norwegian air shuttle asa · q3 2013 presentation . ... of mnok 4,878 in q3 2013 ... and/or cost...
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Europe’s best low-cost airline
• Group revenues of MNOK 4,878 in Q3 2013
Double digit revenue growth in Q3
Revenues 2 828 3 376 4 224 4 878Domestic revenue 992 958 1 071 1 072% y.o.y. chg 27 % -3 % 12 % 0 %International revenue 1 836 2 419 3 153 3 806% y.o.y. chg 23 % 32 % 30 % 21 %
0
500
1 000
1 500
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3 000
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5 000
Q3 10 Q3 11 Q3 12 Q3 13
MN
OK
Domestic Revenue (MNOK)
International Revenue (MNOK)
Total Revenues (MNOK)
+ 15 %
2
Europe’s best low-cost airline
Q3 13 Q3 12
EBITDAR MNOK 1 169 1 098
EBITDA MNOK 778 822
EBIT MNOK 638 708
Pre-tax profit (EBT) MNOK 604 873
Net profit MNOK 436 628
Pre-tax profit of MNOK 604 in Q3
Q3 10 Q3 11 Q3 12 Q3 13 Q3 10 Q3 11 Q3 12 Q3 13EBITDAR margin 30 % 36 % 26 % 24 % EBT margin 26 % 20 % 21 % 12 %
840
1 206
1 0981 169
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900
1 000
1 100
1 200
1 300
MN
OK
733
686
873
604
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MN
OK
EBT development Q3 EBITDAR development Q3
3
Europe’s best low-cost airline
• Estimated long-haul wet-lease, fuel & irregularity effects MNOK 101 – Planned wet-lease MNOK 64
– Increased fuel consumption A340 vs B788 MNOK 19
– IRR cost MNOK 18
• Start-up costs Long-Haul, LGW & ALC unadjusted for (business as usual)
Underlying EBT result MNOK 932
4
Europe’s best low-cost airline Extraordinary summer weather affected late bookings
Väderöarna, Bohuslän in Western Sweden, August 23rd 2013 5
Shar
e of
avai
labl
e se
ats
sold
on
typi
cal
leisu
re ro
utes
fro
m th
e No
rdics
(avg
. for
de
partu
re d
urin
g th
e m
onth
of J
uly)
Pre-sale period Departure
Fw d. Bookings (%) 2012
2013
15
17
19
21
23
25
Avg.
dai
ly m
axte
mpe
ratu
re
( °C) p
rece
ding
wee
k (O
slo) -
aver
age
for d
epar
ture
s in
July
2013
2012
1
2
3
4
5
6
7
Avg.
dai
ly p
recip
itatio
n (m
m)
prec
edin
g w
eek
(Oslo
) -av
erag
e fo
r dep
artu
res
in Ju
ly
2013
2012
Europe’s best low-cost airline Ancillary revenue remains a significant contributor
• Ancillary revenue comprises 11 % of Q3 revenues (target 15%)
• NOK 90 per scheduled passenger (an increase of 5 % from last year)
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Europe’s best low-cost airline Cash position of NOK 2.3 billion (+568 million)
Cash flows from operations in Q3 13
Cash flows from investing activities in Q3 13
Cash flows from financing activities in Q3 13
Cash and cash equivalents at period-end MNOK 2 303
MNOK -68
MNOK -618
MNOK 67 (MNOK 460)
(MNOK -565)
(MNOK 267)
(MNOK 1735)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWUnaudited
Q3 Q3 YTD YTD Full Year(Amounts in NOK million ) 2013 2012 2013 2012 2012
Net cash flows from operating activities 67.4 459.7 2 113.4 1 575.1 2 021.6
Net cash flows from investing activities -617.9 -564.9 -1 161.4 -1 220.1 -2 765.5
Net cash flows from financial activities -67.9 267.4 -378.2 276.1 1 369.4
Foreign exchange effect on cash -1.7 -1.8 -1.9 -1.3 0.3
Net change in cash and cash equivalents -620.1 160.4 571.9 629.8 625.8Cash and cash equivalents in beginning of period 2 922.9 1 574.4 1 730.9 1 104.9 1 104.9
Cash and cash equivalents in end of period 2 302.9 1 734.8 2 302.9 1 734.8 1 730.9
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Europe’s best low-cost airline Equity improved by MNOK 561 compared to last year
• Total balance of NOK 14.4 billion
• Net interest bearing debt NOK 3.4 billion (2.7)
• Equity of NOK 2.9 billion at the end of the third quarter
• Group equity ratio of 20 % (22 %)
1 735Cash2 303
1 562
Receivables2 047
7 611
Non-current assets
10 011
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
Q3 12 Q3 13
MN
OK Equity
2 940 2 379
Pre-sold tickets2 530
1 763
Othercurrent
liabilities3 505
2 312
Long term liabilities
5 386
4 454
Q3 13 Q3 12
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Europe’s best low-cost airline High load factor maintained on 31 % capacity growth
• Average flying distance up 11 %
ASK 683 1 033 1 694 2 333 3 590 3 979 5 331 6 480 7 780 10 223
Load Factor 68.5 % 86.4 % 84.7 % 86.1 % 81.8 % 82.2 % 80.5 % 84.4 % 82.6 % 81.4 %
68.5 %
86.4 % 84.7 % 86.1 %81.8 % 82.2 % 80.5 %
84.4 % 82.6 % 81.4 %
0
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0
1 000
2 000
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7 000
8 000
9 000
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11 000
Q3 04 Q3 05 Q3 06 Q3 07 Q3 08 Q3 09 Q3 10 Q3 11 Q3 12 Q3 13
Load
Fact
or
Avai
labl
e Se
at K
M (A
SK)
ASK Load Factor + 31 %
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Europe’s best low-cost airline Passenger record in Q3
• 6.0 million passengers
• An increase of 800,000 passengers
Pax (mill) 0.5 0.9 1.5 2.0 2.6 3.1 3.8 4.6 5.2 6.0
0.00
1.00
2.00
3.00
4.00
5.00
6.00
Q3 04 Q3 05 Q3 06 Q3 07 Q3 08 Q3 09 Q3 10 Q3 11 Q3 12 Q3 13
Pass
enge
rs (m
illio
n)
+16 %
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Europe’s best low-cost airline Highest growth at London Gatwick
MarketshareOslo Airport
(OSL)
MarketshareStockholm Airport
(ARN)
MarketshareCopenhagen Airport
(CPH)
MarketshareHelsinki Airport
(HEL)
Marketshare Int'lGatwick Airport
(LGW)
Marketshare Int'lSpanish bases
(AGP, LPA, ALC)Q3 08 29 % 10 % 2 % 0 % 0 % 2 %Q3 09 35 % 12 % 8 % 0 % 2 % 3 %Q3 10 39 % 14 % 10 % 2 % 3 % 3 %Q3 11 38 % 19 % 11 % 8 % 4 % 4 %Q3 12 37 % 21 % 15 % 10 % 4 % 5 %Q3 13 39 % 23 % 17 % 12 % 6 % 6 %
0 %
5 %
10 %
15 %
20 %
25 %
30 %
35 %
40 %
+ 231,000 pax
+ 212,000 pax
+ 131,000 pax
+ 119,000 pax
+ 243,000 pax + 149,000 pax
• Increasing market share in all Nordic markets
• Norwegian accounted for 90 % of growth at London Gatwick
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Gatwick total market: +271,000 Norwegian at Gatwick: +243,000
Europe’s best low-cost airline Unit cost excluding fuel down 3 %
• Underlying unit cost down 7 % – Excl. fuel hedge, EUR & USD effect MNOK 65
– Excl. Long-Haul wet lease, fuel & IRR costs MNOK 101
Cost per ASK (CASK) (NOK)CASK ex. fuel 0.29
0.41 0.400.27
0.410.270.41
0.28
0.29
0.27 0.28 0.27
0.11
0.14 0.15
0.13
0.25
0.30
0.35
0.40
Q3 10 Q3 11 Q3 12 Q3 13
Ope
ratin
g co
st E
BITD
A le
vel p
er A
SK (C
ASK)
Fuel share of CASK
CASK excl fuel
-3%
-3%
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 amd 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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Europe’s best low-cost airline
• Uniform fleet of Boeing 737-800s • Overheads • 3 new 737-800 delivered in Q3 (13 y.o.y.)
Aiming for FY CASK NOK 0.25 excluding fuel
• Flying cost of 737-800 lower than 737-300 • 737-800 has 38 “free” seats • Unchanged unit fuel consumption in Q3 due
to A340-300 wet lease
Scale economies New more efficient aircraft Growth adapted to int’l markets
Crew and aircraft utilization Optimized average stage length Automation
• Fixed costs divided by more ASKs • Frequency based costs divided by more ASKs • Q3 sector length up by 11 %
• Cost level adapted to local markets • Outsourcing/ Off-shoring
• Rostering and aircraft slings optimized • Q3 utilization of 12.2 BLH pr a/c (+0.3 BLH)
• Self check-in/ bag drop • Automated charter & group bookings • Streamlined operative systems & processes
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Europe’s best low-cost airline
dBGO OSL HEL
TRF
LONDON(Gatwick)
AES
TOS
GOTAAL
SVGARN
CPH
TRD
DBVSPUNCE
IBZ
BCNPMI
ALCAGPFAO
FUETFS
FCO
ACELPA
BUD
CFU
JTRCTA LCALAX
FLL
JFK
In operationCapacity increaseNew S14
London: Growth on short-haul & adding long-haul
14
Europe’s best low-cost airline
• JFK with most departures in Norwegian’s long-haul network
• 15 weekly roundtrips from NYC to Europe from summer 14
New crew bases in New York and Florida
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OAKSan Francisco
LAXLos Angeles
FLLFt. Lauderdale
MCOOrlando
BKKBangkok
ARNStockholm
OSLOslo
CPHCopenhagenJFK
New York
LGWLondon
Europe’s best low-cost airline Competitors are national airlines flying internationally
“Other European Companies” have a very different business model
«Other European companies are capable of coping without creating this kind of creative corporate structures»
Petter Førde, Chairman, Norwegian Pilots Association
Majority of members fly for SAS and other competitors (Mr. Førde flies for Widerøe)
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Europe’s best low-cost airline
1
3W
3
BGO
TRD
13 +2
5
+1
15
+2
SVG
HAU
KRS
AESMOL
4
+1
ANX
EVE
TOS
BDU
+1
5
6
+1
ALF
KKN
LYR
+12
BOO
OSL
TRF
+215
1
S
52
3
2
S
LKL
4
Improved product in all Scandinavian domestic markets
6+1
4
S
6
5
ARN
GOT
MMX
UME
LLA
KRN
VBY
1
+1
Route with more departures S14 vs S13Route with no change S14 vs S13
New daily number of departures
Change from S13 to S14
Weekly number of departures
Seasonal
15
+2
3W
S
17
Europe’s best low-cost airline Current committed fleet plan
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Deliveries 787-8+1,164 seats
2014:Deliveries 737-800
+2,046 seatsRe-deliveries 737-300
-592 seats
Europe’s best low-cost airline
• Wet leased aircraft with 50 % higher fuel consumption per seat
• MNOK 80 in savings - per airplane - per year
Dreamliner saves 40 tons of fuel roundtrip Bangkok
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Europe’s best low-cost airline
• Business environment – Economic uncertainty in parts of Europe
– Seasonal fluctuations
– Yield pressure from capacity investment
• Production
– The company expects a production growth (ASK) of 32% (Previously “in excess of 30%”)
• Increasing the fleet by adding 737-800’s
• Utilization and distance increase short-haul driven by UK and Spanish bases
• Launch of long-haul operations
– Capacity deployment depending on development in the overall economy and marketplace
• Cost development
– Unit cost expected in the area of 0.42 • Excluding hedged volumes
• Fuel price dependent – USD 950 pr. ton
• Currency dependent – USD/NOK 5.75
• Production dependent
• Based on the currently planned route portfolio
Expectations for 2013 (Group)
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Europe’s best low-cost airline
• The company expects a production growth (ASK) of 40 % – Utilization and distance increase driven by UK and Spanish bases and long-haul
– Continuous optimization of the route portfolio
• Unit cost target in the area 0.40
– Fuel price dependent – USD 950 per ton
– Currency dependent ● USD/NOK 6.00 ● EUR/NOK 7.75 ●
– CASK 2014 target approximately 0.385 on 2013 fuel & ccy assumptions
– Production dependent
– Based on the current route portfolio
Expectations for 2014 (Group)
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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 401 scheduled routes to 124 destinations in
38 countries