Norse Atlantic has hired international investment bank J P Morgan to initiate a strategic review of the airline, which it said could lead to a sale, merger or partnership.
The airline said the strategic review was in response to ‘incoming interest from potential strategic partners’.
At the same time, it revealed that its first-quarter revenue was up 66% year-on-year to $160 million, resulting in a pre-tax profit of $5.8m.
It said increased demand for direct long-haul routes following the outbreak of the Middle East conflict, including flights to Bangkok, had resulted in ‘strong commercial momentum and record unit revenues’.
However, Norse warned of substantial cost pressures from sharply rising fuel prices from the end of February onwards. It reported a 25% decline in passengers flown in April, highlighting short-term volatility in bookings.
In response, it said it is adjusting capacity, reducing its cost base and strengthening its balance sheet ‘to support continued operations until market conditions improve’.
It recently suspended its Gatwick to Los Angeles service, blaming the Middle East conflict for the decision.
It currently flies from Gatwick to New York and Orlando, as well as to Bangkok and Cape Town during the winter. It also flies from Athens and Rome to New York.
CEO Eivind Roald said: “Global travel patterns have also been disrupted, perhaps permanently. As an airline on demand, Norse responded quickly by adding capacity on London Gatwick–Bangkok.
“Longer term, we believe passengers and partners will increasingly prioritise direct routes over hub-based connections.”
Norse said it had accelerated the rollout of its Project Falcon $50m cost reduction programme.
“We are acting decisively on all fronts,” added Eivind. “Subsequent to quarter end we moved swiftly to strengthen Norse’s financial flexibility and robustness through a proposed $110m fully underwritten and subscribed rights issue, accelerate the Falcon cost reduction programme, make capacity adjustments and propose a debt to equity conversion.
“On completion, Norse will be positioned to weather the current period of elevated fuel prices, and to deliver profitable operations once markets normalise.”
Half the airline’s fleet of Boeing 787s are dedicated to wet-lease and charter operations.
