Norwegian Air scraps profit guidance, to cut flights as virus spreads

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OSLO (March 5): Norwegian Air has scrapped its 2020 earnings guidance, which predicted a return to profit after three years of losses, and said it will cancel some of its transatlantic flights in the coming weeks due to the worsening coronavirus outbreak.

Airlines around the world have been cutting capacity and warning of a hit to earnings as a new coronavirus that started in China spreads around the world, hitting travel demand. But analysts have warned Norwegian could be particularly vulnerable to a downturn due to its high debts.

"Given the uncertainty and ongoing impact on overall demand for air travel, Norwegian withdraws its 2020 guidance provided to the market on February 13," the company said in a statement on Thursday.

"At this stage, it is too early to assess the full impact on our business," it added.

The shares of Oslo-listed Norwegian have plunged 52% so far this year.

The company said it had decided to cancel 22 long-haul flights between Europe and the United States from March 28 to May 5, with routes from Rome to Los Angeles, Boston and New York seeing a reduced number of departures.

It will also cut the number of flights between London and New York, flying twice, rather than three times, on some days.

While bookings for flights departing in the coming weeks were less affected, there had been a greater impact on those that are further out in time, Norwegian said.

"The company has a higher share of leisure traffic, which seems less affected than business traffic," it added.

A pioneer in low-fare transatlantic air travel, Norwegian's rapid expansion has left it heavily in debt. It has repeatedly raised cash from shareholders in order to stay in business, and some analysts have predicted it may seek to do so again.

European airline bosses warned this week the worst of the economic impact from the coronavirus epidemic was yet to come for the industry, and early on Thursday British regional airline Flybe entered into administration, a form of protection from creditors.