REFILE-UPDATE 1-Norwegian Air finds fare levels coming under pressure
* Yield falls to 0.48 crowns in Aug vs 0.53 in July
* Yield falls on competition, currency changes, weather
* Share rises after big fall on Wednesday
By Ole Petter Skonnord
OSLO, Sept 5 (Reuters) - Budget airline Norwegian, which is expanding rapidly out of its traditional Nordic base, reported disappointing August figures on Thursday as fare levels came under pressure from competition, a weaker currency and good weather at home.
Norwegian, which launched transatlantic flights earlier this year, said its yield, or average revenue per passenger carried and kilometre flown, fell to 0.48 crowns, the lowest figure since January, defying expectations for a fall to around 0.51 crowns and below July's 0.53 crowns.
Its disappointing numbers come just a day after rival Ryanair warned it could miss its profit target this year due in part to increased competition from rivals, like Norwegian.
"This is on the weak side but they also fly longer distances so you also get lower costs," Ivar Andreas Lemmechen Gjul, an analyst at Fondsfinans said. "Yield can fluctuate from month to month but the trend is for it to remain down 6-7 percent from a year earlier because of the longer flying distances."
Norwegian was hurt this summer by unusually good weather in the Nordics, which reduced its revenue in the high margin last-minute segment, while higher oil prices and a weaker Norwegian crown were also negative factors.
Its yield, an indicator of fare trends, has already been under pressure as it has started flying long-haul routes, which naturally increased its kilometres flown, but this has been mostly factored in, analysts said.
Norwegian carried 2 million passengers in August, 14 percent more than a year earlier, while the product of paying passengers and kilometres flown (revenue-passenger kilometres) rose by a massive 30 percent, reflecting both its rapid expansion and its foray into the long haul market.
Norwegian's shares were up 1.5 percent at 213.6 crowns by 0802 GMT on Thursday, having already fallen 6.4 percent on Wednesday, due in part to Ryanair's warning and Swedbank's downgrade of earnings expectations on rising competition.
Although the share price has doubled in the past year, it has struggled in recent months and the stock is down 28 percent in the past three months, making it the second worst performer amongst constituents of the Oslo market's main index.
"This is the second time in a row when (Norwegian) reported decreasing load factor and decreasing yield. This trend is worrisome for us, but it will likely persist in September," Norne Securities said in a note to clients.
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