Norwegian Air is near the end of a rough year. The low-cost airline has faced rising fuel costs and increased competition from full-service carriers.

Many similar budget airlines have been fed to cut costs and limit service just to stay alive. For example, in October, Primera Air, an LCC carrier based out of Copenhagen, suddenly collapsed, stranding thousands of passengers around the world. WOW Air, a discount carrier based in Reykjavik, recently hit financial troubles sendint it serching for a new owner.

Now, Norwegian Air is facing a similar issue. In five years, the airline has gone from operating 68 aircraft flying on 330 routes to operating 145 planes on 512 routes. Though there is more potential for revenue, unit costs have also increased.

Norwegian faces a mountain of debt due by the end of the month. Though it seems as if Norwegian may go out of business, Norwegian calls talks of bankruptcy pure speculation.

“We attract hundreds of thousands of new passengers every month and we are currently working on selling parts of our fleet, which will further strengthen our financial situation,” Norwegian said in a statement.

Norwegian took a gamble with its rapid expansion, and it may be paying the price. (Rapid expansion is arguable a factor in Primera Air’s demise.) In 2012, Norwegian opened a based in Gatwick airport to fuel its international expansion, allowing it to operate flights to the United States. Yet lingering aircraft costs and rising fuel prices, coupled with slowing revenue, could haunt Norwegian.

Featured image by David Xian/Aeronautics Online

Categories: Industry Talk