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Norwegian continues to compete aggressively

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But figures show a fall in margins that was smaller than expected

Europe’s third-biggest low-cost carrier has reported a fall in margins for July that was smaller than expected it competes aggressively to increase its share of the market.

As Norwegian expands rapidly, opening bases with a focus on leisure destinations and building long-haul operations, its load factor rose to 88.2% from 85% in July the previous year.

Yield fell to NOK 0.47 in July from 0.53 in July 2013 but that is a rise from 0.46 in June, supporting the view that margin pressures may be easing.

“The continued drop in yield is on the back of the intense competition in the Nordics, […] Norwegian stimulating prices in the rest of Europe in order to capture market share on new routes, increased share of long-haul operations with inherently lower yields,” Reuters reported Danske Bank as saying.

A warm summer in the Nordic region has also kept yield down, minimising late bookings.

“The yield recovery is somewhat slower than I had hoped for, but there is some improvement, and a very good load factor,” an industry analyst at the brokerage Carnegie said. “This shows that long haul had been good this summer.”

Norwegian still has more than 200 planes on order and expects to be flying 270 aircraft by 2022, far more than its current 95. Its rapid growth looks set to continue.

Reuters

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