Norwegian Air lowered the upper end of its 2024 profit forecast range after reporting third-quarter core earnings below market expectations on Friday, and said its 2025 capacity growth would slow because of delays in Boeing aircraft delivery.

Its shares dropped over 12% in morning trade.

Costs excluding fuel rose above expectations, Pareto analyst Marcus Gavelli said, adding that the evident cost pressures would offset an otherwise solid travel outlook.

With unit costs up 8%, Norwegian cited crew costs, wet leases on the back of the Boeing delays and additional maintenance costs, as well as unfavourable exchange rates.

The budget carrier said in a statement that it expected capacity growth next year to be below the 13% forecast for 2024.

In a call with analysts, CEO Geir Karlsen said the company would not expand as planned outside the Nordic region in 2025, but had enough capacity to cover its Nordic routes.

“This is an industry-wide situation, of course, and it means that there is going to be less capacity coming into the market in 2025 especially, but I think this will last into 2026 as well,” he said.

Prolonged delays in aircraft deliveries from Boeing, further exacerbated by a strike by some 33,000 workers, and from Airbus have forced airlines to lease planes externally to meet capacity needs, increasing the short-term costs.

“Going forward, we will continue to work on streamlining the operation and identify additional synergies with Wideroe,” Karlsen said in a statement.

Norwegian narrowed its 2024 operating profit guidance to a range of 2.1 billion to 2.4 billion crowns, including Wideroe, the domestic rival it acquired early this year.

In July, the group cut its annual forecast and said it expected an operating profit of between 2.1 billion and 2.6 billion crowns this year.

Karlsen also said in the statement that booking momentum for the seasonally weak fourth quarter was “encouraging across the group, both for leisure and business travel”.

The airline posted an operating profit of 2.13 billion Norwegian crowns ($194.74 million), missing a company-compiled consensus of 2.33 billion crowns and down 2% from 2.17 billion crowns a year earlier.