OSLO (Reuters) – Budget carrier 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 yesterday.
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 percent year on year but revenue-generating passenger kilometres increased by only 24 percent, lagging a forecast of 32.9 percent in a Reuters poll of analysts.
While the recent fall in crude oil prices could eventually 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 1.99 billion Norwegian crowns ($232 million), up from a preliminary October-November loss reported last month of 1.46 billion.
The airline’s load factor, a measure of how many seats are sold on each flight, fell sharply to 78.6 percent for the month, lagging a forecast of 82.6 percent and down from 84.6 percent 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 in a statement.