Norwegian Air Shuttle Asa · OSL:NAS
Norwegian Air Shuttle Asa — Q2 2019 Earnings Presentation
26 slides from Norwegian Air Shuttle Asa's earnings presentation, Jul 11, 2019
Slide 1: Norwegian Air Shuttle ASA Q2 2019 Presentation
Norwegian Air Shuttle ASA Q2 2019 Presentation 11 July 2019
Slide 2: Highlights Q2 2019
Highlights Q2 2019 EBITDAR excl other losses/gains improved to NOK 2,338 million (NOK 1,164 million) as growth is abating, in line with the company’s strategy Improved results y.o.y. Improved unit revenue by 13 per cent, primarily driven by long-haul and positive Easter effect Result impact of NOK 4
Slide 3: Abating growth and increased load factor
Abating growth and increased load factor 6 % growth in production (ASK), compared to 48 % in Q2 2018 7 % growth in traffic (RPK), compared to 46 % in Q2 2018 35,000 ASK Load Factor 100% 87.8 % 87.7 % 86.8 % 88.0 % 85.2 % 90% 30,000 78.3 % 79.6 % 76.5 % 76.9 % 80% 75.4 % 25,000 70% 60% 20,000 50% 15,
Slide 4: Passengers (million)
19 per cent revenue growth on flat passenger development 11 + 0.1 % 10 9 8 7 6 5 4 Passengers (million) 3 2 1 0 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 Q2 16 Q2 17 Q2 18 Q2 19 PAX (m ill) 3.2 4.0 4.5 5.5 6.4 7.0 7.7 8.6 10.0 10.0 PAX 12 m os. rolling (m ill) 11.8 14.2 16.7 19.0 22.5 24.6 27.4 31.0 35.3
Slide 5: Stable passenger development at key airports
Stable passenger development at key airports 5 Source: 12 month rolling passengers as reported by Avinor, Swedavia, Copenhagen Airports, Finavia and Gatwick Airport
Slide 6: Transatlantic routes the key revenue driver in Q2
Transatlantic routes the key revenue driver in Q2 Absolute revenue growth y.o.y. in Q2 19: Revenue split by origin in Q2 19: Strongest growth in absolute revenue in the US Revenue from the US now the largest share of the Continued high growth in the key European markets company’s revenue on transatl
Slide 7: Largest European carrier to New York and Los Angeles
Largest European carrier to New York and Los Angeles 7
Slide 8: Stable short-haul fleet and six remaining deliveries
Stable short-haul fleet and six remaining 787 deliveries 200 180 169 166 164 161 160 10 18 13 18 144 7 22 B787-8/B787-9 owned 140 24 24 24 14 116 14 B787-8/B787-9 leased 120 6 4 3 20 31 99 9 B737 MAX 8 owned 95 4 40 100 3 85 2 5 4 5 53 52 B737 MAX 8 leased Number of aircraft (year-end) 1 80 2 39 4 6
Slide 9: Norwegian has reduced emissions per passenger kilometer by 30 % since 2008
Norwegian has reduced emissions per passenger kilometer by 30 % since 2008 Fuel savings Avoiding flat beds • Modern, fuel efficient • Higher load factor in aircraft Biofuel transition economy cabin • Norwegian’s • Flat beds double CO₂ transatlantic operation is • 50 % biofuel certified emissions per
Slide 10: Best in class on fuel efficiency
Best in class on fuel efficiency Source: The International Council on Clean Transportation (ICCT), published in September 2018 based on 2017 figures. Only transatlantic routes included. 10
Slide 11: Financials
Financials 11
Slide 12: Highest Q2 EBITDAR in the history of the company
Highest Q2 EBITDAR in the history of the company Positive one-off effects of approx. NOK 448 million last year mainly related to renegotiation of technical maintenance contracts Currency gain of NOK 448 million last year. Gain of NOK 174 million from sale of shares in Lilienthal this year Negative I
Slide 13: Positive RASK development driven by long-haul
Positive RASK development driven by long-haul Q2 unit revenue (RASK) +13 % to 0.37 (+11 % in constant currency), positively impacted by Easter Ancillary revenue per passenger increased by 15 % to NOK 185 Cargo revenue increased by 14 % to NOK 182 million + 19 % 12,000 10,000 8,000 Other Ancillary 6,
Slide 14: Currency adjusted unit cost excluding fuel decreased by 1 %
Currency adjusted unit cost excluding fuel decreased by 1 % Unit cost excl fuel increased by 2 % y.o.y. (decreased by 1 % in constant currency) Unit cost incl fuel increased by 3 % y.o.y. (decreased by 2 % in constant currency) Q2 2018 adjusted for settlement regarding engines of NOK 447 million (NO
Slide 15: Stable cost development despite currency headwind
Stable cost development despite currency headwind Higher fuel cost (+4 % per ASK) driven by stronger USD vs NOK (+8 %), partly offset by lower fuel spot price (-9 %) and increased fuel consumption on wetlease operation Higher personnel cost (+1 % per ASK) due to currency headwind and operational ine
Slide 16: #Focus2019: On track with NOK 554 million cost reduction in Q2
#Focus2019: On track with NOK 554 million cost reduction in Q2 Actual Actual Q2 Cost area Completed cost initiatives YTD Q2 (MNOK) (MNOK) • Continued lower airport charges in the network Airport, handling • Full rollout of measures to improve efficiency and increase revenue at all stations and techn
Slide 17: #Focus2019: Cost bridge Q2 2019
#Focus2019: Cost bridge Q2 2019 10,349 304 -554 9,844 535 49 9,510 447 9,063 Adjusted cost* Production Currency & fuel Base cost #Focus2019 Other Cost* Q2 2019 Q2 2018 increase Q2 2019 *Total operating expenses excl other losses/gains, lease and depreciation. 17 Q2 2018 adjusted for one-off effects
Slide 18: Balance sheet
Balance sheet NOK 4 billion above normalized level, due to lack of credit card capacity. Key focus area to get back to normal levels 18
Slide 19: Bond maturity in December 2019
Bond maturity in December 2019 Potential sources to finance the bond maturity: Improved operational performance Increase acquirer capacity Shareholding in Bank Norwegian (NOFI) Joint venture Divestment of aircraft Value in slots 19
Slide 20: Cash flow
Cash flow Q2 investments: One owned 787, one 787 on SLB and four sold 737-800s 20
Slide 21: Continuing to reduce capital expenditure
Continuing to reduce capital expenditure Capital expenditure Expected delays in deliveries of Boeing 737 MAXs reduce the capital expenditure estimate for 2019 Capital commitments (all aircraft incl PDP) 2019 2020 Total contractual USD 1.2 billion USD 1.3 billion commitments (previous estimate: USD 1
Slide 22: Outlook
Outlook 22
Slide 23: Update on the grounding of Boeing 737 MAX
Update on the grounding of Boeing 737 MAX The current working assumption is a further delay in return to service of current fleet of 18 737 MAXs from late August to October Working on contracting wetleases and optimizing the fleet to make sure production is covered to October The new base case scena
Slide 24: Further reducing production growth for 2019
Further reducing production growth for 2019 Estimated production growth (ASK) 0-5 % ASK growth in 2019 (previous estimate 5-10 %) Unit cost estimates 2019 Approximately NOK 0.31 incl depreciation excl fuel (previous estimate: 0.30) on currency headwind and lower production Approximately NOK 0.43 inc
Slide 25: EBITDAR estimate of NOK 6 – 7 billion for 2019
EBITDAR estimate of NOK 6 – 7 billion for 2019 Aim to improve transparency in guidance due to the Boeing 737 MAX grounding and the situation surrounding the company Joint venture progress ongoing, clarification expected within a matter of weeks Expect EBITDAR excl other gains and losses to increase
Slide 26: Fly Norwegian
Fly Norwegian Book tickets at Norwegian.com
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