Geir Karlsen has been busy. Over the past four months, the chief executive of Norwegian Air Shuttle has sold off a large chunk of the airline’s assets at a remarkable pace as he attempts to secure the future of the world’s fifth-biggest low-cost carrier.
But the 54-year old acting chief executive, who took the top job in July and also wears the airline’s chief financial officer hat, remains sombre. “We’re not happy”, he said, when asked if he is pleased with the changes he has made, but added that the airline is “on the right track”.
Mr Karlsen’s task is huge. The fast-growing group has been a disruptive force within the airline industry since it announced plans to launch low-cost transatlantic flights in 2012, leading the charge in reducing fares and forcing rivals to respond with their own budget services.
But Norwegian’s turbocharged growth has put Europe’s third-biggest low-cost airline under heavy financial pressure. Since April last year, the company’s share price has plummeted 75 per cent as investors have worried that the Oslo-based carrier has overstretched itself.
It has a big debt burden of NKr62bn ($6.8bn). It tapped investors for money twice in the past two years and it remains heavily lossmaking. According to Bloomberg consensus figures, the airline is not predicted to make a net profit until 2021. This year, analysts are estimating a NKr2.16bn net loss.
The Nordic airline has also been hit by problems beyond its own control in recent years, including ongoing engine troubles with Boeing’s Dreamliner aircraft, the grounding of the 737 Max since April, and an aborted takeover attempt by Spanish rival IAG, the owner of British Airways.
Significantly, Mr Karlsen has not ruled out another rights issue to raise money from investors to help keep the airline afloat.