Norwegian Air posts slower growth, yield edges up

Norwegian Air posted smaller-than-expected passenger growth in December and additional fuel hedging losses, but earned more money from each traveller, its monthly traffic report showed Monday. Norwegian, which has been courted by British Airways owner IAG, has rapidly expanded its transatlantic business in recent years but recently announced plans to cut costs in a bid to turn around its loss-making operations. It expanded capacity in December by 34% year on year but revenue-generating passenger kilometres increased by only 24%, lagging a forecast of 32.9% in a Reuters poll. While the recent fall in crude oil prices could bring down fuel costs, the company will first book substantial losses from hedging positions it entered into at higher prices. For the October-December quarter, Norwegian Air estimated an unrealised loss from fuel hedging of US$232m, up from a preliminary October-November loss reported last month of US$1.46b. The airline’s load factor fell sharply to 78.6% for the month, lagging a forecast of 82.6% and down from 84.6% a year earlier. “The company has made considerable investments this year and will now enter a period of slower growth. We have adjusted and optimised our route portfolio and the capacity going forward. We have also made seasonal adjustments for the winter,” CEO Bjoern Kjos said. “We have launched a series of cost-reduction measures to boost our financials in 2019 which will have an immediate and continued positive influence throughout the year.” <br/>