Presentation of results for Q1

Norwegian Air Shuttle ASA
Q1 2016 Presentation
21 April 2016
Highlights Q1 2016
Launched new routes to/from Paris and the
USA (LAX, NYC and FLL) and a short haul
base in Rome, Italy
Norwegian Reward reached 4 million
members
Tentative approval of NAI by the US
Department of Transportation (DoT)
Added five new 737-800 aircraft and one
787-9 Dreamliner to the fleet
Clean EBITDA improved by NOK 400 million
2
5.8 million passengers in Q1 2016 (+18 %)
7
+ 18 %
6
5
4
Passengers (million)
3
Pax (mill)
2
1
0
Q1 07
Q1 08
Q1 09
Q1 10
Q1 11
Q1 12
Q1 13
Q1 14
Q1 15
Q1 16
1,3
2,0
2,1
2,7
3,1
3,6
3,9
4,9
4,9
5,8
3
Q1 load factor up to 85 % (+2 p.p.)
17 % growth in capacity (ASK)
21 % growth in traffic (RPK)
Average flying distance increased by 4 %
ASK
18 000
Load Factor
17 000
16 000
83,0 %
15 000
14 000
74,8 %
77,2 %
74,8 %
75,1 %
74,3 %
77,2 %
76,1 %
Load
+2 p.p.
100%
85,1 %
90%
77,3 %
80%
13 000
70%
12 000
11 000
60%
10 000
9 000
50%
40%
7 000
6 000
30%
5 000
4 000
20%
3 000
2 000
10%
1 000
0
Q1 07
Q1 08
Q1 09
Q1 10
Q1 11
Q1 12
Q1 13
Q1 14
Q1 15
Q1 16
ASK
1 342
2 183
2 674
3 507
4 498
5 266
6 378
9 421
10 056
11 803
Load Factor
74,8 %
77,2 %
74,8 %
75,1 %
74,3 %
77,2 %
76,1 %
77,3 %
83,0 %
85,1 %
0%
4
Load Factor
Available Seat KM (ASK)
8 000
Holding or growing market shares in all key
airports (last 12 months)
+ 1,034,000 pax
41 % mkt share
10 000 000
8 000 000
+ 680,000 pax
+ 398,000 pax
6 000 000
+ 715,000 pax
4 % mkt share
17 % mkt share
22 % mkt share
+ 566,000 pax
10 % mkt share
4 000 000
+ 171,000 pax
13 % mkt share
2 000 000
0
Oslo
Arlanda
Copenhagen
Helsinki
Gatwick
Spanish bases
Mkt. Size:
25 mill
Mkt. Size:
21 mill
Mkt. Size:
27 mill
Mkt. Size:
17 mill
Mkt. Size:
40 mill
Mkt. Size:
135 mill
Q1 11
Q1 12
Q1 13
Q1 14
Q1 15
Q1 16
5
Sources: Avinor, Swedavia, Copenhagen Airports, Finavia, Gatwick Airport, Aena
23 % revenue growth in Q1
25 % growth in international revenue, + 15 % for domestic Scandinavia
Unit revenue up by 5 % driven by yield (+2 %) and load (+2 p.p) offset by
increased stage length
6 000
+ 23 %
5 000
4 000
Domestic revenue
3 000
International revenue
NOK million
2 000
Total Revenues
1 000
0
Q1 13
Q1 14
Q1 15
Q1 16
Revenues
Domes ti c revenue
2 904
1 043
3 551
1 032
4 034
981
4 961
1 130
% y.o.y. chg
Interna ti ona l revenue
% y.o.y. chg
20 %
-1 %
-5 %
15 %
1 861
2 519
3 053
3 831
25 %
35 %
21 %
25 %
6
19 % growth in ancillary revenue in Q1
16 % share of Group revenue
1 % growth per passenger
NOK 138
NOK 136
Flexibility/
modifications
Pre-sold
packages
(bundle)
Flexibility/
modifications
Pre-sold
packages
(bundle)
Optional
extras
Seating
Seating
Baggage
Baggage
Other Ancillary
Other Ancillary
Q1 15
Q1 16
7
Strongest growth in USA and Spain
Growing share of revenue in USD, GBP and Euro
Norway now reduced to 35 % of group passengers
Over 40% of passengers booking from outside Scandinavia
Hungary
France
Italy
Poland
Germany
USA
USA
Spain
Hungary
Other
Norway
Finland
France
Sweden
UK
UK
Norway
Italy
Denmark
Denmark
Finland
0%
10%
20%
30%
40%
50%
60%
Spain
Sweden
8
New corporate contracts boosting sales
Revenue from corporate agreements Q1:
•
Norway
up by 22 % y-o-y
•
Sweden
up by 17 % y-o-y
Corporate contracts signed in Q1 2016:
Forsvaret (Norwegian army)
•
Four year contract from February for 17,000 employees
(Norwegian only)
NAV (Norwegian Labour and Welfare Administration)
•
Two year contract + option to extend 2 x 1 year, for 19,000
employees (Norwegian only)
HINAS (Norwegian health care system)
•
Three year contract from April, 13 domestic routes for
employees and patients
Retail
Consultants
Construction
Health Care
IT/Telecom
Bank/Finace
Public sector
Industrials
Media
Oil/Offshore
Change
65 %
38 %
24 %
18 %
13 %
13 %
10 %
9%
-2 %
-4 %
9
Reported earnings: lower fuel offset by currency
(NOK million)
Q1 15
Q1 16
Change
Revenue
4 034
4 961
EBITDAR
69
63
-6
EBITDA
-502
-606
-104
Pre-tax profit (EBT)
-776
-992
-216
Net profit
-538
-800
EBT development Q1
EBITDAR development Q1
500
400
200
438
-50
-160
300
-300
NOK million
NOK million
200
100
69
0
63
-550
-813
-800
-776
-100
-992
-200
-300
EBITDAR margin
-1 050
-215
Q1 13
Q1 14
Q1 15
Q1 16
15 %
-6 %
2%
1%
-1 300
EBT margin
Q1 13
Q1 14
Q1 15
Q1 16
-6 %
-23 %
-19 %
-20 %
10
Underlying EBITDA* up by NOK 400 million
NOK million
Revenue
EBITDA as reported
Other losses/gains
EBITDA excl other losses/gains
Q1 2015
Q1 2016
chg
4 034
-502
3
-505
4 961
-606
-528
-78
926
-104
-531
426
-110
-19
-129
-112
-112
-376
34
-9,3 %
0,7 %
Non-recurring items:
- strik e
- wetlease
Sum non-recurring items
Clean EBITDA
Margin clean EBITDA
* Underlying (clean) EBITDA adj for other losses/gains and non-recurring items
409
11
Unit cost cut by 5 %
CASK ex fuel +1 % to NOK 0.35 on currency
0,55
0,50
0,16
CASK excl fuel
0.15
0,11
0,11
0,45
Operating cost EBITDA level per ASK (CASK)
Fuel share of CASK
0,12
0,15
0,40
0,13
0,14
0,10
0,07
0,35
0,30
0,25
0,46
0,45
0,20
0,15
0,40
0,44
0,37
0,36
0,33
0,32
Q1 13
Q1 14
0,35
0,35
Q1 15
Q1 16
0,10
0,05
0,00
Q1 07
Q1 08
Q1 09
Q1 10
Q1 11
Q1 12
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.
12
Fuel share of opex reduced to 15 % (23% in Q115)
0,16
Sales/
distrib.
2%
Fuel
15 %
Depr.
4%
0,14
Other Flight
ops. exp.
4%
0,12
Personnel
16 %
Gen. and
adm. exp.
5%
Technical
7%
Fuel
0,10
0,08
Leasing
12 %
Airport & ATC
12 %
Handling
10 %
Personnel
Airport/ATC
0,06
Handling
Leasing
Other
0,04
Technical
7 % negative impact of currency
Fuel hedging:
Depreciation
0,02
Sales &
Distribution
• 50 % of 2016
• 27 % of 2017
0,00
Q1 11
Q1 12
Q1 13
Q1 14
Q1 15
Q1 16
12 mths rolling 12 mths rolling 12 mths rolling 12 mths rolling 12 mths rolling 12 mths rolling
13
NOK 1 bn higher cash-flow from operations
Invested NOK 1.7 bn in new B737-800 aircraft
NOK 3.2 billion in cash at the end of Q1
NOK million
Q1
2015
Q1
2016
Change
Profit before tax
Depreciation
Air traffic settlement liabilities
Change working capital
Net cash flows from operating activities
-777
220
2 497
-945
996
-992
288
2 954
-243
2 007
-215
68
457
702
1 012
-1 597
196
10
-1 666
375
20
-69
179
10
-396
736
1 132
1 615
3 190
1 574
Net cash flows from investing activities
Net cash flows from financial activities
Foreign exchange effect on cash
Net change in cash and cash equivalents
Cash and cash equivalents, end of period
14
Net debt reduced by NOK 1 bn in the quarter
Added five new 737-800 on balance + PDP’s
NOK 16 bn net debt (reduced from NOK 17bn at the end of 2015)
Equity ratio of 6 % (11 % incl. market value of Bank Norwegian)
33 000
30 000
27 000
Aircraft
18 536
24 000
21 000
10 028
12 512
18 000
PDP and bonds
6 104
NOK million
15 000
12 000
4 103
9 000
6 000
3 000
0
Aircraft
Financing
12 994
Aircraft PDP
5 939
1 615
Other assets
2 139
Receivables
3 180
Cash
3 190
Q1 15
Q1 16
5 134
2 998
Other
liabilities
4 931
Pre-sold
tickets
6 969
4 684
4 311
5 462
Equity
1 986
1 876
Q1 16
Q1 15
15
Aircraft financing on track
Expected capex (all aircraft incl. PDP)
USD 1.1 bn for 2016 (unchanged)
USD 2 bn for 2017
USD 2 bn for 2018
PDP financing
PDP financing with backstop lease B 737 800 (in 1H 2016)
PDP Financing for 50 A320 Neo’s in place
Negotiating PDP financing for Boeing deliveries
Long-term financing
Commercial financing of 6 B 737 800
Ex-Im and ECA
EETC
16
Top modern fleet with an average age of 3.6 years
Deliveries 787-9
+1376 seats
2016:
Deliveries 737-800
+3,162 seats
Re-deliveries 737-800
-744 seats
156
160
7
B788/B789 Owned
140
14
B788/B789 Leased
120
A320neo owned
120
3
9
B737 MAX 8 owned
B738 owned
100
95
B738 S&LB
85
B738 leased
80
B733 leased
57
M80 leased
40
40
20
0
32
8
11
6
4
3
5
1
2
B733 owned
60
2
5
99
12
13
8
11
13
2003
year-end
2004
year-end
2005
year-end
22
2
2
22
7
5
23
20
2006
year-end
8
5
2007
year-end
2008
year-end
46
2
16
5
23
2009
year-end
7
2
21
5
22
2010
year-end
62
15
8
68
30
41
51
85
23
10
13
13
13
23
68
25
29
13
13
29
5
11
5
5
5
5
5
2011
year-end
2012
year-end
2013
year-end
2014
year-end
27
23
19
2015
year-end
2016
year-end
2017
year-end
17
Norwegian Group 2020:
Long-haul to be more than 1.5x today’s short-haul operation
An average 20 % annual growth for the period (CAGR 10 % for SH, 40 % for LH)
An estimated 130 billion ASK in 2020
2016-2020:
140 000
CAGR 20 %
Million seat-kilometres (ASK)
120 000
100 000
2005-2015:
80 000
CAGR 30%
60 000
40 000
20 000
2005
2006
2007
2008
2009
2010
2011
2012
Short Haul
2013
2014
2015 2016E 2017E 2018E 2019E 2020E
Long Haul
18
Based on the current fleet plan. Aircraft replaced after 8 years. Excess capacity leased out or sold.
Summer 2016: 18 crew bases and 106 aircraft
Short haul: 96 aircraft
Long haul: 10 aircraft
LGW
TRD
NO
738: 33
JFK
FLL
BGO
OSL
HEL
ARN
SVG
BKK
DK
738: 8
UK
738: 10
FI
738: 5
SE
738: 13
CPH
LGW
IT
738: 2
ES
738: 25
BCN
FCO
MAD
ALC
AGP
TFS
LPA
19
Launched new long haul routes to Paris
20
Outlook for 2016
Markets and business
Soft macro and passenger tax to be introduced in Norway, strong competition in Denmark
Stable in other key markets
Positive momentum for long-haul
Group bookings ahead of last year, capacity adjusted
An estimated production growth (ASK) of 18 % (unchanged)
Short-haul + 12 %, Long-haul + 40 %
Increasing distance driven by mix (long-haul)
Unit cost in the area of NOK 0.37 (unchanged)
Assumptions: Fuel price of USD 350 per metric ton, USD/NOK 8.25, EUR/NOK 9.00
Based on the current route portfolio and planned production
25 aircraft scheduled for delivery in 2016
Seventeen direct buy B737-800 (returning four leased 737-800)
Four leased B787-9 Dreamliners
Four direct buy A320Neo (to be leased out)
21
Summary
Won several corporate agreements as
businesses want to reduce travel expenses
NAI has received tentative approval from DoT
Bookings ahead of last year
Financing on-track
Unchanged guidance for 2016 on production and
unit cost
Bank Norwegian to be listed on OSE
22
Norwegian operates 447 routes to 138 destinations
From bases in
SWEDEN
DENMARK
FINLAND
From bases in the
USA &
THAILAND
From bases in
NORWAY
From bases in
From the
SPAIN
UK base
23