June 6, 2018 / 7:13 AM / 5 months ago

Norwegian Air posts above-forecast May traffic growth

OSLO, June 6 (Reuters) - Budget carrier Norwegian Air saw higher-than-expected growth in capacity and passenger traffic in May, while income per customer was in line with forecasts.

The Oslo-listed airline, the subject of a recent takeover proposal by British Airways-owner IAG, is rapidly expanding its long-haul business as it seeks to turn around a loss-making business.

Passenger traffic, as measured by the number of revenue-generating passenger kilometres (RPK), grew by 51 percent year-on-year in May, while analysts in a Reuters poll on average had predicted an increase of 48.8 percent.

The company’s yield, or income per passenger carried and kilometres flown, meanwhile stood at 0.36 Norwegian crowns, matching expectations, but down six percent year-on-year.

“Even with strong capacity growth, the demand is high,” Norwegian Air Chief Executive Bjoern Kjos said in a statement.

“Our strategy has been to build a strong, competitive company, and going forward we will reap what we have sown for the benefit of our customers, dedicated staff and shareholders,” he added.

Norwegian’s shares rose 3.4 percent in early trade to 254 Norwegian crowns.

“We argue that traffic figures are solid given the severe capacity growth and thus bode well for the upcoming peak season,” brokers Pareto Securities wrote in a note to clients, reiterating a Buy recommendation and a share price target of 400 crowns. (Reporting by Ole Petter Skonnord, writing by Terje Solsvik, editing by Gwladys Fouche)

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