norwegian air shuttle asa · q4 2013 presentation ... q3 & q4 ... items* as well as other non...

Europe’s best low-cost airline

Norwegian Air Shuttle ASA Q4 2013 Presentation


• Group revenues of MNOK 3,786 in Q4 2013

Double digit revenue growth in Q4

Revenues 2 146 2 536 3 106 3 786Domestic revenue 848 947 1 097 1 116% y.o.y. chg 5 % 12 % 16 % 2 %International revenue 1 297 1 589 2 008 2 670% y.o.y. chg 37 % 22 % 26 % 33 %

0

500

1 000

1 500

2 000

2 500

3 000

3 500

Q4 10 Q4 11 Q4 12 Q4 13

MN

OK

Domestic Revenue (MNOK)

International Revenue (MNOK)

Total Revenues (MNOK)

+ 22 %

2


Q4 13 Q4 12

EBITDAR MNOK 299 296

EBITDA MNOK -41 53

EBIT MNOK -183 -52

Pre-tax profit (EBT) MNOK -283 23

Net profit MNOK -197 24

Q4 influenced by price stimulation & currency

Q4 10 Q4 11 Q4 12 Q4 13 Q4 10 Q4 11 Q4 12 Q4 13EBITDAR margin 10 % 9 % 10 % 8 % EBT margin -1 % -7 % 1 % -7 %

214216

296 299

0

100

200

300

MN

OK

-27

-188

23

-283

-450

-350

-250

-150

-50

50

MN

OK

EBT development Q4 EBITDAR development Q4

3

Europe’s best low-cost airline Revenue growth of 2.7 billion in 2013

• Annual turnover MNOK 15,580

Slide: 4

Revenues 8 598 10 532 12 859 15 580Domestic revenue 3 316 3 667 4 057 4 423% y.o.y. chg 14 % 11 % 11 % 9 %International revenue 5 282 6 865 8 802 11 157% y.o.y. chg 20 % 30 % 28 % 27 %

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

2010 2011 2012 2013

MN

OK

Domestic Revenue (MNOK)

International Revenue (MNOK)

Total Revenues (MNOK)

+ 21 %


2013 2012

EBITDAR MNOK 2 784 1 822

EBITDA MNOK 1 500 789

EBIT MNOK 970 403

Pre-tax profit (EBT) MNOK 437 623

Net profit MNOK 319 457

2010 2011 2012 2013 2010 2011 2012 2013EBITDAR margin 14 % 15 % 14 % 18 % EBT margin 3 % 2 % 5 % 3 %

243

166

623

437

0

100

200

300

400

500

600

MN

OK

1 175

1 540

1 822

2 784

0

400

800

1 200

1 600

2 000

2 400

2 800

MN

OK

Pre-tax profit of MNOK 437 in 2013

Slide: 5

EBT development (full year) EBITDAR development (full year)


• Reversal of pension provisions (Group defined benefit pension plan ended)

• Estimated long-haul earnings effect MNOK 216 – Q2 low utilization & staff training

– Extra costs due to wet-lease Q2, Q3 & Q4

– Irregularity costs Q3 & Q4

• Start-up costs LGW & ALC unadjusted for (business as usual)

2013 underlying EBT result MNOK 731

6

Europe’s best low-cost airline Ancillary revenue remains a significant contributor

• Ancillary revenue comprises 11 % of 2013 revenues (target 15%)

• NOK 87 per scheduled passenger (an increase of 6 % from last year)

7

Europe’s best low-cost airline 2013 Positive Free Cash Flow despite 2.1 billion investments

Cash flows from operations in Q4 13

Cash flows from investing activities in Q4 13

Cash flows from financing activities in Q4 13

Cash and cash equivalents at period-end (MNOK 1731)MNOK 2 166

MNOK 563

MNOK -965

MNOK 264 (MNOK 447)

(MNOK -1545)

(MNOK 1093)

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWUnaudited

Q4 Q4 YTD YTD Full Year(Amounts in NOK million ) 2013 2012 2013 2012 2012

Net cash flows from operating activities 263.5 446.5 2 376.7 2 021.5 2 021.5

Net cash flows from investing activities -964.5 -1 545.4 -2 125.9 -2 765.5 -2 765.5

Net cash flows from financial activities 562.3 1 093.3 184.1 1 369.4 1 369.4

Foreign exchange effect on cash 1.9 1.6 0.0 0.3 0.3

Net change in cash and cash equivalents -136.8 -4.0 434.9 625.7 625.7Cash and cash equivalents in beginning of period 2 302.9 1 734.8 1 730.9 1 104.9 1 104.9

Cash and cash equivalents in end of period 2 166.1 1 730.9 2 166.1 1 730.9 1 730.9

8

Full year

Europe’s best low-cost airline Equity improved by MNOK 326 compared to last year

• Total balance of NOK 14.8 billion

• Net interest bearing debt NOK 4.3 billion (3.0)

• Equity of NOK 2.7 billion at the end of the fourth quarter

• Group equity ratio of 19 % (20 %)

1 731Cash2 166

1 176

Receivables1 746

9 013

Non-current assets

10 848

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

Q4 12 Q4 13

MN

OK Equity

2 747 2 421

Pre-sold tickets2 567 1 740

Othercurrent

liabilities2 663 3 106

Long term liabilities

6 783

4 654

Q4 13 Q4 12

9

Europe’s best low-cost airline Long-term financing 2014 on track

10

• Planned external financing 2014: MNOK +/- 3,000 – Committed / arranged financing: MNOK 1,700

– EETC, JOLCO & guaranteed export financing

• Year-end 2013 PDP balance: MNOK 2,550 – 94 % paid with own funds

• Year-end 2014 debt increase: MNOK +/- 2,200 (long-term debt, net of amortization)


ASK 1 149 2 302 3 464 5 370 7 560 11 530 13 555 17 804 21 957 25 920 34 318

Load Factor 62.5 % 66.8 % 78.0 % 78.6 % 80.1 % 78.7 % 78.2 % 77.4 % 79.3 % 78.5 % 78.3 %

62.5 %66.8 %

78.0 % 78.6 % 80.1 % 78.7 % 78.2 % 77.4 %79.3 % 78.5 % 78.3 %

0

0.2

0.4

0.6

0.8

1

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Load

Fact

or

Avai

labl

e Se

at K

M (A

SK)

ASK Load Factor+ 32 %

Traffic growth of 32% in 2013

• Stable load despite high growth

• Average flying distance up 11 %

11


Pax (mill) 1.2 2.1 3.3 5.1 6.9 9.1 10.8 13.0 15.7 17.7 20.7

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Pass

enge

rs (m

illio

n)

+17 %

20.7 million passengers in 2013

• An increase of 3,000,000 passengers

12


• Business model works – lower costs and prices attract volume

Strong demand: Growing market share in all markets

MarketshareOslo Airport

(OSL)

MarketshareStockholm Airport

(ARN)

MarketshareCopenhagen Airport

(CPH)

MarketshareHelsinki Airport

(HEL)

Marketshare Int'lGatwick Airport

(LGW)

Marketshare Int'lSpanish bases

(AGP, LPA, ALC, TFS)Q4 08 33 % 9 % 3 % 0 % 1 % 2 %Q4 09 37 % 10 % 10 % 0 % 3 % 3 %Q4 10 38 % 14 % 11 % 2 % 5 % 4 %Q4 11 37 % 19 % 12 % 8 % 6 % 5 %Q4 12 38 % 19 % 15 % 10 % 6 % 7 %Q4 13 41 % 23 % 16 % 12 % 10 % 8 %

0 %

5 %

10 %

15 %

20 %

25 %

30 %

35 %

40 %

+ 243,000 pax

+ 247,000 pax

+ 101,000 pax

+ 113,000 pax

+ 221,000 pax+ 202,000 pax

13

Europe’s best low-cost airline Lowest cost always wins

14

• 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 Q4 2013 report (period displayed January 2013 – December 2014), SAS Group Year-end report November 2012 - October 2013 (period displayed November 2012 – October 2013, Scandinavian Airlines (SK) only), Finnair Plc. Annual Report 2012 and Finnair Group Financial Statements Bulletin 2013, Ryanair Annual Report 2013, easyJet 2013 full year results statement and Annual Report 2013 (period displayed October 2012 – September 2013), Air Berlin Annual Report 2012, Vueling Results Presentation FY’12 and Q4’12 and Norwegian’s estimations.

12 mths: Quarterly reports 2012 & 2013 and Annual Report 2013. Unit cost presented on a 12 month rolling basis for Scandinavian Airlines only (excl. Widerøe and Parent Company costs, non-recurring items as reported by company excluded. Charter ASK based on estimations as it is not reported publicly)


Cost per ASK (CASK) (NOK)CASK ex. fuel 0.36

0.47 0.420.28

0.450.330.48

0.30

0.36

0.33

0.300.28

0.11 0.15

0.15

0.14

0.25

0.30

0.35

0.40

0.45

0.50

Q4 10 Q4 11 Q4 12 Q4 13

Ope

ratin

g co

st E

BITD

A le

vel p

er A

SK (C

ASK)

Fuel share of CASK

CASK excl fuel

-8%

-6%

Unit cost ex fuel down 8% in Q4

• Unit cost including fuel down 6 %

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.

15

Europe’s best low-cost airline Unit cost ex fuel down 7% in 2013

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.

16

Cost per ASK (CASK) (NOK) 0.59 0.55 0.55 0.53 0.56 0.49 0.46 0.46 0.45 0.42

CASK ex. fuel 0.49 0.44 0.41 0.40 0.37 0.38 0.34 0.32 0.31 0.29

0.49 0.440.41

0.400.37

0.38

0.340.32 0.31

0.29

0.09

0.11

0.15 0.13 0.19

0.10

0.120.14

0.14

0.13

0.25

0.30

0.35

0.40

0.45

0.50

0.55

0.60

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Ope

ratin

g co

st E

BITD

A le

vel p

er A

SK (C

ASK)

CASK excl fuel Fuel share of CASK

• Unit cost including fuel down 6 %


• Uniform fleet of Boeing 737-800s • Overheads • 4 new 737-800 delivered in Q4 (14 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 • 1 % lower unit fuel consumption in Q4

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 • Q4 sector length up by 15 %

• Cost level adapted to local markets • Outsourcing/ Off-shoring

• Rostering and aircraft slings optimized • Q4 utilization of 11.4 BLH pr a/c (+0.6 BLH)

• Self check-in/ bag drop • Automated charter & group bookings • Streamlined operative systems & processes

17


BGO OSL HEL

TRF

LAS PALMAS(Gran Canaria)

MMX

AES

OUL

UME

TOS

EVE

BOO

GOTAAL

BLL

HAUSVG

KSD ARN

CPH

TRD

SXF

HAM

LGW CGN

MUC

Traffic patterns determine the location of bases

OSL(3W)

HEL(3W)ARN

(4W)

WAW(2W)LGW

(1D)

MADRID

CPH(1D)

HAM(4W)

BGO

MALAGA(Costa del Sol)

TRD

OSL HELARN

GOT

CPH

SVG RYGTRF

AAL

LGW

HAM

CGN

MUC

WAW

BGO OSL HEL

TRF

LONDON(Gatwick)

AES

TOS

GOTAAL

SVG

ARN

CPH

TRD

DBVSPUNCE

IBZ

BCN

PMI

ALC

AGPFAO

FUETFS

FCO

ACE

LPA

BUD

CFU

JTRCTA

LCA

BGO OSL HEL

TRF

TENERIFE

OUL

GOTSVG

RYG ARN

CPH

TRD

SXF

HAM

LGWCGN

MUC

ALICANTE(Costa Blanca)

BGO OSL HEL

RYGTRF

MOL

OUL

UME

TOS

EVE

GOT

LGW

BLL

KSD ARN

CPH

TRD

AES

AAL

SVG

MUC

HAM

CGN

TKU

COPENHAGEN

OSLO STOCKHOLM

TRONDHEIM

BERGEN

STAVANGER

HELSINKIBGO(2W)

TRD

BARCELONA

OSL(2D)

CPH(2D)

ARN(2D)

GOT(4W)

ARN(1D)

HAM(4W) SXF

(3W)WAW(3W)LGW

(1D)

Europe’s best low-cost airline Growing share of non-Nordic routes

HAM

DBVNCE

IBZ

BCN

PMIALC

AGP

FUETFS

FCO

ACE

LPA

BUD

CFU

JTRCTA

LCA

SPU

LGW WAWSXF

FAO

MUC

MAD

CGN

LAX

JFK

FLL

Europe’s best low-cost airline Increasing the Dreamliner order by another four 787-9

787-8 on firm order 787-8 in operation 787-9 on firm order


2014:Re-deliveries 737-300

-740 seatsRe-deliveries 737-800

-558 seatsDeliveries 737-800

+2,604 seatsDeliveries 787-8

+1,164 seats

Current committed fleet plan

21


• Business environment – Economic uncertainty in parts of Europe

– Seasonal fluctuations

– Yield pressure from capacity investment

– Increased competitive pressure in the Nordic region

• Production

– The company expects a production growth (ASK) of 40 % (unchanged)

• Increasing the fleet by adding 737-800’s and 787-8’s

• Utilization and distance increase short-haul driven by UK and Spanish bases

• Expanding long-haul operations

– Capacity deployment depending on development in the overall economy and marketplace

• Cost development

– Unit cost expected in the area of 0.40 (unchanged)

• Excluding hedged volumes

• Fuel price dependent – USD 950 pr. ton

• Currency dependent ● USD/NOK 6.00 ● EUR/NOK 7.75 ●

• Production dependent

• Based on the currently planned route portfolio

Expectations for 2014 (Group)

22

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 413 scheduled routes to 128 destinations in

38 countries


24

Norwegian Air Shuttle ASA Organization number NO 965 920 358 MVA

Telephone +47 67 59 30 00 Telefax +47 67 59 30 01 Internet www.norwegian.com

Mailing address P.O. Box 113 No – 1330 Fornebu Visiting address Oksenøyveien 3

norwegian air shuttle asa · q4 2013 presentation ... q3 & q4 ... items* as well as other non...

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