Norwegian shares up 8% as it posts a £28m profit
A solid second quarter performance by Scandinavian airline Norwegian, which flies to two US airports from Belfast, has raised the bar for potential suitors, including Aer Lingus owner IAG.
Shares in Norwegian soared almost 8% in early trading as the carrier posted a net profit of 300m krone (£28m), compared to a 691m krone (£64.5m) loss in the second quarter last year. It was helped by a 19% fall in non-fuel costs.
Chief executive Bjorn Kjos said Norwegian is at the peak of its growth phase and will now "reap what we have sown".
Last year the company started to fly from Belfast International Airport to Stewart International Airport in New York and Providence's TF Green Airport, which serves Boston.
It also flies out of Dublin, Shannon and Cork.
But in April it emerged that Norwegian Air will suspend its transatlantic service from Belfast for the winter months due to lower demand. Last week the airline said: "We are still confirming our route schedule for summer 2019 and aim to announce our plans in the coming weeks once everything is finalised."
The airline has been under pressure from investors to prove that its low-cost, long-haul model can deliver profits, not just passengers. Frenetic expansion by Norwegian continued despite questions over the model's potential longevity.
"Our long-standing concern about the Norwegian business model was that despite double-digit growth through 2016, 2017 and early 2018, it was not achieving any meaningful scale efficiencies," noted Davy Stockbrokers.
However, Davy said that while it will look for follow-on improvements in coming quarters, the cost-led performance during the second quarter is an "encouraging sign".
"We expect that the stock price, however, will continue to largely reflect the likelihood of an acquisition," it added.