Norw egian Air Shuttle ASA (NAS) Q4 2004 and FY 2004 17 February, 2005 Oslo
Strong grow th continued ● 73 % production increase from Q403 to Q404, with up to 40 % increase on main domestic routes. ● Satisfactory load factor levels maintained ● Strong performance on international routes Load factor 100 % 683 642 607 80 % 60 % 370 349 40 % 20 % 0 % Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 ASK LF mill 427 398 572 549 554 PAX (000) 2
Stronger market position ● Approaching 30 % market share on key domestic routes ● Positive response on improved time table for Bergen and Trondheim 35 % 30 % 30 % 30 % 28 % 27 % 26 % 26 % 24 % 25 % 23 % 22 % 21 % 20 % 20 % 18 % 15 % 10 % Bergen Trondheim Stavanger Tromsø Q2 03 Q2 04 Q4 04 3
28% increase in turnover ● 331 MNOK in turnover in Q4 2004, compared to 258* MNOK in Q4 2003 ● EBITDA result of -43 MNOK in Q4 2004, compared to 0,5* MNOK in Q4 2003 ● A period of extraordinary events; high fuel prices and price war MNOK Revenue development 350 300 250 200 150 100 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 EBITDA MNOK 0,5 -50 -36 -11 -43 (Low fare 2003) 4 *Low fare operation
Financial position ● Cash-balance of 195 MNOK, prepaid tickets of 109 MNOK ● Equity-share of 35% ● Strong sales in beginning of 2005 will increase cash balance CASH FLOW (MNOK) From: Q4 04 2004 2003 Operation activities -24 660 -90 847 61 498 Investments -16 037 -11 964 -28 637 Financial activities 902 -16 069 217 938 Net change -39 796 -118 879 250 799 Opening balance 234 953 314 036 63 237 Closing balance 195 157 195 157 314 036 5
Capacity expansion continues Grow th 04-05 Sept. 04 Sept. 05(E) Sept. 02 Sept. 03 18 % 11 Fleet 6 8 13 23 % 400 ~490 Man-years 254 300 224 30 % Avail. Seat Kilom. (mill ASK) 57 119 ~290 Number of routes 4 17 31 ~40 30 % 2 355 ~3 100 32 % Airborne hours (ABH) 769 1 311 Passenger traffic (mill RPK) 29 77 141 ~200 42 % 184 043 Number of passengers 65 879 129 298 ~265 000 44 % 6
Continued cost reduction ● Average unit costs of 0.62 NOK in Q4 2004, down 17 % from Q4 2003 (0.74 NOK) ● 22 % down from 2003 ● Higher crew and fleet utilization from production increase, renegotiated supplier agreements and cheaper distribution will bring costs further down in 2005 NOK/ASK -16% -22 % 0,80 0,70 0,60 0,50 0,40 0,30 0,20 Q4 03 Q4 04 2003 2004 2005 2006 Target* Target 7 *Target after planned 2005 production expansion, commencing Q2 05
True low -cost operator Cost per ASK vs Stage Length 2000 KLM 1800 Air France 1600 1400 Lufthansa 1200 lberia ”Low-cost quadrant” km 1000 Easyjet 800 Ryanair SAS Norwegian 2004 Norwegian 2005 600 Norwegian 2003 400 200 0 0 20 40 60 80 100 120 øre Footnotes: Total cost pr ASK, incl. leasing costs 8 Source: Annual reports and airline analysis 2002/2003.
Tow ards normalized price levels? Consumer price index, domestic air-fares 170 160 150 140 130 120 110 100 3 competitors 2 competitors monopoly 2 competitors 90 9 9 0 0 1 1 2 2 3 3 4 4 5 9 9 0 0 1 1 2 2 3 3 4 4 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 . . . . . . . . . . . . . . . . . . . . . . . . . n l n l n l n l n l n l n r t r t r t r t r t r t u u u u u u p k p k p k p k p k p k a a a a a a a j j j j j j o o o o o o a a a a a a j j j j j j j Consumer price index, domestic air-fares KPI Totalindex Source, SSB 9
Yield has improved ● Yield levels influenced by shorter sector lengths ● Yield pressure softened somewhat during Q4 ● Positive effects from improved revenue management practice Yield (Revenue/RPK) NOK 1,20 1,00 0,80 0,60 0,40 0,20 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Yield (Rev / RPK) 10
Expectations for 2005 ● Continued market increase from low prices ● Price competition at current levels ● Fuel prices at current levels ● Continued expansion expected to strengthen market position and achieve cost level targets from Q2 and onwards ● Expected loss in Q1 and positive operating results from Q2 and onwards 11
Norw egian Air Shuttle ASA (NAS) Q4 2004 and FY 2004
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