Norwegian has blamed poor third-quarter financial results on the “long overdue” application for a foreign air carrier permit.
The budget carrier said the delayed permit from the US department of transportation for Norwegian’s Irish subsidiary, Norwegian Air International (NAI), was a major factor in recording pre-tax results of 505m Krone (£48m), down from 604m Krone (£57m) for the same quarter in 2013.
NAI’s controversial decision to move its operations to Ireland has been criticised by parts of the industry that claim the main reason for the move is to bypass Norway’s strict labour laws, which would prevent it from hiring cheap workers.
NAI deny this claim and said the move is to gain access to future traffic rights to and from the EU.
Norwegian said the application is “in full accordance with the Open Skies Agreement between the EU and the US”.
The airline also blamed a combination of a weak Krone, costs associated with flight delays and wet-leasing replacement aircraft on its revenue slump for this quarter.
Despite the drop, the airline’s load factor increased 3 per cent to 85 per cent in the third quarter of this year compared to 2013. Norwegian carried 7.1 million passengers this quarter and the company’s operation at London Gatwick had the strongest passenger growth.
Norwegian CEO Bjorn Kjos said despite a number of new passengers choosing Norwegian the airline has suffered “some turbulence” this quarter.
“Our results are affected by additional costs related to the pending U.S. permit for our subsidiary in Dublin, consequently reducing our ability to optimize our fleet of aircraft,” said Kjos.
“Even though technical difficulties with our Boeing 787 Dreamliners have also caused additional costs, our long-haul operation now consists of more aircraft and improved reliability.
“Looking into 2015, we will see a year of consolidation and lower growth. Next year, our fleet of short-haul aircraft will consist exclusively of Boeing 737-800s as older Boeing 737-300s will be phased out.”
Last month, Norwegian continued its long-haul network expansion with a new Gatwick to Orlando service.