nordic
market, with SAS increasing capacity and cutting costs.
Norwegian Air's CEO said it would have to adjust in the coming
"It may be that it is not such a good idea to have so much
capacity available in the Nordic countries in winter than in
other places. Which we are going to do," Bjoern Kjos told
Reuters after presenting the firm's results.
The airline's still fledgling long-haul business has put
pressure on costs as aircraft breakdowns and delivery delays
forced it to lease expensive replacements at short notice.
As a result, the company now sees its unit costs, or the
cost per kilometre for each passenger flown, at 0.40-0.41 crown
this year, up from a previous guidance of 0.40.
The company has put on hold talks with Boeing to
order an extra 20 787 Dreamliners for a combined list price of
$5 billion, on top of its commitments to buy or lease 14
Dreamliners. Kjos said on Thursday those talks remained on hold.
The airline expects its expansion to slow and now expects
available seat kilometre to rise by more than 35 percent this
year, below a previous target of 40 percent.
($1 = 6.1949 Norwegian Kroner)
(Reporting by Gwladys Fouche and Balazs Koranyi; editing by Tom
Pfeiffer and Jason Neely)