Norwegian Air Shuttle ASA - marketscreener.com · Expected capex (all aircraft incl. PDP) USD 1.1 bnfor 2016 (unchanged) USD 2 bnfor 2017 USD 2 bnfor 2018 PDP financing PDP financing

Norwegian Air Shuttle ASAQ4 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 %)

3Pax (mill) 1,3 2,0 2,2 2,8 3,3 4,0 4,4 5,2 5,6 6,1

0

1

2

3

4

5

6

7

Q4 06 Q4 07 Q4 08 Q4 09 Q4 10 Q4 11 Q4 12 Q4 13 Q4 14 Q4 15

Passen

gers (m

illion)

+ 9% 

Market shares in key airports (last 12 months)

4Sources: Avinor, Swedavia, Copenhagen Airports, Finavia, Gatwick Airport, Aena

Q4 load factor increased to 85 % (+4 p.p.)

5

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 %

72,1 %

77,6 % 76,2 % 76,1 % 77,4 % 78,5 % 76,7 % 77,9 %80,7 %

84,9 %

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

1 000

2 000

3 000

4 000

5 000

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7 000

8 000

9 000

10 000

11 000

12 000

13 000

14 000

15 000

16 000

17 000

18 000

Q4 06 Q4 07 Q4 08 Q4 09 Q4 10 Q4 11 Q4 12 Q4 13 Q4 14 Q4 15

Load

 Factor

Available Seat KM (A

SK)

ASK Load FactorLoad+4 p.p. 

7 % growth in capacity (ASK)

12 % growth in traffic (RPK)

Average flying distance increased by 4 %

Q4 revenue increased by 16 %

6

Revenues 3 106 3 786 4 602 5 319Domestic revenue 1 097 1 116 1 201 1 256% y.o.y. chg 16 % 2 % 8 % 5 %Internationa l  revenue 2 008 2 670 3 401 4 063% y.o.y. chg 26 % 33 % 27 % 19 %

0

1 000

2 000

3 000

4 000

5 000

6 000

Q4 12 Q4 13 Q4 14 Q4 15

NOK million

Domestic revenue

International  revenue

Total Revenues

+ 16 %

19 % growth in international revenue, + 5 % for domestic Scandinavia

USD6 %

EUR16 %

SEK19 %

DKK10 %

GBP8 %Other

1 %

NOK40 %

USD3 % EUR

14 %

SEK21 %

DKK10 %GBP

6 %Other1 %

NOK45 %

Unit Revenue (RASK) improvement driven by higher load factor and currencyGrowing share of revenue in USD, GBP and Euro Less exposure to Norwegian krone

Q4 unit revenue up by 7 % +1 % in local currency

Q4 2014 (NOK 3.8 bn) Q4 2015 (NOK 4.3 bn)

7

Q4: 17 % growth in ancillary revenue

8

15 % share of Group revenue

Per passenger: 14 % growth for LH and 2 % for SH driven by bundle and freedom to choose

Q4 EBITDA improved by NOK 603 million

9

EBT development Q4EBITDA development Q4

(NOK million) Q4 14 Q4 15 Change

Revenue 4 602 5 319

EBITDA -869 -266 603

EBIT -1 083 -633

Pre-tax profit (EBT) -1 184 -703 481

Net profit -978 -373

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

10

0,42

0,41 0,42 0,400,36

0,330,30

0,280,30

0,32

0,13  0,15 

0.15 

0,09 

0,11  0,15 

0,15 0,14 

0,13  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

Q4 06 Q4 07 Q4 08 Q4 09 Q4 10 Q4 11 Q4 12 Q4 13 Q4 14 Q4 15

Ope

ratin

g cost EBITD

A level p

er ASK

 (CAS

K)

CASK excl fuel

Fuel share of CASK

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.

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

12

EBT development (full-year)EBITDA development (full-year)

(NOK million) 2014 2015 Change

Revenue 19 534 22 491

EBITDA -662 1 481 2 143

EBIT -1 411 348

Pre-tax profit (EBT) -1 627 75 1 702

Net profit -1 070 246

EBITDA excl. unrealized hedging and one-offs

13

NOK million 2014 2015 chg

Revenue 19 540 22 491 2 951 EBITDA as reported -662 1 481 2 144 Unrealized fuel hedges marked to market -459 -800 -341 EBITDA excl unrealized hedges -203 2 281 2 485

Non-recurring items: - strike -101 -110 - LH start-up IRR, wetlease -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 2 320 Margin clean EBITDA 1,4 % 11,6 %

NOK 2.1 bn higher CF from operations in 2015

14

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 Q4NOK million 2014 2015 2014 2015

Profit before tax -1 184 -703 -1 627 75Paid taxes -203 0 -203 -44Depreciation 212 367 748 1 133Change working capital 282 59 1 369 1 193Net cash flows from operating activities -892 -278 287 2 357Net 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

Net change in cash and cash equivalents 580 157 -155 443

Cash and cash equivalents, end of period 2 011 2 454 2 011 2 454

Balance-Sheet expanded by currency (NOK 4bn) and new aircraft (NOK 5bn)

15

Added ten new 737-800 and one 787 on balance + PDP’s

NOK 17 billion net debt and unchanged equity ratio of 9 %

2 011Cash2 454

2 256Receivables

2 657

1 824 Other assets

2 128

4 103 

Aircraft PDP 5 939 

12 512

Aircraft18 536

0

3 000

6 000

9 000

12 000

15 000

18 000

21 000

24 000

27 000

30 000

33 000

Q4 14 Q4 15

NOK million

Equity2 965 2 108

Pre‐sold tickets4 014 2 965

Otherliabilities5 150

4 349

Aircraft PDP3 041

3 330

Aircraft Financing16 543

9 953

Q4 15 Q4 14

Aircraft financing on track

Expected capex (all aircraft incl. PDP)USD 1.1 bn for 2016 (unchanged)USD 2 bn for 2017USD 2 bn for 2018

PDP financingPDP financing with backstop lease B 737 800 (in 1H 2016)PDP Financing for 50 A320 Neo’s in placeNegotiating PDP financing for Boeing deliveries

Long-term financingCommercial financing of 6 B 737 800 Ex-Im and ECAEETC to be considered

16

1. ---2. +14%3. +20%4. +22%5. +22%6. +22%7. +22%8. +22%9. +26%10. +26%11. +30%12. +30%13. +30%14. +36%15. +38%16. +38%17. +38%18. +44%19. +44%20. +51%27

2828

292929

30313131

3232

3333333333

3435

40

British AirwaysLufthansa

SASUS Airways

Virgin AtlanticSwiss

UnitedIberia

AmericanAlitalia

DeltaIcelandair

KLMAir Canada

AeroflotTurkish

Air FranceAer Lingus

AirberlinNorwegian

Fuel efficiency of the top 20 airlines on transatlantic routes

17

Pax-km/L fuelExcess fuel/

Pax-km

Industry AverageSource: “Transatlantic Airline Fuel Efficiency Rankin, 2014”, ICCT (The International Council on Clean Transportation) published November 2015

New routes to the US and the Caribbean

18

Top modern fleet with an average age below 4 yr

19

8 58 11 1320

22 2323 22

115 5

2

2 55 5

55 5

5

7 16 21

2325 29

2927 23 19

28

1013

13

1313

13

2

7 15 23

30 41 5168

83

5

4

12

2

55

9

14

1

23

3

7

8 11 1322

3240

46

5762

68

85

9599

120

153

0

20

40

60

80

100

120

140

160

2003year‐end

2004year‐end

2005year‐end

2006year‐end

2007year‐end

2008year‐end

2009year‐end

2010year‐end

2011year‐end

2012year‐end

2013year‐end

2014year‐end

2015year‐end

2016year‐end

2017year‐end

B788/B789 Owned

B788/B789 Leased

A320neo owned

B737 MAX 8 owned

B738 owned

B738 S&LB

B738 leased

B733 owned

B733 leased

M80 leased

Extended lease agreements for three 737-800 (4 years)

Outlook for 2016

Markets and business Soft macro and passenger tax to be introduced in Norway, stronger competition in DenmarkStable in other key marketsPositive momentum for long-haulGroup 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 0.37Assumptions: 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 DreamlinersFour 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

21

-

20 000

40 000

60 000

80 000

100 000

120 000

140 000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E

Milli

on s

eat-k

ilom

etre

s (A

SK)

Short Haul Long Haul

2016-2020:

CAGR 20 %

2005-2015:

CAGR 30%

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

23

From bases in

SWEDEN DENMARK FINLAND

From the

UK base

From bases in

SPAIN

From bases in the

USA & THAILAND

From bases in

NORWAY