[PPT] - Norwegian Air Shuttle ASA Q1 2017 Presentation 27 April 2017 PowerPoint Presentation

SLIDE 1

Norwegian Air Shuttle ASA

Q1 2017 Presentation 27 April 2017

SLIDE 2

Highlights Q1 2017

Launched 39 new routes for spring/summer 2017, including new intercontinental routes with the MAX Ranked the 31st most valuable airline brand in the world (up from 44th last year) by Brand Finance This year’s UNICEF flight went to Mali in Africa, carrying 13 tons of emergency aid and school supplies Added seven new Boeing 737-800’s and one 787-9 Dreamliner to operations Leasing operation received one Airbus 320neo in March (to a total three aircraft) 4 % lower unit cost ex. fuel (+4 % incl. fuel) A soft first quarter with EBITDA ex. other losses/gains negative by NOK 1.1 bn on higher fuel cost and lower unit revenue due to currency and impact of Easter

2

SLIDE 3

6.7 million passengers in Q1 (+14 %)

3

Pax (mill) 2.0 2.1 2.7 3.1 3.6 3.9 4.9 4.9 5.8 6.7

1 2 3 4 5 6 7 8

Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Q1 17

Passengers (million)

+ 14 %

SLIDE 4

Stable Q1 load factor of 84 % (85 %)

4

ASK 2,183 2,674 3,507 4,498 5,266 6,378 9,421 10,056 11,803 14,649 Load Factor 77.2 % 74.8 % 75.1 % 74.3 % 77.2 % 76.1 % 77.3 % 83.0 % 85.2 % 84.4 % 77.2 % 74.8 % 75.1 % 74.3 % 77.2 % 76.1 % 77.3 % 83.0 % 85.2 % 84.4 %

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 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 16,000 17,000 18,000

Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Q1 17

Load Factor Available Seat KM (ASK)

ASK Load Factor

Load

0.8 p.p.

24 % growth in capacity (ASK) 23 % growth in traffic (RPK) Average flying distance increased by 6 %

SLIDE 5

Continued growth in all key airports

5

Source: 12 month rolling passengers as reported by Avinor, Swedavia, Copenhagen Airports, Finavia, Gatwick Airport, Aena

SLIDE 6

Strongest growth rate in US, Spain and France 6 % passenger growth in the Nordics

Growth in number of passengers in Q1 17 (y/y): Split passengers by origin in Q1 17:

Continued passenger growth in US and Spain

6

SLIDE 7

7

Q1 unit passenger revenue -17 % to 0.28 (-13 % in constant currency) 15 % growth in ancillary revenue (flat NOK 138 per passenger) Other revenue driven by Reward, Cargo, external leasing and SLB gains

9 % revenue growth in Q1

Total revenue 2,904 3,551 4,034 4,961 5,406 Passenger 2,473 2,900 3,221 3,971 4,074 % y/y chg

24 % 17 % 11 % 23 % 3 %

Ancillary 338 523 676 802 919 % y/y chg

13 % 55 % 29 % 19 % 15 %

Other 93 128 137 188 413 % y/y chg

52 % 38 % 7 % 37 % 120 %

1,000 2,000 3,000 4,000 5,000 6,000 7,000

Q1 13 Q1 14 Q1 15 Q1 16 Q1 17

NOK million + 9 %

SLIDE 8

Growth driven by both new routes and frequency

8

Total ASK growth of 20 % the last 12 months Balanced growth on increased frequency and new routes

44000 46000 48000 50000 52000 54000 56000 58000 60000 ASK Q116 12 mths rolling New routes Closed routes Frequecy changes New routes Frequency changes ASK Q117 12 mths rolling

SLIDE 9

Launched 12 new routes with the 737 MAX

9

SLIDE 10

Intercontinental routes for summer 2017

10

SLIDE 11

Adding nine 787-9 Dreamliners in 2017

11

2013 2014 2015 2016 2017 2018 Aircraft 3 7 8 12 21 32 Seats 873 2 037 2 328 3 704 6 800 10 584 Deliveries 787-8

(291 seats)

Deliveries 787-9

(344 seats)

Widebody aircraft

(delivered and firm orders)

Q1 Q2 Q3 Q4

SLIDE 12

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 21 23 25 29 29 27 23 19 15 14 2 8 10 13 13 13 17 29 29 29 2 7 15 23 30 41 51 64 69 71 71

6 16 32

2 5 5 9 14 20 20 1 2 3 3 7 12 17

8

6 8 11 13 22 32 40 46 57 62 68 85 95 99 116 144 163 191

20 40 60 80 100 120 140 160 180 200 2002 year-end 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 2018 year-end 2019 year-end

A321LR owned B787-8/B787-9 owned B787-8/B787-9 leased B737 MAX 8 owned B737-800 owned B737-800 S&LB B737-800 leased B737-300 owned B737-300 leased M80 leased

Adding 32 new aircraft in 2017

12

2017: Deliveries 787-9 +3,096 seats Deliveries 737-800 and 737 MAX +4,296 seats Re-deliveries 737-800

744 seats

SLIDE 13

Financials

13

SLIDE 14

Q1 14 Q1 15 Q1 16 Q1 17 EBT margin

1 %
8 %
1 %

2 %

215
1,592
141

652

2,000
1,600
1,200
800
400

400 800 NOK million

Q1 14 Q1 15 Q1 16 Q1 17 EBT margin

23 %
19 %
20 %
34 %
813
776
992
1,848
2,000
1,750
1,500
1,250
1,000
750
500
250

NOK million

Q1 impacted by higher fuel cost and lower RASK

14 EBT development Q1 12 mths rolling EBT development Q1

(NOK million) Q1 17 Q1 16

Chg

12 mths rolling

Q1 17

12 mths rolling

Q1 16

Chg

Revenue 5,406 4,961

446

26,500 23,417

3,083

EBITDAR (607) 63

(670)

5,289 3,688

1,600

EBITDA (1,338) (606)

(732)

2,385 1,377

1,008

Pre-tax profit (EBT) (1,848) (992)

(856)

652 (141)

793

Net profit (1,492) (800)

(691)

444 (16)

459

SLIDE 15

Less impact of wetlease and hedging

15

* Clean EBITDA: Reported EBITDA adj. for other losses/gains and non-recurring items

NOK million Q1 17 Q1 16

Chg

12 mths rolling

Q1 17

12 mths rolling

Q1 16

Chg

Revenue 5,406 4,961

446

26,500 23,417

3,083

EBITDA as reported

1,338
606
732

2,385 1,377

1,008

Other losses/gains

255
528

273

849

1,005

1,854

EBITDA ex. other losses/gains

1,083
78
1,004

1,536 2,382

846

Non-recurring items:

industry action
110
net of gain SLB and writedown assets for sale

151 255

52
wetlease
69
112
486
157

Sum non-recurring items 82

112
231
319

Clean EBITDA

1,165

34

1,199

1,767 2,701

934

Margin clean EBITDA

21.5 %

0.7 % 6.7 % 11.5 %

SLIDE 16

EBITDA bridge Q1 2017 vs last year

16

* Ex. other losses/gains

1600
1400
1200
1000
800
600
400
200

EBITDA* Q1 16 Increased fuel price Yield change Load change Gain from SLB Other EBITDA* Q1 17

78
1,083

Passenger tax Norway

SLIDE 17

Q1 split of unit revenue and cost by currency

Currency split RASK: Currency split CASK:

17

SLIDE 18

Q1 unit cost ex. fuel decreased by 4 % to NOK 0.34

2 % lower unit cost ex. fuel in constant currency Unit cost increased by 4 % to NOK 0.44 (6 % in constant currency)

18

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 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.

Cost per ASK (CASK) NOK 0.62 0.56 0.51 0.50 0.50 0.47 0.45 0.45 0.43 0.44 CASK ex. fuel 0.46 0.45 0.40 0.37 0.36 0.33 0.32 0.35 0.35 0.34 0.46 0.45 0.40 0.37 0.36 0.33 0.32 0.35 0.35 0.34 0.16 0.11 0.15 0.12 0.15 0.13 0.14 0.10 0.07 0.10

0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 0.55 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Q1 17

Operating cost EBITDA level per ASK (CASK)

CASK ex. fuel Fuel share of CASK

SLIDE 19

Full impact of lower fuel cost

Higher Fuel cost (+43 % per ASK) driven by price (+53 %) offset by stronger NOK vs USD (3 %) Higher Personnel cost (+2 % per ASK) due to ramp-up of intercontinental

perations. 32 % increase in FTE’s

Lower Airport/ATC (-14 % per ASK), Handling (-3 % per ASK) and Sales and Distribution (-9 % per ASK) per ASK due to increased sector length and currency Lower Leasing cost (-12 % per ASK) due to reduced use of wetlease and currency Higher Technical expenses (+9 % per ASK) on more leased aircraft and price escalation on heavy maintenance

19

0.00 0.02 0.04 0.06 0.08 0.10 0.12 0.14 0.16 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Q1 17 12 mths rolling 12 mths rolling 12 mths rolling 12 mths rolling 12 mths rolling 12 mths rolling

Personnel Other Technical Airport/ATC Leasing Depreciation Sales & Distribution Handling Fuel

SLIDE 20

NOK 1.4 bn cash-flow from operations in Q1

20

Strong liquidity with NOK 4.8 bn in cash at the end of Q1 (+NOK 0.3 bn in undrawn facility) Cash-flow from operations of NOK 2.3 bn the last 12 months Invested NOK 5 bn the last 12 months, of which NOK 4.3 bn is financed with external debt

NOK million Q1 17 Q1 16

Chg

12 mths rolling

Q1 17

12 mths rolling

Q1 16

Chg

Profit before tax

1,848
992
856

652

140

792

Paid taxes 40

40

12

44

56

Depreciation 364 288

76

1,372 1,201

170

Change air traffic settlement liabilities 3,888 2,954

934

1,586 1,506

80

Change working capital

1,045
243
802
1,324

913

2,237

Net cash flows from operating activities 1,399 2,007

608

2,297 3,436

1,139
Net cash flows from investing activities
194
1,666

1,472

5,040
5,276

236

Net cash flows from financial activities 1,226 375

851

4,297 3,461

836

Net change in cash and cash equivalents 2,434 735

1,698

1,554 1,574

20
Cash and cash equivalents, end of period

4,757 3,190

1,568

4,757 3,190

1,568

SLIDE 21

Financing on track

Expected capex (all aircraft incl. PDP)

USD 1.3 bn for 2017 (reduced from USD 1.8 bn) USD 2.1 bn for 2018 (unchanged)

PDP financing / liquidity

PDP financing for 50 Airbus 320neo’s Credit facility (NOK 1 bn) New unsecured bond (SEK 1 bn)

Long-term financing

Export credit guaranteed financing (Ex-Im and ECA) AFIC – guaranteed by a syndicate Sale leaseback (SLB) Commercial banks EETC financing Private placements

21

SLIDE 22

3,190 Cash 4,757 3,180 Receivables 3,893 2,283 Other assets 2,727 5,274 Aircraft PDP 7,128 19,057 Aircraft 22,452

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 Q1 16 Q1 17

NOK million

Equity 2,536 1,986 Pre-sold tickets 8,554 6,969 Other liabilities 4,932 4,931 PDP and bonds 7,547 4,091 Aircraft financing 17,389 15,008

Q1 17 Q1 16

Net debt reduced by NOK 1 bn

22

Added eight new 737-800 and three 320neo’s on balance the last 12 months NOK 20 bn net debt (reduced from 21 bn in Q4 2016) 6 % equity ratio (unchanged y/y). 10 % when adding market value of Bank Norwegian (NOFI)

SLIDE 23

Outlook for 2017

Markets and business

Negative impact from passenger tax in Norway and weaker demand in the UK Negative revenue impact from currency and distance Capacity adjusted booking volumes on par with last year, except some softness in May

An estimated production growth (ASK) of 30 % (unchanged)

737-800 / 737 MAX +20 %, 787-9 Dreamliners +60 % Increasing distance driven by mix

Fuel hedging

52 % of 2017 at USD 494 and 12 % of 2018 at USD 500

Unit cost target of NOK 0.39 to 0.40 (unchanged)

Assumptions: Fuel price of USD 500 per metric ton, USD/NOK 8.25, EUR/NOK 9.00 Impact of NOK 90 million higher fuel cost in Q1 Including impact of additional SLB (leasing is included in CASK) and ramp-up of intercontinental operations Based on the current route portfolio and planned production

32 new aircraft entering operations in 2017

17 Boeing 737-800, six 737 MAX and nine 787-9 Dreamliners (incl. five leased)

23

SLIDE 24

Going forward

Focus on global expansion and strong growth in staff, routes and aircraft European launch customer of the 737 MAX 8 The new intercontinental routes with the MAX well received in the market Startup of US-Spain with 787’s in Q2 Launched new routes from London to Seattle, Denver and Singapore Strong liquidity and reduced capex for 2017

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SLIDE 25

Norwegian operates 482 routes to 133 destinations

25

From bases in

SWEDEN DENMARK FINLAND

From the

UK base

From bases in

SPAIN Intercontinental

From bases in

NORWAY