Startup budget airline Norse Atlantic Airways is betting that a significant expansion of transatlantic flights from London will deliver it profits after posting a loss for its first year of operations.
The Oslo-based carrier expects a profit in the second half of 2023 driven by the launch of six new routes between London Gatwick and the U.S. beginning in May. The new routes will be operated by Norse’s new UK-based subsidiary, Norse Atlantic UK. The airline launched in June 2022, initially flying to four U.S. destinations — Fort Lauderdale, Los Angeles, New York JFK, and Orlando — from Oslo and Berlin. It also opened a JFK route from London Gatwick.
“As we enter into our first full summer season in 2023 the initial substantial investments that were necessary to launch Norse Atlantic Airways operations, and subsequently establish our UK-based airline, will have created a strong and sustainable company, ready to swiftly seize on new opportunities and navigate through an unpredictable global economic environment,” Norse CEO Bjorn Tore Larsen said.
Airlines forecast a busy summer travel period across the North Atlantic. In January, United Airlines Chief Commercial Officer Andrew Nocella said they expect “record” revenues in the market this summer. Others, including Air France, Iberia, and JetBlue Airways, are adding new flights to take advantage of the demand. And Norse’s own forward bookings give it confidence in turning a profit during the six months that begin in July.
Still, despite the growth, industry capacity between the U.S. and Europe for the peak June-to-August period will be down roughly 3 percent compared to 2019, according to Diio by Cirium schedules.
Norse’s expansion, which has not been loaded in schedules yet, includes three new destinations: Boston, San Francisco, and Washington Dulles. The airline will serve the markets nonstop from Gatwick, as well as add a new flight to Los Angeles from London with the four routes beginning between June and September. Norse previously unveiled new nonstops between London Gatwick and both Fort Lauderdale and Orlando that begin in May.
Norse is solely focused on the transatlantic market. It operates a fleet of 15 Boeing 787s that, this summer, will serve seven U.S. destinations from Berlin, Oslo, London, Paris, and Rome. For flyers who need to travel beyond its gateways on both sides of the Atlantic, Norse has joint ticketing interline arrangements with EasyJet, Norwegian Air, and Spirit Airlines.
Speaking of Norwegian Air, Larsen has repeatedly said that Norse is not a reincarnation of Norwegian Air’s former loss-making long-haul, low-cost business that closed in 2021 as part of the airline’s restructuring. However, many of Norse’s routes were ones previously flown by Norwegian Air — including its latest London Gatwick expansion — and its 787s are former Norwegian Air aircraft.
Despite the similarities, Larsen has been adamant that Norse is different. The airline has power-by-the-hour lease agreements on most of its 787s that allow it to cost-effectively reduce flying during the winter; Norse pays far less for the aircraft if they are not flying under power-by-the-hour agreements. This is important because the market tends to be very seasonal. In addition, the airline’s sole-focus on long-haul, low-cost flying with a single aircraft type allows it to keep other expenses low as well.
If Norse can turn a profit this year, it would be notable among the startups that launched during the pandemic. Fellow Norwegian airline Flyr, which targeted European leisure travelers with a fleet of Boeing 737s, shut down in January. And Icelandic discounter Play Airlines only expects an operating profit if there are no further energy, labor, or macroeconomic shocks in 2023 as were seen this year.
Norse intends to operate 10 aircraft this summer, while five 787s are subleased to other carriers. The carrier plans to operate its full fleet of 15 787s in summer 2024.
The airline posted a $106 million operating loss on $101 million in revenues in the second half of 2022, its first as an operating airline. Norse cited startup challenges, as well as high fuel costs, for the loss. For the full year, the carrier lost $146 million. It had $70 million in cash at the end of December.