CICHY China Construction Bank Corp (PK)

    By Dominic Chopping 
 

Shares in Norwegian Air Shuttle ASA (NAS.OS) soared 21% higher Thursday after the low-cost carrier announced a financing joint venture with a unit of China Construction Bank Corp. (0939.HK) and posted a forecast-beating rise in third-quarter net profit.

The joint venture will finance, own and lease aircraft that are part of Norwegian's aircraft orderbook, with the new company purchasing an initial 27 Airbus A320 NEO planes.

CCB Leasing (International) Corp. DAC, a subsidiary of China Construction Bank Corp., has committed to provide senior debt financing to the joint venture for all 27 aircraft.

The joint venture--30% owned by Norwegian and 70% owned by CCB--will reduce Norwegian's committed capital expenditure by $1.5 billion based on these initial aircraft, Norwegian said.

"The JV is one of many important initiatives that need to be realized in order for us to deliver on our strategy of moving from growth to profitability," said Norwegian Acting Chief Executive Geir Karlsen.

At the same time, Norwegian reported a 28% rise in third quarter net profit to 1.67 billion Norwegian kroner ($182.5 million), beating FactSet forecasts of NOK1.43 billion, as earnings were boosted by growth on its intercontinental routes and lower costs.

Revenue rose to NOK14.4 billion from NOK13.39 billion.

Norwegian has shifted its strategy from growth to profitability and is implementing measures including an optimized route portfolio and an extensive cost reduction program called Focus2019.

The company's internal cost reduction program achieved cost reductions in the third quarter of NOK827 million and the company expects to achieve cost reductions of NOK2.3 billion for the year.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

October 24, 2019 05:45 ET (09:45 GMT)

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