Norwegian Air Shuttle ASA Investor Presentation January 2020 - - PowerPoint PPT Presentation

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Norwegian Air Shuttle ASA Investor Presentation January 2020 - - PowerPoint PPT Presentation

Aug 25, 2022 114 likes •358 views

Norwegian Air Shuttle ASA Investor Presentation January 2020 Norwegian at a glance 150+ ~10,000 4 th GLOBAL DESTINATIONS HARD WORKING STAFF LARGEST LOW- COST AIRLINE IN EUROPE* ~36M 160+ PASSENGERS FLOWN 500+ AIRCRAFT IN FLEET

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Norwegian Air Shuttle ASA

Investor Presentation January 2020

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Norwegian at a glance

2

4th

LARGEST LOW- COST AIRLINE IN EUROPE*

150+

GLOBAL DESTINATIONS

500+

ROUTES

~36M

PASSENGERS FLOWN

160+

AIRCRAFT IN FLEET

~10,000

HARD WORKING STAFF

* Based on passengers in 2019, based on company traffic reports.

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8 5 6 8 11 13 20 22 23 23 22 11 5 5 2 2 5 5 5 5 5 5 5 7 16 23 31 35 42 42 40 40 64 62 61 2 7 15 23 30 41 51 64 53 52 40 4 6 14 14 2 5 5 9 14 22 26 1 2 3 3 7 10 11 6 8 11 13 22 32 40 46 57 62 68 85 95 99 116 144 164 156 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Set to leverage on scale

3

787-8/9 Owned 737-800 Owned 737-800 Leased 787-8/9 Leased 737 MAX 8 Leased 737 MAX 8 Owned M80 Leased 737-300 Leased 737-300 Owned

Number of Aircraft Local short-haul focus Global growth phase, long-haul focus Focus on profitability 2 30 19+8 222 15+3 15 6 42 Aircraft orders New markets and other key milestones Europe’s Best Low-Cost Airline World’s Best Low-Cost Long Haul Airline

Leading position

  • n Nordic short

haul Maturing long- haul offering with improving margins Solid platform and sufficient scale to achieve profitability Top ranked by both short-haul and long-haul passengers

4

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Innovation Teamwork Simplicity

CORE VALUES

Key pillars of our corporate strategy 2018-2022

“We shall be the leading long-haul low-cost airline in Europe operating as the engine of global low- cost alliance and dominating the Nordic short- haul market” Return to sustainable profitability Be the preferred airline for customers seeking value for money Fortify position as the leading short-haul carrier in the Nordics Build global low-cost alliance with our long-haul

  • peration as the backbone

LONG TERM VISION STRATEGIC OBJECTIVES 2022

  • Reduce cost base
  • Sustainable unit cost position
  • Cost control and automation

Competitive cost base

  • Standardize and reduce complexity
  • Strategic sourcing
  • Agile development processes

Improve digital and analytics capabilities

  • Deliver on the basics
  • One customer journey
  • Personalization and Reward

Shared customer focus

  • Commercially-driven fleet plan
  • Fleet renewal program
  • Maximize return on assets

Optimized asset management

  • Improve operational simplicity
  • Develop resilient program
  • Optimize technical & crew

Operational resilience

  • Focus is to capitalize on long haul
  • Fortify position in the Nordics
  • Improve connectivity and feed

Profitable operations and global alliance

KEY FOCUS AREAS

4

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Changing strategic focus from growth to profitability

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2013 - 2018 2019 -

Focus on profitability and cash flow Optimization of the base structure and route network based on 12-month profitability criteria Continuous efforts to reduce costs Focus on growth Built up market position and scale Captured slots at constrained airports Onboarded new aircraft and launched new routes Divest aircraft not required for the company’s commercial needs

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Changes to network and

  • perations
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Stable demand at key airports

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10 20 30 40 50 60 Oslo Stockholm Copenhagen Gatwick Barcelona

TOTAL PASSENGERS

In million 2015 2016 2017 2018 LTM Q3 2019

Source: Avinor, Swedavia, Copenhagen Airports, Gatwick Airport and Aena.

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  • 30%
  • 20%
  • 10%

0% 10% 20% 30% 20,000 40,000 60,000 80,000 100,000 120,000 2016 2017 2018 2019 ASK (12m rolling) Unit revenue growth y/y

→ Profits in Q3 was the highest in the Company’s history → The planned capacity reduction supports higher unit revenue, better load factor and increased punctuality MONTHLY TRAFFIC DEVELOPMENT

New strategy starting to show results

8

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LGW 7 (-4) NO 40 (+1) IT 0 (-3) ES 20 (-6) DUB 2 (-5)

Exhaustive review of the short-haul operation

SUMMER 2020 AIRCRAFT ALLOCATION

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DK 12 (0) SE 14 (-3) FI 7 (-2) EDI 0 (-1)

TRD OSL BGO SVG ARN HEL CPH LGW EDI DUB FCO BCN PMI MAD AGP ALC TFS LPA Existing base Restructured base Closed base Versus same season last year ( )

Focus on Nordic core Short-haul network connectivity and density Support long-haul feed, where appropriate Reduce complexity Handle fleet deficit from MAX grounding Closed down more than 70 routes, of which more than 50 on short haul

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Our long-haul business in context

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Geographic focus Connecting large catchment areas Seek connectivity with the rest of the network where necessary Fleet A fleet of 37 Boeing 787 Dreamliners Two-class configuration and high-density cabin Product focus Value for money fares with quality inflight services, leveraging our award-winning brand Business model Long haul, low cost mainly focused on connecting primary airport / city points Profitability Finetuning network to improve operational resilience Focus on core EU and US markets

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Long haul developing according to strategy

SUMMER 2020 AIRCRAFT ALLOCATION TRAFFIC AND YIELD DEVELOPMENT

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UK 787: 13 NO 787: 2 IT 787: 4 ES 787: 5 FR 787: 7 US 787: 2

33 aircraft deployed on long-haul network

2017 2018 LTM Q3 2019 Passengers (million) 3.0 5.4 6.0 ASK (billion) 23.9 45.0 49.9 Legs 11,500 20,600 21,600 Load factor 90% 87% 87%

60 70 80 90 100 110 120 10,000 20,000 30,000 40,000 50,000 60,000 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2013 2014 2015 2016 2017 2018 2019 ASK, 12m rolling (million) Yield, 12m rolling (index; Q2 2013 = 100)

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Connecting networks to feed long haul

Largest foreign carrier in New York and largest European carrier in Los Angeles

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Our young fleet is a key sustainability, commercial and financial advantage

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Source: Planespotter.net, January 2019. The International Council on Clean Transportation (ICCT) Working Paper 2019-16: CO2 emissions from commercial aviation, 2018.

~20% more fuel efficient than world average for airline Lower fuel costs Significantly improved environmental friendliness Newer and more sustainable aircraft are preferred by travellers globally

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Our low-cost business model is one of the most carbon efficient in the world

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ONGOING INITIATIVES Fleet renewal program Advanced weather data from Avtech SkyBreathe app for pilots

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Disciplined low cost operating model

Cost development in 2018 and 2019 Cost level compares well to peers

Southwest Ryanair AirAsia X Vueling WizzAir 0.56 easyJet Finnair JetBlue SAS 0.27 0.32 0.35 0.43 0.59 0.56 0.59 0.62 0.76

Operating costs (EBIT level) per ASK (NOK)1

1 Based on 2018 annual reports or corresponding fiscal year.
  • 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
  • Other losses/(gains) are not included in the unit cost measure 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 operational expenses).

Norwegian has the youngest fleet

0.28 0.23 0.25 0.24 0.25 0.23 0.22 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19

Operating costs excl. fuel and ownership costs per ASK (NOK)

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Cost area Completed cost initiatives Actual Q3 (NOK m) Actual YTD Q3 (NOK m) Airport, handling and technical costs

  • High effect of airport- and handling-related cost initiatives during peak season
  • Progressing on several items with key technical suppliers

408 924

Operating efficiency

  • Lower personnel costs due to improved planning and efficiency measures
  • Standardizing operational tools and consumables
  • Improving disruption handling
  • Processes to close operational bases announced

237 582

Procurement, administration and IT

  • Stronger effects from renegotiated volume-driven agreements
  • Consolidating office locations in Norway and Spain
  • Implemented new flight planning system

68 177

Commercial, marketing and product offering

  • Product offering optimization
  • Working with partners to release synergies

114 165

Total

827 1,848

#FOCUS2019: Raising full-year target to NOK 2.3 billion

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Continuing to deliver on strategic changes

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Fuel is the largest variable expense and accounted for 30 percent of costs in 2018

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1) Numbers presented are annualised numbers on a December year-end basis due to the different reporting standards of the peer companies 2) 2019 full year estimated with a forward fuel cost at 626 USD/MT as per 12.12.2019

601 569 639

20 40 60 80 100 120 140 200 400 600 800 1000 1200 2014 2015 2016 2017 2018 2019 2020

Jet fuel price and effective fuel price including hedging1

JET1NECC INDEX SAS easyJet Ryanair Norwegian Brent Brent forward Jet fuel (USD/MT)

885 526 859 719 560 582 728 568 672 580 514 498 614

Hedging ratio 12m fwd at FY reporting SAS 80 % 45 % 43 % 52 % 62 % n.a. easyJet 83 % 81 % 75 % 65 % 68 % n.a. Ryanair 90 % 95 % 90 % 90 % 90 % n.a. Norwegian 50 % 52 % 25 % 35 % 00 % n.a.

2

Brent (USD per BOE)

674 605 685 647

2021

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Impact of MAX grounding and engine issues

Status and impact from MAX grounding

18 aircraft grounded 12 March 2019 16 new deliveries deferred Estimated negative impact on P&L of NOK 1 billion for 2019 Discussions on compensation and new delivery schedule

Engine issues Dreamliners

Estimated negative impact on P&L of NOK 300 million for 2019

Credit card acquirers

Onboarded two new acquirers in Q4 plus a new account-to-account solution In discussions with existing acquirers

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Significant actions to increase financial headroom while transforming the business

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Ongoing Sept Oct

#Focus2019

Target achieved through continuous cost focus and revised target to NOK 2.3 billion

Sale of NOFI

Completed sale of shares with final settlement in Q4 and cash release of NOK 0.9 billion

Partnership

Letter of intent for partnership with JetBlue

Deferring deliveries

Restructuring of aircraft orders reducing capex by NOK 22.0 billion for 2019 and 2020

Bond maturity

NOK 3.4 billion extended with

  • approx. 2 years

compared to

  • riginal maturity

dates

Sale of aircraft

Concluded 24 AC for 2019 and 2020 with net liquidity effect of NOK 2.2 billion

Aug

Joint Venture

Established joint venture with CCBLI reducing capex by NOK 13.7 billion

Based on exchange rate USD/NOK of 9.10.

Sale of Argentina

Sold Argentinian subsidiary to JetSMART

Capital raise

Private placement of NOK 1.1 billion and CB

  • f USD 150 million.

This comes on top of NOK 3 billion rights issue in Q1 2019

Dec Nov

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Sold a total 24 aircraft with net proceeds of NOK 2.2 billion in 2019 and 2020

NUMBER OF AIRCRAFT BASED ON ANNOUNCED SALES

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Fleet (2020 vs. 2018) Aircraft sales* Aircraft re-deliveries Aircraft deliveries Net development Short haul 22 9 16

  • 15

Long haul 9 9 Total 22 9 25

  • 6

* In addition, the company sold two Airbus A320neo in Q1 2019 that were on external lease.

787-8/9 Owned 737-800 Owned 737-800 Leased 787-8/9 Leased 737 MAX 8 Leased 737 MAX 8 Owned 62 61 61 61 61 57 55 54 53 52 51 47 45 40 30 30 30 30 4 4 4 4 4 4 4 4 4 14 14 14 14 14 19 19 23 30 22 24 25 26 26 26 26 26 26 10 10 11 11 11 14 15 15 15 164 164 162 161 156 150 149 152 158 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20

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NEXT steps

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Fly Norwegian

Book tickets at Norwegian.com