UPDATE 2-Norwegian Air plans further capacity cuts in bid for 2020 profit

Norwegian Air will make deeper capacity cuts in 2020 than previously announced as part of its plan to return to profits after three consecutive years of deficit, the budget carrier said on Thursday.

The company posted a fourth-quarter net loss of 1.87 billion Norwegian crowns ($202.03 million), reduced from a year-ago loss of 3 billion but lagging a forecast of a 1.35 billion loss in a Refinitiv poll of analysts. A pioneer in low-fare transatlantic air travel, Norwegian Air's rapid expansion has left the company heavily in debt, forcing it to cut unprofitable routes while repeatedly raising cash from owners in order to survive.

In 2020, the company's available seat kilometers (ASK), a key measure of capacity, is now set to decline by between 13% and 15%, more than the goal of 10% cutback which the airline had set last October. The company's guidance is based on a return to service of its fleet of grounded Boeing 737 MAX aircraft in September, it added.

"All the above taken into consideration, the company targets a net profit in 2020," Norwegian Air said while adding it remains in discussions with Boeing over compensation for the MAX outage. Meanwhile, technical problems with the Rolls Royce engines on its Boeing 787 Dreamliners cost Norwegian an estimated 750 million crowns in 2019, and the costs of repair are expected to continue in 2020, the company said.

The company has a target, also announced last year, of improving underlying earnings by four billion crowns by 2021, and expects measures taken in 2020 to yield 1.5 billion crowns of this, it said on Thursday. Norwegian's net loss for 2019 grew to 1.61 billion crowns from a 1.45 billion crown deficit in 2018 and an even bigger 1.79 billion loss in 2017, company records show.

The company's share price rose by 7.4% to a four-week high on Wednesday, the day before the earnings release, but is still down 34% in the last 12 months. ($1 = 9.2559 Norwegian crowns)

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