Norwegian Air Shuttle Asa · OSL:NAS
Norwegian Air Shuttle Asa — Q3 2006 Earnings Presentation
19 slides from Norwegian Air Shuttle Asa's earnings presentation, Oct 26, 2006
Slide 1: Norwegian (NAS) Q3 2006
Norwegian (NAS) Q3 2006 Bjørn Kjos (CEO) Oslo, 26 October 2006
Slide 2: Strong revenue growth in Q3
Strong revenue growth in Q3 ● 878 MNOK revenue in Q3 2006 ● Revenue growth of 49 % since Q3 2005 MNOK revenue 1000 900 800 700 600 500 400 300 200 100 0 Q3 03 Q3 04 Q3 05 Q3 06 Revenue 230 332 590 878 Earnings after tax -30 -11 44 28 EPS 1,91 -0,61 3,54 2,74 2
Slide 3: Profitable quarter
Profitable quarter ● EBITDA of 54 MNOK in Q3 2006 ( 64 MNOK ) ● Earnings after tax 28 MNOK ( 44 MNOK ) 120 100 EBITDA development ex Poland start up 77 80 Poland operation weakens 60 margin by MNOK 23 40 20 0 Q3 03 Q3 04 Q3 05 Q3 06 -20 -40 Revenue 230 332 590 878 EBITDA MNOK -20 -11 64 54 EBITDA ma
Slide 4: Cash flow fluctuation due to seasonality
Cash flow fluctuation due to seasonality ● Negative cash flow from operation of - 136 MNOK ● Cash and equivalents 387 MNOK ( +200 MNOK credit line) ● Investments related to IT-systems and upgrades on aircraft CASH FLOW (TNOK) Third quarter From: 2006 2005 Operating activities MNOK Operating activite
Slide 5: Capacity growth on track
Capacity growth on track ● 64 % increase in production from Q305 to Q306 ● Load factor leveling out at 85 % Load factor M ASK 100 % 2000 95 % 1800 90 % 1600 85 % 1400 80 % 1200 75 % 1000 70 % 800 65 % 600 400 60 % 200 55 % 0 50 % Q3 03 Q3 04 Q3 05 Q3 06 Q3 03 Q3 04 Q3 05 Q3 06 5
Slide 6: Strong passenger growth
Strong passenger growth ● 70 % passenger growth on international routes ● 1.5 million passengers last three months Thousand pax 59 % 1500 1300 1100 73 % 900 700 70 % 500 300 100 Q2 03 Q3 04 Q3 05 Q3 06 6 *Tickets sold for travel
Slide 7: Enhanced competitive position
Enhanced competitive position ● 38 % market share on key domestic routes, 7 pp growth ● Capacity increased by 64 % since Q305 % Market Share 45 % 40 % 35 % 42 % 30 % 39 % 34 % 35 % 34 % 25 % 31 % 28 % 29 % 20 % Bergen Trondheim Stavanger Tromsø Q3 05 Q3 06 7
Slide 8: Continued growth in business segment
Continued growth in business segment ● 83 % growth in business passengers since Q305 ● Adequate timetable and flexible tickets is attracting the business segment Business travellers Q3 04 Q3 05 Q3 06 8
Slide 9: Strong revenue growth, domestic and international
Strong revenue growth, domestic and international ● Domestic turnover increased by 30 % since Q3 2005 ● International turnover increased by 85 % since Q3 2005 900 000 000 800 000 000 Poland UK 700 000 000 Scandinavia 600 000 000 Other Europe 500 000 000 400 000 000 Sothern Europe 300 000 000 200 000
Slide 10: Poland expansion on track
Poland expansion on track ● Production adjustments made quickly after launch ● Load factor ranging from 63 to 73 % first 3 months, showing demand for low fare travel ● Stronger presumption than start up in Norway Load factor development CASK development 1,30 80 % 1,20 75 % 1,10 70 % 1,00 0,90 65 % 0
Slide 11: Still a guarantor for low fares
Still a guarantor for low fares ● Domestic prices are down 5 % Q306 compared to Q305 ● Implementation of a new revenue systems hampered yield during Q3 ● International prices are down from heavy expansion and introductionary pricing Norwegian's average ticket price - index (Q1 03 = 100) 100 80 60 40
Slide 12: Cost development
Cost development ● Unit cost of 0.49 NOK in Q3 06 ● Cost level affected by higher fuel prices and one offs CASK 0,52 0.51 Wet lease 0.49 Passenger service costs 0.01 One offs Termination cost on handling 0,48 Extra crew costs 0.02 Fuel 0,44 0.46 0,4 Q305 Q306 12
Slide 13: Cost initiatives are materialising
Cost initiatives are materialising ● Getting closer to NOK 0,45 target set in 2004 Cost reducing initiatives : New handling contract Capacity increase CASK Distribution costs Costs are down 0,52 ● Average unit costs of 0.50 NOK in Q3 2004, down more than 30 % from Q3 2003 (0.75 NOK) ● Scale benefits
Slide 14: Lower distribution costs
Lower distribution costs ● Distribution costs per sold ticket of NOK 14.8, down from 21.4 NOK ● Joint partnership with Amadeus is proven efficient Distribution costs per sold ticket NOK pr pax 40,0 35,0 30,0 25,0 20,0 - 31 % 15,0 10,0 5,0 Q3 04 Q3 05 Q3 06 14
Slide 15: Increased fleet and crew utilization
Increased fleet and crew utilization ● Crew utilization of 794 block ● Aircraft utilization of 11,5 block hours per crew per year, hours per plane per day, up 16 % up 11 % from Q3 2005 (714) from Q3 2005 (9,9) Block hours/crew/year Block hours/plane/day 900 11 800 10 700 9 600 8 500 7 400 6 Q3 04 Q3
Slide 16: Lean organization
Lean organization ● Carrying approx 10,000* passengers per employee ● Approx 40 % growth since Q3 05 Passenger per employee 11000 10000 12000 9000 10000 8000 8000 7000 6000 6000 4000 5000 2000 4000 0 Q304 Q305 Q306 Ryan Air Easy Jet Norwegian Air Berlin Fly Me Sky Europe Pax pr employee* 2004 2005 N
Slide 17: Norwegian Student Academy
Norwegian Student Academy ● Two years apprentice program in the tourist industry, supported by the Norwegian authorities ● Certificate of apprenticeship that leads to job opportunities ie in sales, marketing, station or cabin attendence 17 Foto Olav Stendal ©
Slide 18: Expectations for remaining 2006
Expectations for remaining 2006 Expected business environment: ● Increased competition on international routes ● Continued price competition on domestic northbound routes Expected results: ● Unit cost for 2006 in the area of NOK 0,54 – At current fuel and currency levels, and flight program in Polan
Slide 19: Leading Scandinavian low fare airline
Leading Scandinavian low fare airline 84 routes
Norwegian Air Shuttle — Q3 2006 Earnings Presentation on 6ix