Norse is expecting to deploy at least half its aircraft capacity on wet-lease and charter services over the winter season, and signals that it is looking to de-risk its operation by entering longer-term external capacity agreements.
The airline has been revising its business plan, to strengthen its financial footing, following the collapse of talks with a potential strategic partner earlier this year.
Although it will deploy much of its capacity on its own network for the third quarter, it will concentrate on third-party opportunities during the weaker fourth.
“Through the winter season we are planning to fly at least half of our operated capacity on [wet-lease] and charter contracts,” it states.
Norse is scaling down its fleet to 12 Boeing 787-9s, after opting to return its three sub-leased 787-8s to their lessor, and it is re-assessing its business plan based on the smaller operation.
It says the strategic changes to its business model could involve more of its capacity being “locked into longer-term contracts” which will mean the airline carries “lower market risk”.
It says it is negotiating with “several” airlines over “multi-year contracts” to which it would allocate capacity – potentially from the end of this year – and replace part of its variable income with fixed revenues.
“[Owing] to lack of widebody capacity in the market, Norse is experiencing large interest in the capacity the company can offer with its [787s],” it states.
“Under such a scenario the company’s own scheduled network will be carefully examined and further refined.”
Norse says it would focus on its “most mature and profitable routes” in a scaled-back network for the summer as well as winter periods. “Such business plans may also imply significant cost reductions,” says chief executive Bjorn Tore Larsen.
Norse remains loss-making, and its financial performance over the second quarter and first half was only slightly better than last year.
It turned in a second-quarter net loss of $31.9 million, compared with $35.1 million in 2023, while the first-half loss reached $94.7 million against the prior $106 million.
Larsen describes the second quarter as “successful…from a growth perspective”, with higher revenues and average load factor reaching 82%.
But greater capacity on the transatlantic market this year, he says, has resulted in a “softening” of fares and an 11% fall in the carrier’s unit revenues over the quarter, with the figure flat for the first half.
Total cash at the half-year mark was $23.7 million, less than half the level at the midway point last year.
Norse acknowledges that it “may be reliant on securing more financing” in order to execute its revised business plan, with the quantity needed dependent on the details and the carrier’s financial performance over the rest of this year’s summer season.
This year the carrier aims to achieve greater reach to customers by joining the global distribution system, allowing its services to be accessed by corporate and leisure travel agents.
