A stronger competitive position Q2 2004 Oslo London 25 - 26 - - PowerPoint PPT Presentation

Norw egian Air Shuttle ASA (NAS)

A stronger competitive position

Q2 2004 Oslo – London 25 - 26 August 2004

2

A stronger competitive position

• Q2 results in line with expectations
• Strong financial position maintained
• Low-cost model confirmed
• Low-fare position strengthened
• Positive EBITDA outlook for H2

3

A stronger competitive position

• Q2 results in line with expectations
• Strong financial position maintained
• Low-cost model confirmed
• Low-fare position strengthened
• Positive EBITDA outlook for H2

4

Turnover up 45% from Q2 2003

50 100 150 200 250 300 350 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Mill

• 311 Mill NOK in turnover in Q2 2004, compared to 215

(196 from low-fare) in Q2 2003

• Growth driven by increased production and higher

passenger volumes

• Rapid expansion accomplished with continuously

higher load-factor (61% in Q2 03 to 67% in Q2 04)

45 %

5

Aggressive pricing impacted result

• EBITDA result of -36 MNOK in Q2 2004, versus -8.7

MNOK in Q2 2003 (low-fare)

• EBITDA result mainly impacted by aggressive

competitive pricing

• EBITDA result not satisfactory, but in line with

management expectations

• 45
• 35
• 25
• 15
• 5

5 15 25 35 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Mill

EBITDA level B-737

6

A stronger competitive position

• Q2 results in line with expectations
• Strong financial position maintained
• Low-cost model confirmed
• Low-fare position strengthened
• Positive EBITDA outlook for H2

7

Stable cash balance

• Cash-balance marginally down from Q1 2004 to 320.5

MNOK as of July 1. 2004

• Positive cash flow from operations of 0.7 MNOK
• Good sales in Q2

Cash Flow statement 2003 2004 2003 Operating activities 738

• 1 870

61 498 Investments

• 8 243
• 7 481
• 28 637

Financial activities 3 682

• 3 252

217 938 Net change

• 3 824
• 12 603

250 799 Cash balance per 31 March 324 407 88 016 63 237 Cash balance per 30 June 320 583 75 413 314 036

Second Quarter

8

Strong financial position

• Total assets of 556 MNOK
• IPO proceeds of 235 MNOK ”still in the bank”
• Equity-share of 36%

FIXED ASSETS 2004 2003 EQUITY 2004 2003 Intangible assets 91 336 37 478 Tangible fixed assets 28 688 62 764 Paid-in equity 267 214 71 157 Financial fixed assets 13 953 14 175 Retained earnings

• 67 460
• 280

TOTAL FIXED ASSETS 133 977 114 417 TOTAL EQUITY 199 754 70 877 CURRENT ASSETS LIABILITIES Material and consumables 9 736 9 753 Provisions 51 616 23 214 Receivables 91 423 100 889 Other long-term liabilities 26 609 Cash and bank deposits 320 583 75 413 Current liabilities 304 349 179 772 TOTAL CURRENT ASSETS 421 742 186 055 TOTAL LIABILITIES 355 965 229 595 TOTAL ASSETS 555 719 300 472 TOTAL EQUITY AND LIABILITIES555 719 300 472 No of shares 18284570 79021 Nominal share value 0,1 13 Second Quarter

9

A stronger competitive position

• Q2 results in line with expectations
• Strong financial position maintained
• Low-cost model confirmed
• Low-fare position strengthened
• Positive EBITDA outlook for H2

10

Costs are dow n as planned

• Average unit costs of 0.54 NOK in Q2 2004, down more than 30 %

from Q2 2003 (0.78 NOK)

• Scale benefits from increased production and longer sector lengths,

have been main drivers

• Cost effective distribution solutions, renegotiated supplier

agreements and internal efficiency improvements, are expected to bring costs even further down

0,40 0,45 0,50 0,55 0,60 0,65 0,70 0,75 0,80 0,85 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04

• 31 %

Cost / ASK

11

Scale benefits realized

100 200 300 400 500 600 700 800 900 1000 Q1 04 Q2 04 Q3 04 Q4 04 Hrs pilots

1 2 3 4 5 6 7 8 9 10 Pilot utilization (ABH pr pliot) (1) Average ABH pr plane pr day

Hrs plane 100 200 300 400 500 600 700 800 900 1000 Q1 04 Q2 04 Q3 04 Q4 04 Hrs pilots

1 2 3 4 5 6 7 8 9 10 Pilot utilization (ABH pr pliot) (1) Average ABH pr plane pr day

100 200 300 400 500 600 700 800 900 1000 Q1 04 Q2 04 Q3 04 Q4 04 Hrs pilots

1 2 3 4 5 6 7 8 9 10 Pilot utilization (ABH pr pliot) (1) Average ABH pr plane pr day

Hrs plane

A A (F) (F) (F)

• Annualized ABH per pilot was 573 in Q2

2004, up 19% from Q1

• ABH per plane per day was 6,8 in Q2

2004, up 20% from Q1

12

More effective distribution

• Distribution costs per sold seat is down with 25 % since

Q2 2003

• Higher internet penetration, currently 60% of sold

volume, is a major driver

• New internet portals for business clients and travel

agents combined with new distribution channels (SMS and Narvesen), should bring costs even further down

• 25 %

Distribution cost per sold seat 20 30 40 50 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 NOK

• 25 %

Distribution cost per sold seat 20 30 40 50 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 NOK

13

A stronger competitive position

• Q2 results in line with expectations
• Strong financial position maintained
• Low-cost model confirmed
• Low-fare position strengthened
• Positive EBITDA outlook for H2

14

A demonstration of strength

100 200 300 400 500 600 700 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04

Mill km

10 % 30 % 50 % 70 %

RPK / ASK

load factor RPK ASK

• Increased fleet from 8 to 11 planes and started 18 new routes

in Q2 2004

• Production increased to 642 Mill km in Q204, an increase of

147% from Q203 (261 Mill km)

• Load factor increased to 67% in Q204, an increase of 6 %-

points from Q203 (61%)

• Load factor in July was 79%, up 10 %-points from a year ago

15

Stronger domestic position

• Market share of 25 % and increasing on key domestic

routes

• Market share maintained and somewhat increased from Q1

to Q2, in a period with aggressive competitive pricing

• Large business clients are showing renewed interest in our
• services. Recently closed deal with Telenor

Market share domestic main routes Q203 vs. Q204

22 % 21 % 20 % 18 % 27 % 26 % 23 % 26 % 0 % 5 % 10 % 15 % 20 % 25 % 30 % Bergen Trondheim Stavanger Tromsø Q2 03 Q2 04

16

A stronger competitive position

• Q2 results in line with expectations
• Strong financial position maintained
• Low-cost model confirmed
• Low-fare position strengthened
• Positive EBITDA outlook for H2

17

Yield hit by aggressive pricing

• An increase of 33% in average sector length from Q1 2004 to Q2

2004, impacted yield levels negatively in Q2

• Aggressive price competition had a strong adverse affect on yield

levels in Q2

• The intensity of price rivalry has recently eased off, providing room for

a positive yield development in H2 0,00 0,30 0,60 0,90 1,20 1,50 1,80 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04

Yield Cost / ASK

18

The overall market is grow ing

Total PAX volume OSL 2003/2004

300 000 500 000 700 000 900 000 1 100 000 1 300 000 1 500 000 J a r u a r y F e b r u a r y M a r c h A p r i l M a y J u n e J u l y A u g u s t S e p t e m b e r O c t

• b

e r N

• v

e m b e r D e c e m b e r

International Domestic 2004

19

Positive EBITDA outlook for H2

• Higher passenger volumes and continued yield pressure

expected for Q3 and Q4

• A materialized ”softening” of domestic price rivalry, may

affect yield levels positively in the latter part of H2

• Positive EBITDA outlook for H2
• An overall negative result for 2004 is expected

Summary:

• Q2 results in line with expectations
• Strong financial position maintained
• Low-cost model confirmed
• Low-fare position strengthened
• Positive EBITDA outlook for H2