Q4 2015 Presentation

Norwegian Air Shuttle ASA
Q4 2015 Presentation
11 February 2016
Highlights
Launched routes in Q4 to the Caribbean (Puerto Rico, St Croix,
Martinique, Guadeloupe) and domestic Spain. New base in Italy in
2016
Added 10 new 737-800 aircraft and one 787-8 Dreamliner in 2015
Reached agreement with unions for pilots and cabin crew
EBITDA ex other gains/losses improved to NOK 2 billion from a loss
of NOK 79 million in 2014
2
6.1 million passengers in Q4 2015 (+9 %)
7
+ 9 % 6
5
4
Passengers (million)
3
Pax (mill)
2
1
0
Q4 06
Q4 07
Q4 08
Q4 09
Q4 10
Q4 11
Q4 12
Q4 13
Q4 14
Q4 15
1,3
2,0
2,2
2,8
3,3
4,0
4,4
5,2
5,6
6,1
3
Market shares in key airports (last 12 months)
4
Sources: Avinor, Swedavia, Copenhagen Airports, Finavia, Gatwick Airport, Aena
Q4 load factor increased to 85 % (+4 p.p.)
7 % growth in capacity (ASK)
12 % growth in traffic (RPK)
Average flying distance increased by 4 %
ASK
18 000
Load Factor
Load
+4 p.p. 100%
84,9 %
90%
17 000
16 000
15 000
14 000
77,6 %
76,2 %
76,1 %
77,4 %
78,5 %
76,7 %
77,9 %
80,7 %
80%
72,1 %
13 000
70%
12 000
11 000
60%
10 000
50%
9 000
40%
7 000
6 000
30%
5 000
4 000
20%
3 000
2 000
10%
1 000
0
0%
Q4 06
Q4 07
Q4 08
Q4 09
Q4 10
Q4 11
Q4 12
Q4 13
Q4 14
Q4 15
ASK
1 420
2 122
2 783
3 432
4 516
5 461
6 517
9 176
11 142
11 909
Load Factor
72,1 %
77,6 %
76,2 %
76,1 %
77,4 %
78,5 %
76,7 %
77,9 %
80,7 %
84,9 %
5
Load Factor
Available Seat KM (ASK)
8 000
Q4 revenue increased by 16 %
19 % growth in international revenue, + 5 % for domestic Scandinavia
6 000
+ 16 %
5 000
4 000
Domestic revenue
3 000
International revenue
NOK million
2 000
Revenues
Domes ti c revenue
% y.o.y. chg
Interna ti ona l revenue
% y.o.y. chg
Total Revenues
1 000
0
Q4 12
Q4 13
Q4 14
Q4 15
3 106
1 097
3 786
1 116
4 602
1 201
5 319
1 256
16 %
2 %
8 %
5 %
2 008
2 670
3 401
4 063
26 %
33 %
27 %
19 %
6
Q4 unit revenue up by 7 % +1 % in local currency
Unit Revenue (RASK) improvement driven by higher load factor and currency
Growing share of revenue in USD, GBP and Euro
Less exposure to Norwegian krone
Q4 2015 (NOK 4.3 bn)
Q4 2014 (NOK 3.8 bn)
USD
3 %
USD
6 %
EUR
16 %
EUR
14 %
NOK
40 %
NOK
45 %
SEK
21 %
Other
1 %
GBP
6 %
DKK
10 %
SEK
19 %
Other
1 %
GBP
8 %
DKK
10 %
7
Q4: 17 % growth in ancillary revenue
15 % share of Group revenue
Per passenger: 14 % growth for LH and 2 % for SH driven by
bundle and freedom to choose
8
Q4 EBITDA improved by NOK 603 million
(NOK million)
Q4 14
Q4 15
Revenue
4 602
5 319
EBITDA
-869
-266
EBIT
-1 083
-633
Pre-tax profit (EBT)
-1 184
-703
-978
-373
Net profit
EBITDA development Q4
Change
603
481
EBT development Q4
9
Unit cost cut by 2 % in Q4, -1% for the full year
CASK -2 % to NOK 0.43 on lower fuel cost offset by currency
0,55
CASK excl fuel
0.15 0,50
0,13 Fuel share of CASK
0,15 Operating cost EBITDA level per ASK (CASK)
0,45
0,09 0,11 0,40
0,15 0,15 0,35
0,13 0,10 0,14 0,30
0,25
0,41
0,20
0,15
0,42
0,40
0,36
0,42
0,33
0,30
0,28
0,30
0,32
0,10
0,05
0,00
Q4 06
Q4 07
Q4 08
Q4 09
Q4 10
Q4 11
Q4 12
Q4 13
Q4 14
Q4 15
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.
10
2% reduction in unit cost ex fuel adj. for currency
8 % negative impact of currency
Fuel share of opex reduced to 24 %
11
FY 2015 EBITDA improved by NOK 2.1 bn
(NOK million)
2014
2015
Revenue
19 534
22 491
EBITDA
-662
1 481
EBIT
-1 411
348
Pre-tax profit (EBT)
-1 627
75
Net profit
-1 070
246
EBITDA development (full-year)
Change
2 143
1 702
EBT development (full-year)
12
EBITDA excl. unrealized hedging and one-offs
NOK million
2014
2015
chg
19 540
-662
-459
-203
22 491
1 481
-800
2 281
2 951
2 144
-341
2 485
-101
-110
-381
-29
- Extra engine overhaul and maintenance
-
-118
- Writedown old aircraft for sale
-
-60
Sum non-recurring items
-482
-317
Clean EBITDA
279
2 598
1,4 %
11,6 %
Revenue
EBITDA as reported
Unrealized fuel hedges marked to market
EBITDA excl unrealized hedges
Non-recurring items:
- strik e
- LH start-up IRR, wetlease
Margin clean EBITDA
2 320
13
NOK 2.1 bn higher CF from operations in 2015
Invested NOK 5.2 bn in new aircraft
EUR 125 million bond issue in Q4
NOK 2.5 billion in cash at the end of the year
Q4
2014
Q4
2015
2014
2015
Profit before tax
Paid taxes
Depreciation
Change working capital
Net cash flows from operating activities
-1 184
-203
212
282
-892
-703
0
367
59
-278
-1 627
-203
748
1 369
287
75
-44
1 133
1 193
2 357
Net cash flows from investing activities
-1 306
-657
-4 931
-5 189
Net cash flows from financing activities
2 773
1 081
4 478
3 282
580
157
-155
443
2 011
2 454
2 011
2 454
NOK million
Net change in cash and cash equivalents
Cash and cash equivalents, end of period
14
Balance-Sheet expanded by currency (NOK
4bn) and new aircraft (NOK 5bn)
Added ten new 737-800 and one 787 on balance + PDP’s
NOK 17 billion net debt and unchanged equity ratio of 9 %
33 000
30 000
27 000
24 000
Aircraft
18 536
21 000
Aircraft Financing
16 543
18 000
9 953
12 512
NOK million
15 000
Aircraft PDP
3 041
12 000
9 000
6 000
3 000
0
Aircraft PDP 5 939 Other
liabilities
5 150
2 011
Other assets
2 128
Receivables
2 657
Cash
2 454
Pre‐sold tickets
4 014
Equity
2 965
Q4 14
Q4 15
Q4 15
4 103 1 824 2 256
3 330
4 349
2 965
2 108
Q4 14
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 to be considered
16
Fuel efficiency of the top 20 airlines on
transatlantic routes
Excess fuel/
Pax-km
Pax-km/L fuel
1.
Norwegian
2.
Airberlin
3.
Aer Lingus
4.
Air France
33
+22%
5.
Turkish
33
+22%
6.
Aeroflot
33
+22%
7.
Air Canada
33
+22%
8.
KLM
33
+22%
9.
Icelandair
32
+26%
10.
Delta
32
+26%
11.
Alitalia
31
+30%
12.
American
31
+30%
13.
Iberia
31
+30%
14.
United
15.
Swiss
29
+38%
16. Virgin Atlantic
29
+38%
17.
US Airways
29
+38%
18.
SAS
28
+44%
19.
Lufthansa
28
+44%
20. British Airways
40 --35
34
30
+14%
+20%
+36%
27
+51%
Industry Average
Source: “Transatlantic Airline Fuel Efficiency Rankin, 2014”, ICCT (The International Council on Clean Transportation) published November 2015
17
New routes to the US and the Caribbean
18
Top modern fleet with an average age below 4 yr
Extended lease agreements for three 737-800 (4 years)
B788/B789 Owned
160
153
B788/B789 Leased
7
A320neo owned
140
14
B737 MAX 8 owned
B738 owned
120
B738 S&LB
B738 leased
100
95
B733 owned
85
B733 leased
80
57
46
40
40
32
22
0
11
3
9
5
4
3
5
68
60
8
12
1
2
M80 leased
20
2
5
99
120
13
8
11
13
2003
year‐end
2004
year‐end
2005
year‐end
2
2
7
5
16
5
22
23
8
5
2007
year‐end
2008
year‐end
2009
year‐end
15
8
21
5
23
20
2006
year‐end
2
7
2
62
22
2010
year‐end
30
41
68
83
51
23
13
13
10
13
23
25
29
11
5
5
5
5
5
2011
year‐end
2012
year‐end
2013
year‐end
2014
year‐end
13
13
29
5
27
23
19
2015
year‐end
2016
year‐end
2017
year‐end
19
Outlook for 2016
Markets and business
Soft macro and passenger tax to be introduced in Norway, stronger competition in Denmark
Stable in other key markets
Positive momentum for long-haul
Group bookings on par with last year, capacity adjusted
The company expect a production growth (ASK) of 18 %
Short-haul + 12 %, Long-haul + 40 %
Increasing distance driven by mix (long-haul)
Unit cost in the area of NOK 0.37
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 five leased 737-800)
Four leased B787-9 Dreamliners
Four direct buy A320Neo (to be leased out)
20
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
21
Based on the current fleet plan. Aircraft replaced after 8 years. Excess capacity leased out or sold.
Summary
Launching new bases and routes, starting
with Rome
Pending DoT approval for NAI and NUK
Positive impact from historic low fuel cost
Aiming for further unit cost reductions
22
Norwegian operates 439 routes to 132 destinations
From bases in
SWEDEN
DENMARK
FINLAND
From bases in the
USA &
THAILAND
From bases in
From bases in
NORWAY
SPAIN
From the
UK base
23