Norwegian Air Shuttle Asa · OSL:NAS
Norwegian Air Shuttle Asa — Q4 2017 Earnings Presentation
28 slides from Norwegian Air Shuttle Asa's earnings presentation, Feb 15, 2018
Slide 1: Norwegian Air Shuttle ASA Q4 2017 Presentation
Norwegian Air Shuttle ASA Q4 2017 Presentation 15 February 2018
Slide 2: Highlights Q4 2017
Highlights Q4 2017 Added one 737-800 and two 787-9s to operations Financed the first aircraft with a combination of UKEF and JOLCO Agreed with the Scandinavian pilot unions on a new three year agreement Got concessions for 152 routes in Argentina Launched transatlantic routes from Amsterdam, Madrid
Slide 3: Stable load despite high ASK growth
Stable load despite high ASK growth 30 % growth in both capacity (ASK) and traffic (RPK) ASK Load Factor Load 24,000 -0.5 p.p. 100% 23,000 22,000 85.8 % 90% 84.9 % 85.3 % 21,000 80.7 % 20,000 77.4 % 78.5 % 77.9 % 76.2 % 76.1 % 76.7 % 80% 19,000 18,000 17,000 70% 16,000 15,000 60% 14,000 13,000 12,00
Slide 4: 8.1 million passengers in Q4 (+12 %)
8.1 million passengers in Q4 (+12 %) + 15 % 9 9 + 12 % 8 8 7 7 6 6 5 5 4 4 3 3 Passengers (million) Passengers (million) 2 2 1 1 0 0 Q4 08 Q4 08 Q4 09 Q4 09 Q4 10 Q4 10 Q4 Q4 11 11 Q4Q4 12 12 Q4Q4 1313 Q4Q4 1414 Q4Q41515 Q4 Q416 16 Q4 Q417 17 Pax (mill) 2.2 2.8 3.3 4.0 4.4 5.2 5.6 6.1 7.2 8.1 Pax 12
Slide 5: Continued growth at all key airports
Continued growth at all key airports 5 Source: 12 month rolling passengers as reported by Avinor , Swedavia, Copenhagen Airports, Finavia, Gatwick Airport and Aena
Slide 6: 55 % of revenue generated outside the Nordics
55 % of revenue generated outside the Nordics 17 % revenue growth in the Nordics 78 % revenue growth in Spain Growth in revenue by origin in Q4 17 (y/y): Split revenue by origin in Q4 17: 6
Slide 7: Underlying RASK unchanged
Underlying RASK unchanged Q4 unit passenger revenue (RASK) -2 % to 0.31 (-3 % in constant currency) Average flying distance increased by 14 % Ancillary revenue per passenger increased by 18 % Cargo revenue increased by 137 % to NOK 180 million 9,000 + 30 % 8,000 7,000 6,000 5,000 4,000 3,000 2,000 N
Slide 8: A network of more than 60 intercontinental routes
A network of more than 60 intercontinental routes 8
Slide 9: Adding 25 new aircraft to own operations in 2018
Adding 25 new aircraft to own operations in 2018 Deliveries 787-9 Deliveries 737-800 and 737 MAX Re-deliveries 737-800 2018: +3,724 seats +2,640 seats -744 seats 9
Slide 10: Norwegian Reward – loyalty pays off
Norwegian Reward – loyalty pays off 10
Slide 11: Building the Reward program
Building the Reward program Set up as a separate and dedicated business unit We have about 50 partners in NO, SE, DK, FI, ES & UK: 11
Slide 12: Reached 7 million Reward members
Reached 7 million Reward members* Strong increase of members and activity More than 50 % of cash points are earned through external partners Currently the highest growth in the US and the UK Loyalty incentives implemented * In February 2018 12
Slide 13: Financials
Financials 13
Slide 14: Q4 EBITDAR of NOK 387 million
Q4 EBITDAR of NOK 387 million 12 mths rolling 12 mths rolling Q4 17 Q4 16 Chg Q4 17 Q4 16 Chg Revenue 7,844 6,027 1,818 30,948 25,951 4,997 EBITDAR 387 1,357 -970 3,950 5,958 -2,009 EBITDA -652 673 -1,325 60 3,116 -3,056 Pre-tax profit (EBT) -1,431 300 -1,731 -1,067 1,508 -2,576 Net profit -919 197
Slide 15: EBITDA (excl other losses/gains) bridge
EBITDA (excl other losses/gains) bridge * Excl other losses/gains 15
Slide 16: Unit cost driven by fuel and ramp-up
Unit cost driven by fuel and ramp-up Unit cost excl fuel increased by 6 % (5 % in constant currency) Unit cost incl fuel increased by 7 % (8 % in constant currency) 0.70 0.65 0.60 Fuel share of unit cost 0.55 Unit cost ex. depr. and fuel 0.21 0.50 Operating cost EBITDA level per ASK (CASK) 0.45 0.09
Slide 17: Increased unit cost while expanding globally
Increased unit cost while expanding globally Higher fuel cost (+11 % per ASK) driven by spot price (+22 %), partly offset by a weaker USD vs NOK (-5 %) Higher personnel cost (+5 % per ASK) due to recruitment for growth and to avoid crew shortage in the high season Higher handling cost (+5 %) due to
Slide 18: Strong liquidity with NOK 4 billion in cash
Strong liquidity with NOK 4 billion in cash Highlights Cash development Q4 4,500 Cash from operations finances the 4,000 4,040 fleet increase 3,500 3,000 Cash flow from operations of NOK NOK million 2,500 2.9 bn the last 12 months (3.1 bn) 2,454 2,324 2,000 2,011 Invested NOK 3.6 bn the last 12 1,50
Slide 19: 13 new aircraft on balance in 2017
13 new aircraft on balance in 2017 Added four 787-9s, six 737 MAXs and three 320neos on balance the last 12 months NOK 22.3 bn net debt (21.2 bn in Q4 2016) 9 % equity ratio (11 %) 19114 195 45,000 40,000 Aircraft financing 35,000 Aircraft 20,423 25,862 16145 30,000 14800 18,538 22,572 15007 25,000
Slide 20: Balanced mix of funding
Balanced mix of funding 30 aircraft financed by export credits Debt mix: 3.2 % average interest rate on long- term aircraft financing (3.7 %) 95 % of aircraft financing on fixed rates Debt maturity profile*: Number of aircraft: # aircraft B737 B787 B737 MAX A320 Export credits (UK and US) 23 7 AFIC
Slide 21: Financing on track
Financing on track Gross capex commitment (all aircraft incl PDP) USD 1.9 bn for 2018 (reduced from 2.1 bn) USD 2.6 bn for 2019 Expect net capex to be reduced in 2018 and 2019 Fleet renewal – initiated process to sell older aircraft and reduce capex commitment PDP financing / liquidity PDP financing
Slide 22: Outlook
Outlook 22
Slide 23: Growth driven by increased frequency in wide body operation
Growth driven by increased frequency in wide body operation Two thirds of the 2018 growth will come from increased frequency 70 % of the ASK growth in 2018 comes from the widebody fleet 23
Slide 24: Overall bookings ahead of last year
Overall bookings ahead of last year 24 Booked and paid travels as of February 12, 2018 and February 13, 2017 (corresponding weekday)
Slide 25: Outlook for 2018
Outlook for 2018 Markets and business Positive and stable markets in the Nordics Capacity adjusted booking volumes ahead of last year An estimated production growth (ASK) of 40 % (unchanged) Increasing distance Q1: +36 %, Q2: +48 %, Q3: + 37 % Q4: +41 % Fuel hedging 25 % of 2018 at USD 494 37 % of H
Slide 26: Expect to reduce unit cost excl fuel by 12% in 2018
Expect to reduce unit cost excl fuel by 12% in 2018 Unit cost estimates (unchanged) NOK 0.290-0.295 excl fuel and depreciation NOK 0.390-0.395 excl depreciation NOK 0.405-0.410 incl depreciation Assumptions: Fuel price of USD 575/mt, USD/NOK 7.75, EUR/NOK 9.00. Based on the current route portfolio a
Slide 27: Going forward
Going forward Solid bookings ahead of 2018 Strong growth in cargo revenue Target 20 % long-term ancillary revenue share driven by new products and services, and third party revenue streams Increasing premium cabin on new deliveries of the 787 Dreamliner due to demand Preparing for ticket sales after
Slide 28: Norwegian offers more than 500 routes to over 150 destinations
Norwegian offers more than 500 routes to over 150 destinations 28
Norwegian Air Shuttle — Q4 2017 Earnings Presentation on 6ix