OSLO (Reuters) - Norwegian Air’s (NWC.OL) revenue per customer grew less than expected in July and the company filled slightly fewer seats than analysts had predicted during the peak summer season, sending its shares down almost 8% in early trade.
Europe’s third largest budget carrier has warned that the global grounding since March of the Boeing (BA.N) 737 MAX aircraft, which make up 11% of Norwegian’s fleet, may hamper its plans to return to profitability this year.
The company’s yield, a measure of revenue per passenger carried and km flown, rose to 0.51 Norwegian crowns (£0.0471) in July from 0.45 crowns in June, lagging the 0.54 crowns expected by analysts in a Reuters poll.
Norwegian filled 93.5% of its available seats last month, up from 93.0% a year earlier but lagging an average analyst forecast of 93.8%, its monthly traffic data showed on Tuesday.
Norwegian late last year announced plans to curb its rapid capacity growth and cut costs to preserve cash and stem losses from its operations. It has also raised 3 billion crowns from shareholders to boost its balance sheet.
The company’s capacity expansion, as measured by available seat km (ASK), peaked at 51% growth year-on-year in June 2018 and has since declined, hitting 5% in July, slightly above the 4% percent that analysts had forecast.
“Following a period of significant expansion and investments, the growth is slowing down, which is in line with our strategy of moving from growth to profitability,” interim CEO Geir Karlsen said in a statement.
“The figures also show that passengers travel longer distances and a higher load factor. This means that more people choose Norwegian when they are travelling, not least on intercontinental flights,” he added.
Norwegian Air, whose founder retired from the post of chief executive last month, has used its low-fare, high-volume model to grab market share from incumbent transatlantic carriers.
“The number of American passengers continues to increase. In July, half of the passengers on board Norwegian’s intercontinental flights were Americans flying to Scandinavia, the UK, Spain, France, the Netherlands or Italy,” it said.
Norwegian has sought to limit the impact from the grounding of its 18 MAX aircraft by combining flights, but the cost of renting replacement planes is still estimated at some 700 million crowns in 2019, it said last month.
Norwegian’s shares opened 7.8% lower in Oslo.
Reporting by Terje Solsvik; editing by Jason Neely