q1 2015 presentation - norwegian · q1 2015 presentation photo: bo mathiesen. europe’s best...

Europe’s bestlow-cost airline

Norwegian Air Shuttle ASAQ1 2015 Presentation

Photo: Bo Mathiesen

Europe’s bestlow-cost airline2013 & 2014

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• New aircraft

– Two new 737-800

– One new Dreamliner (April)

• Progress for long-haul

• Launched new routes to the

Caribbean and USA

• Pilot strike

• Net profit improved to

MNOK -538 (MNOK +57)

Q1 2015 Highlights


• 21 % revenue growth for international flights

• Domestic reduced due to strike and reduced winter program

Q1 revenue increased by 14 %

Revenues 2 360 2 904 3 551 4 034

Domestic revenue 872 1 043 1 032 981

% y.o.y. chg 12 % 20 % -1 % -5 %

International revenue 1 488 1 861 2 519 3 053

% y.o.y. chg 33 % 25 % 35 % 21 %

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

Q1 12 Q1 13 Q1 14 Q1 15

MN

OK

Domestic Revenue

(MNOK)

International Revenue

(MNOK)

Total Revenues

(MNOK)

+ 14 %

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Europe’s bestlow-cost airline2013 & 201429 % growth in ancillary, now at 17% of group revenue

• Category (per pax)

• Short Haul + 21% y.o.y

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Q1 15 Q1 14

EBITDAR MNOK 69 -215

EBITDA MNOK -502 -615

EBIT MNOK -722 -777

Pre-tax profit (EBT) MNOK -776 -813

Net profit MNOK -538 -595

EBITDAR improved by MNOK 284 on higher load and Easter

EBT development Q1EBITDAR development Q1

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• Deviation explained by lost revenue due to strike

• Long-haul regularity improved

• Not included: currency gain on assets of MNOK 284 booked to equity

Contribution from lower fuel cost offset by currency

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Europe’s bestlow-cost airline2013 & 2014Weaker cash-flow explained by strike

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• NOK 1 billion cash-flow from operations – seasonal increase in pre-sold tickets

• Added two brand new Boeing 737-800 aircraft in Q1

• NOK 1.6 billion available cash at 31 March

Europe’s bestlow-cost airline2013 & 2014Balance sheet boost by currency and new aircraft

3 160 Cash

1 615

2 448Receivables

2 998

11 690

Non-current

assets

21 749

0

3 000

6 000

9 000

12 000

15 000

18 000

21 000

24 000

27 000

Q1 14 Q1 15

NO

K m

illi

on

Equity

1 8762 119

Pre-sold

tickets

5 4624 695

Other

current

liabilities

6 8773 049

Long term

liabilities

12 147

7 434

Q1 15 Q1 14

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• NOK 5.5 bn capex the last 12 months

• Added eight new 737-800 and one 787 on balance

• Assets up by NOK 4 billion on FX from Q1 last year

• Bank Norwegian - BV: MNOK 246, MV: MNOK 1,020

Europe’s bestlow-cost airline2013 & 2014Strong Q1 load factor

• Load factor increased to 83 % (+ 6 p.p.)

• 15 % traffic growth (RPK)

• Average flying distance up by 10 %

ASK 933 1 342 2 183 2 674 3 507 4 498 5 266 6 378 9 421 10 056

Load Factor 76,8 % 74,8 % 77,2 % 74,8 % 75,1 % 74,3 % 77,2 % 76,1 % 77,3 % 83,0 %

76,8 %74,8 %

77,2 %74,8 % 75,1 % 74,3 %

77,2 % 76,1 % 77,3 %

83,0 %

0%

20%

40%

60%

80%

100%

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

11 000

12 000

Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15

Lo

ad

Fa

cto

r

Av

aila

ble

Se

at

KM

(A

SK

)

ASK Load Factor+ 7 %

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Europe’s bestlow-cost airline2013 & 20145 million passengers in Q1 2015

270,000 long-haul passengers in the first quarter

Pax (mill) 1,0 1,3 2,0 2,1 2,7 3,1 3,6 3,9 4,9 4,9

0,00

1,00

2,00

3,00

4,00

5,00

6,00

Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 Q1 15

Pa

sse

ng

ers

(m

illio

n)

+ 2 %

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• Over 1 million members in Norway

• Roll-out in new markets: added 800,000 new Reward members since Q1 14

• CashPoints: Strong growth from external partners

Norwegian Reward at 3.2 million members

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Growth in UK and Spain (+320,000 pax) - Norway and Sweden hit by strike (-190,000 pax)

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Cost per ASK (CASK) (NOK)

CASK ex. fuel 0,33

0,47

0,32

0,45

0,35

0,45

0,36

0,50

0,36

0,330,32

0,35

0,15

0,13

0.15

0,10

0,20

0,25

0,30

0,35

0,40

0,45

0,50

Q1 12 Q1 13 Q1 14 Q1 15

Op

era

tin

g c

ost

EB

ITD

A le

ve

l p

er

AS

K (

CA

SK

)

Fuel share of CASK

CASK excl fuel

Flat unit cost y.o.y

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. 13

Europe’s bestlow-cost airline2013 & 2014Operating expenses - potential to cut unit cost further

• Key drivers to reduce unit costs:

– Replace older leased aircraft (Fuel, Tech, Handling, Airport/ATC &

Personnel)

– Larger scale (Overhead, Sales & distr., Personnel)

– Further automation (Overhead, Personnel, Handling, Sales & distr.)

– Higher utilization (Leasing, Depreciation)

– Global operations (Personnel, Handling, Airport, Overhead)

Co

st p

er

sea

t p

er

KM

(N

OK

)

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Europe’s bestlow-cost airline2013 & 2014Lowest cost always wins

• 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 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.

Sources: Norwegian Q3 2014 report (period displayed October 2013 – September 2014), SAS Interim Reports (including latest May 2014 – July 2014). Figures as reported in respective quarters and not restated - Scandinavian Airlines (SK) only from February 2013 – October 2014, SAS Group figures from November 2013 – April 2014 after divestment of Widerøe. Finnair Plc. Annual Report 2013 and Finnair Group Financial Statements Bulletin 2013 (period displayed January 2013 – December 2013), Ryanair Annual Report 2014 (period displayed April 2013 – March 2014), easyJet 2013 full year results statement and Annual Report 2013 (period displayed October 2012 – September 2013), Air Berlin Annual Report 2013, IAG Annual Report 2013 (period displayed for Vueling from April 26th 2013 to through December 2013) and Norwegian’s estimations.

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8 58 11 1320

2223

23 22

115 5

2

2 5

5 5

5

5 5

5

7 16 21

23

2529

29

2720

16

2

810

13

13

13

1313

2

7 1523

30 4151 68

83

2

4

12

2

55

9

12

1

23

3

3

811 13

22

32

40

46

5762

68

85

9599

117

141

0

20

40

60

80

100

120

140

2003

year-end

2004

year-end

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year-end

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year-end

2007

year-end

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year-end

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2012

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2013

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2014

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2015

year-end

2016

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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

Youngest fleet in Europe with an average age of 4 years

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Europe’s bestlow-cost airline2013 & 2014Building a fleet of seventeen Dreamliners by 2018

One 787-8 delivered in AprilSeven 787-8 in operation Nine 787-9 on firm order

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Europe’s bestlow-cost airline2013 & 2014Long haul

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Europe’s bestlow-cost airline2013 & 2014To the US and Caribbean from London and Scandinavia

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“It (Chinese tourism) might be the biggest

phenomenon to hit the global travel industry since

the invention of commercial flight” –

Competition becomes Global

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• Business environment

– Bookings for 2015 are ahead of last year (capacity adjusted)

– Stable market in the Nordic region

– Tough competition in continental Europe on short haul driven by new capacity

– Good progress 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

Expectations for 2015 (Group)

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Summary

• Bookings for 2015 ahead of last year

• An estimated NOK 2 billion lower fuel cost for 2015

• Start-up of long haul on-track, improving regularity for the Dreamliner

• Aiming for further unit cost reductions

• Bond issue NOK 750 - 1,250 million mandated

From bases in NORWAY From bases in SWEDEN DENMARK

FINLAND

From the UK baseFrom bases in SPAIN

From bases in the USA & THAILAND

Norwegian offers 425scheduled routes to 130 destinations in

39 countries

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q1 2015 presentation - norwegian · q1 2015 presentation photo: bo mathiesen. europe’s best...

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