Norwegian Air Shuttle ASA Q2 2015 Presentation Best low-cost - - PowerPoint PPT Presentation

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Norwegian Air Shuttle ASA Q2 2015 Presentation Best low-cost - - PowerPoint PPT Presentation

Apr 07, 2023 227 likes •456 views

Norwegian Air Shuttle ASA Q2 2015 Presentation Best low-cost airline in Europe 2013-2015 Worlds best Long Haul low-cost airline 2015 Photo: Bo Mathiesen Europes best low-cost airline Q2 2015 Highlights 2013,2014 & 2015 New

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Best low-cost airline in Europe 2013-2015 World’s best Long Haul low-cost airline 2015

Norwegian Air Shuttle ASA

Q2 2015 Presentation

Photo: Bo Mathiesen

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Europe’s best low-cost airline 2013,2014 & 2015

  • New routes launched

– domestic Spain – London-Boston – Caribbean (Puerto Rico + winter routes)

  • SkyTrax awards 2015

– Best Low-Cost airline in Europe (3 years in a row) – World’s best Long Haul Low-Cost airline

  • Three new aircraft to the fleet in Q2

– 2 new 737-800’s (four new in first half) – 1 new 787-8 Dreamliner (to a fleet of eight)

  • Strong progress for long-haul
  • EBT improved to NOK 456 million from a

loss of NOK 137 million last year

Q2 2015 Highlights

2

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Europe’s best low-cost airline 2013,2014 & 2015

  • Group revenues almost doubled in three years
  • A strong 60% revenue growth for long-haul

Q2 revenue increased by 16 %

Revenues 3 170 4 012 5 043 5 861 Domestic revenue 1 017 1 192 1 173 1 362 % y.o.y. chg

4 % 17 %

  • 2 %

16 %

International revenue 2 153 2 820 3 871 4 498 % y.o.y. chg

24 % 31 % 37 % 16 %

1 000 2 000 3 000 4 000 5 000 6 000

Q2 12 Q2 13 Q2 14 Q2 15

NOK million

Domestic revenue International revenue Total Revenues

+ 16 %

3

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Europe’s best low-cost airline 2013,2014 & 2015

25 % growth in ancillary to 15 % share of group revenue

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  • Split: Group ancillary per

customer

– Growth driven by bundle and freedom to choose

  • Short Haul: 12 % growth for

ancillary per customer

Other Ancillary Other Ancillary Baggage Baggage Seating Seating Pre-sold packages Pre-sold packages Flexibility/ modifications Flexibility/ modifications

Q2 14 Q2 15 Optional extras

NOK 125

Optional extras

+ 14 % y.o.y

NOK 110

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Europe’s best low-cost airline 2013,2014 & 2015

EBT improved by NOK 593 million on higher load

Q2 12 Q2 13 Q2 14 Q2 15 Q2 12 Q2 13 Q2 14 Q2 15 EBITDAR margin 21 % 22 % 11 % 22 % EBT margin 4 % 7 %

  • 3 %

8 % 680 878 563 1 285

  • 150

50 250 450 650 850 1 050 1 250 1 450 NOK million

125 277

  • 137

456

  • 150

50 250 450 650 850 1 050 1 250 1 450 NOK million

EBT development Q2 EBITDAR development Q2

5

(NOK million) Q2 15 Q2 14 Change EBITDAR 1 285 563 722 EBITDA 765 94 EBIT 520

  • 85

Pre-tax profit (EBT) 456

  • 137

593 Net profit 325 129

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Europe’s best low-cost airline 2013,2014 & 2015

  • USD/NOK has strengthened by 29 % y.o.y
  • Spot fuel price down by 39 % (-20 % in NOK)
  • Saved NOK 572 million on lower fuel cost (-18 % per ASK)

– NOK 826 million reduction due to lower spot price – NOK 42 million saved on lower fuel consumption due to new aircraft – NOK 296 million negative impact of currency (USD/NOK)

  • Other opex: NOK 311 million negative impact from currency

– Related to leasing, maintenance, airport charges, handling, etc.

  • One-offs included in EBT

– NOK 84 million extra cost related to engine maintenance – NOK 10 million Wetlease – NOK 100 million gain on hedging

Tailwind from fuel offset by currency

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Europe’s best low-cost airline 2013,2014 & 2015

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

Unaudited

Q2 Q2 YTD YTD Full Year Full Year (Amounts in NOK million ) 2015 2014 2015 2014 2014 2013 Net cash flows from operating activities 1 315 416 2 310 1 518 287 2 377 Net cash flows from investing activities

  • 1 092
  • 1 902
  • 2 689
  • 2 936
  • 4 931
  • 2 126

Net cash flows from financial activities 1 224 660 1 420 1 588 4 479 184 Foreign exchange effect on cash

  • 17

5

  • 7

3 11 Net change in cash and cash equivalents 1 430

  • 821

1 034 173

  • 155

435 Cash and cash equivalents in beginning of period 1 615 3 160 2 011 2 166 2 166 1 731 Cash and cash equivalents in end of period 3 045 2 339 3 045 2 339 2 011 2 166

NOK 1.3 billion cash-flow from operations

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  • Invested NOK 1.1 billion in new aircraft in Q2 (one 787 and two 737’s)
  • Financing: NOK 1 billion bond issue in May
  • NOK 3 billion in cash at 30 June
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Europe’s best low-cost airline 2013,2014 & 2015

Balance sheet boost by currency and new aircraft

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  • Invested NOK 4.7 billion the last 12 months
  • Seven new 737-800 and one 787 on balance since Q214
  • NOK 12.6 billion net debt

2 339 Cash 3 045 4 924 Receivables 2 801 3 998 Aircraft PDP /

  • ther assets

6 783 10 002 Aircraft 15 140

3 000 6 000 9 000 12 000 15 000 18 000 21 000 24 000 27 000 30 000 Q2 14 Q2 15

NOK million

Equity 2 163 2 299 Pre-sold tickets 5 605 4 579 Other liabilities 7 910 4 341 Aircraft Financing 12 092 7 705

Q2 15 Q2 14

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Europe’s best low-cost airline 2013,2014 & 2015

Load factor increased to 85 % (+5 p.p.)

  • 8 % growth in capacity (ASK)
  • 15 % growth in traffic (RPK)
  • Average flying distance increased by 6 %

ASK 1 323 1 763 2 974 3 469 4 449 5 518 6 357 8 541 12 012 12 919 Load Factor 79,1 % 79,4 % 78,4 % 78,3 % 75,4 % 78,3 % 76,5 % 76,9 % 79,6 % 85,2 % 79,1 % 79,4 % 78,4 % 78,3 % 75,4 % 78,3 % 76,5 % 76,9 % 79,6 % 85,2 %

0% 20% 40% 60% 80% 100% 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 10 000 11 000 12 000 13 000 14 000 15 000

Q2 06 Q2 07 Q2 08 Q2 09 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15

Load Factor Available Seat KM (ASK)

ASK Load Factor

ASK +8 %

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Europe’s best low-cost airline 2013,2014 & 2015

7 million passengers in Q2 2015 (+9 %)

324,000 passengers on Long-Haul in the second quarter vs 139,000 in Q2 last year

Pax (mill) 1,3 1,6 2,3 2,8 3,2 4,0 4,5 5,5 6,4 7,0

1 2 3 4 5 6 7 8

Q2 06 Q2 07 Q2 08 Q2 09 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15

Passengers (million)

+ 9 %

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Europe’s best low-cost airline 2013,2014 & 2015

Unit cost cut by 3 % to NOK 0.40

Other losses / (gains) is not included in the CASK concept as it primarily contains hedge gains/losses offset under financial items* as well as other non-operational income and/or cost items such as gains on the sale

  • f spare part inventory and unrealized foreign currency effects on receivables/payables and (hedges of operational expenses).

*Norwegian hedges USD/NOK to counter foreign currency risk exposure on USD denominated borrowings translated to the prevailing currency rate at each balance sheet date. Hedge gains and losses are according to IFRS recognized under operating expenses (other losses/ (gains) while foreign currency gains and losses from translation of USD denominated borrowings are recognized under financial items.

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0,42 0,41 0,35 0,38 0,35 0,32 0,31 0,29 0,28 0,29 0,13 0,12 0.15 0,09 0,12 0,15 0,15 0,14 0,14 0,11

0,25 0,30 0,35 0,40 0,45 0,50 0,55 Q2 06 Q2 07 Q2 08 Q2 09 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15

Operating cost EBITDA level per ASK (CASK)

CASK excl fuel Fuel share of CASK

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Europe’s best low-cost airline 2013,2014 & 2015

Aiming for NOK 0.25 per ASK (ex fuel)

  • Cost per available seat kilometer is an industry-wide cost level indicator often referred to as “CASK”. Usually represented as operating expenses before depreciation and amortization (EBITDA level) over produced seat kilometers (ASK).
  • Foreign exchange rates used are equivalent to the daily average rates corresponding to the reporting periods and as stated by the Central Bank of Norway
  • Note: For some carriers the available financial data represents Group level data which may include cost items from activities that are unrelated to airline operations.
  • Other losses / (gains) is not included in the CASK concept as it primarily contains hedge gains/losses offset under financial items* as well as other non-operational income and/or cost items such as gains on the sale of spare part inventory and unrealized foreign currency effects on receivables/payables and (hedges of
  • perational expenses).

*Norwegian hedges USD/NOK to counter foreign currency risk exposure on USD denominated borrowings translated to the prevailing currency rate at each balance sheet date. Hedge gains and losses are according to IFRS recognized under operating expenses (other losses/ (gains) while foreign currency gains and losses from translation of USD denominated borrowings are recognized under financial items. Sources: Based on official full-year 2014 annual report for Norwegian Air Shuttle, Finnair, Air Berlin, Vueling, SAS Group (31.10.2014), Easyjet (30.09.2014), and full-year 2015 report for Ryanair and WizzAir (31.03.2015).

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0.25 0.30 0.42 0.49 0.49 0.59 0.62 0.74

  • 0,10

0,20 0,30 0,40 0,50 0,60 0,70 0,80

Operating cost EBITDA level per ASK (CASK)

Comfort Zone Make or break

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Europe’s best low-cost airline 2013,2014 & 2015

8 5 8 11 13 20 22 23 23 22 11 5 5 2 2 5 5 5 5 5 5 5 7 16 21 23 25 29 29 27 20 16 2 8 10 13 13 13 13 13 2 7 15 23 30 41 51 68 83

5 4 12

2 5 5 9 12 1 2 3 3 3

8 11 13 22 32 40 46 57 62 68 85 95 99 117 144

20 40 60 80 100 120 140 2003 year-end 2004 year-end 2005 year-end 2006 year-end 2007 year-end 2008 year-end 2009 year-end 2010 year-end 2011 year-end 2012 year-end 2013 year-end 2014 year-end 2015 year-end 2016 year-end 2017 year-end

B788 Owned B788/B789 Leased A320neo B737 MAX 8 B738 owned B738 S&LB B738 leased B733 owned B733 leased M80 leased

Top modern fleet with an average age of 4 years

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2015: Sale of 737-300

  • 740 seats

Re-deliveries 737-800

  • 372 seats

Deliveries 737-800 +1,860 seats Deliveries 787-8 +291 seats

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Europe’s best low-cost airline 2013,2014 & 2015

Market shares in key airports (last 12 months)

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1 000 000 2 000 000 3 000 000 4 000 000 5 000 000 6 000 000 7 000 000 8 000 000 9 000 000 10 000 000 Oslo Arlanda Copenhagen Helsinki Gatwick Spanish bases Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15

+ 215,000 pax 39 % mkt share + 63,000 pax 23 % mkt share + 75,000 pax 18 % mkt share + 37,000 pax 13 % mkt share + 220,000 pax 9 % mkt share + 160,000 pax 4 % mkt share

  • Mkt. Size:

24 mill

  • Mkt. Size:

23 mill

  • Mkt. Size:

126 mill

  • Mkt. Size:

39 mill

  • Mkt. Size:

16 mill

  • Mkt. Size:

26 mill

Sources: Avinor, Swedavia, Copenhagen Airports, Finavia, Gatwick Airport, Aena

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Europe’s best low-cost airline 2013,2014 & 2015

Market shares Spanish airports (last 12 months)

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250 000 500 000 750 000 1 000 000 1 250 000 Malaga Intl Alicante Intl Barcelona Intl Las Palmas Intl Tenerife Intl Madrid Intl Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 + 35,000 pax 9 % mkt share + 8,000 pax 9 % mkt share + 16,000 pax 3 % mkt share

  • 11,000 pax

8 % mkt share

  • 600 pax

4 % mkt share + 112,000 pax 2 % mkt share

  • Mkt. Size:

12 mill

  • Mkt. Size:

9 mill

  • Mkt. Size:

32 mill

  • Mkt. Size:

8 mill

  • Mkt. Size:

6 mill

  • Mkt. Size:

28 mill

Source: Aena

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Europe’s best low-cost airline 2013,2014 & 2015

Madrid Barcelona Malaga

Fuerteventura

Gran Canaria Tenerife S.

Tenerife North

  • Madrid to:

Tenerife North Gran Canaria

  • Barcelona to:

Tenerife North Gran Canaria Fuerteventura

  • Malaga to:

Tenerife South Gran Canaria

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Launched domestic routes in Spain

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Europe’s best low-cost airline 2013,2014 & 2015

New routes to North America and the Caribbean

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Europe’s best low-cost airline 2013,2014 & 2015

  • Eight aircraft in operation (from May 2015)
  • Launched 29 routes
  • Built up four bases (NY, FL, UK and Thailand)
  • Over 1.7 million passengers
  • Positive momentum and through start-up phase

Long-haul status after two years of operation

Key figures long-Haul

  • 100

200 300 400 500

  • 30 000

60 000 90 000 120 000 150 000 mai-13 jul-13 sep-13 nov-13 jan-14 mar-14 mai-14 jul-14 sep-14 nov-14 jan-15 mar-15 mai-15 Revenue (NOK million) Passengers Passengers Revenue 0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 %

  • 100

200 300 400 500 600 700 800 900 1 000 mai-13 jul-13 sep-13 nov-13 jan-14 mar-14 mai-14 jul-14 sep-14 nov-14 jan-15 mar-15 mai-15 Load Factor ASK (million) ASK Load Factor

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2013 2014 1H 2015 ASK (million) 1 571 8 087 4 873 Load Factor 89 % 87 % 91 % Passengers 192 579 941 265 591 577 Legs 769 3 683 2 235

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Europe’s best low-cost airline 2013,2014 & 2015

  • Expanding fleet with 4 Boeing 787-9 in 2016

– 344 seat configuration (291 for the 787-8) – two in Q2 2016, and two in Q4

  • An estimated 30 % ASK growth in 2015 and

38 % in 2016

  • Reached critical mass and built market

presence

  • Expect positive contribution going forward

Expanding Long-haul operations

Forecast Long-Haul

2014 2015P 2016P ASK 8 087 10 500 14 500 growth 415 % 30 % 38 % Legs 3 683 4 800 6 450 379 % 30 % 34 % 19

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Europe’s best low-cost airline 2013,2014 & 2015

  • Business environment

– Bookings for Q3 2015 ahead of last year (capacity adjusted) – Stable market in the Nordic region – Good load and improving yield for long-haul

  • The company expects a production growth (ASK) of 5 % (unchanged)

– Increasing utilization and distance driven by long-haul – Continuous optimization of the route portfolio

  • Unit cost target in the range of NOK 0.39 to 0.40 (unchanged)

– Fuel price assumption: USD 575 per MT – Currency assumptions: USD/NOK 7.5 and EUR/NOK 8.5 – Including impact of pilot-strike – Based on the current planned route portfolio and mix

  • Investments and capex

– Aircraft deliveries:

  • 2015: 11 new aircraft; 10 B737 and one B787-8 (returning 7 older aircraft)
  • 2016: 25 aircraft; 17 B737, 4 A320Neo, 4 leased B787-9 (returning 7 leased 737, lease out 4 Neo’s)

– Expected capex mainly related to PDP and aircraft deliveries for FY 2015 and 2016 of NOK 5.5bn and 8.4bn, respectively

Expectations for 2015 (Group)

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Europe’s best low-cost airline 2013,2014 & 2015

  • Awarded Europe’s Best Low-Cost Carrier

2015 and Global Best Low-Cost Long- Haul Carrier 2015 by SkyTrax

  • Bookings for Q3 2015 ahead of last year
  • An estimated NOK 2 billion lower fuel

cost for 2015

  • Expect positive contribution from Long-

Haul going forward

  • Aiming for further unit cost reductions
  • Successful placing of NOK 1 billion bond

Summary

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From bases in NORWAY From bases in SWEDEN

DENMARK FINLAND

From the UK base From bases in SPAIN From bases in the USA & THAILAND

Norwegian offers 434 scheduled routes to 130 destinations in 39 countries

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