Travellers love Norwegian Air’s Transatlantic fares but investors may have doubts

With a promise to fly US passengers to Europe for as little as $65, Norwegian Air Shuttle ASA is poised to transform transatlantic travel. While terrific news for consumers, its low-cost long-haul strategy might be a little more turbulent for shareholders and lenders. Having built Norwegian from a handful of aircraft into Europe’s third-largest budget carrier, founder and CEO Bjorn Kjos, a former fighter pilot, likes proving doubters wrong. He won a big victory in December when the U.S. approved his plan to add more long-haul routes via an Irish subsidiary. Yet Norwegian’s breakneck debt-funded expansion — it’s lifting seat capacity by about 30 percent this year — is risky and there’s no guarantee that its heavy long-haul spending will generate ample returns, especially if competitors fight back. In 2012, Norwegian placed Europe’s biggest ever passenger jet order for more than 200 narrow-body Airbus and Boeing aircraft. The $21.5 billion list price was almost 50 times Norwegian’s market capitalization at the time. Now, as it tries to shake up the long-haul market, Norwegian also plans to almost treble its number of wide-body Boeing 787 jets by 2018. Norwegian’s capex will double this year to about $1.8b and analysts expect negative free cash flow until at least 2019. Story has further details.<br/>