Norwegian posts $61.7mn Q2 loss on fuel and court ruling

Norwegian Group posted an operating loss of $61.7mn (NOK 603mn) in the second quarter of 2026, swinging sharply from an operating profit of $128.5mn (NOK 1.25bn) in the same period a year earlier, as elevated fuel costs and a one-off charge from a Supreme Court of Norway ruling on emissions obligations compounded to produce a result wider than the NOK 517mn loss analysts had forecast.

The Supreme Court rejected Norwegian's appeal over its 2020 European Union Emissions Trading System (EU ETS) obligations in June, ruling the airline must fulfil commitments it had argued it could not meet while undergoing bankruptcy restructuring; the ruling triggered a one-off charge of $75.3mn (NOK 733mn). Excluding the EU ETS item and other losses, the adjusted operating result was $21.8mn (NOK 213mn) with a corresponding operating margin of 2 per cent.

Fuel costs rose 33 per cent year on year, the most direct expression of the Iran conflict-driven price spike that has affected every European carrier since late February 2026; Norwegian hedges approximately 55 per cent of its 2026 estimated jet fuel consumption, leaving 45 per cent exposed to spot prices. At current market levels the unhedged portion represents a material drag on unit economics that the airline's non-fuel cost improvements cannot fully absorb.

Norwegian carried 7.8 million passengers in the quarter, 6.7 million on Norwegian and 1.1 million on subsidiary Widerøe, with capacity up 5 per cent year on year. Load factor fell 2.7 percentage points to 82.5 per cent, partly reflecting the earlier timing of Easter, which pulled forward demand that would normally support second-quarter volumes.

Non-fuel unit costs fell 5 per cent year on year, and Norwegian achieved an on-time performance of 86.4 per cent, ranking as Europe's most punctual airline in May according to Cirium and second most punctual in April. The group's liquidity position remained solid at $1.41bn (NOK 13.7bn) at quarter-end.

Norwegian's shareholders separately approved the acquisition of Nordic Leisure Travel Group, Scandinavia's leading tour operator, on 8 July for approximately $816mn (SEK 7.94bn), with the transaction awaiting EU competition clearance and expected to close in the second half of 2026. If completed it would give Norwegian a vertically integrated position in Nordic leisure travel comparable to the easyJet Holidays model that has contributed meaningfully to easyJet's earnings resilience during the same fuel crisis.

Chief executive Geir Karlsen said the results reflected the EU ETS charge and fuel environment, adding: "Our cost focus initiatives are continuing to deliver, and cost excluding fuel is down 5 per cent compared to last year." Norwegian expects third-quarter available seat kilometre (ASK) capacity to increase 5 per cent year on year, with full-year capacity growth of approximately 3 per cent; booking momentum has improved, with ticket sales tracking ahead of the same period last year.

Norwegian's shares fell 4.1 per cent in Oslo trading following the announcement, hitting a session low of NOK 12.80 and matching the stock's 52-week trough. The analyst consensus price target stands at NOK 16.70.