UPDATE 1-Norwegian Air passenger growth slows, hedging loss mounts

Budget carrier Norwegian Air posted smaller-than-expected passenger growth in December and additional losses on fuel hedging, its monthly traffic report showed on Monday.

Norwegian, which has been courted by British Airways owner IAG, has rapidly expanded its transatlantic business in recent years but has struggled to turn a profit.

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.

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.

"We have launched a series of cost-reduction measures to boost our financials in 2019 which will have an immediate and continued positive influence throughout the year." he said.

($1 = 8.5897 Norwegian crowns) (Reporting by Ole Petter Skonnord; editing by Terje Solsvik and Jason Neely)

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