Norwegian Air Shuttle Asa · OSL:NAS
Norwegian Air Shuttle Asa — Q4 2019 Earnings Presentation
36 slides from Norwegian Air Shuttle Asa's earnings presentation, Feb 13, 2020
Slide 1: Norwegian Air Shuttle ASA Q4 2019 Presentation
Norwegian Air Shuttle ASA Q4 2019 Presentation 13 February 2020
Slide 2: Agenda
Agenda 1 Welcome 2 Q4 2019 Presentation and Outlook Geir Karlsen, CFO 3 The Way Forward Jacob Schram, CEO 4 Q&A Jacob Schram, CEO and Geir Karlsen, CFO 2
Slide 3: Highlights Q4 2019 and full-year 2019
Highlights Q4 2019 and full-year 2019 Improved EBITDAR excl other losses/(gains) to NOK 436 million in Q4 2019 (NOK -118 million), driven by optimization of route network and #Focus2019 Significant actions to increase financial headroom and established JV with CCBLI Q4 2019 Highlights Successfully c
Slide 4: Focus on profitability showing results
Focus on profitability showing results → ASK growth of 1% in 2019 compared to 37% in 2018 → 7% increase in unit revenue for FY 2019 (-4% in 2018) → Higher load factor – up 0.8 p.p. to 86.6% for the full year UNIT REVENUE DEVELOPMENT VS. SAME MONTH LAST YEAR 4
Slide 5: Available Seat KM (ASK)
Yield and load improvements in Q4 19% reduction in production (ASK) and 15% reduction in traffic (RPK) in Q4 2019, compared to 32% and 25% growth in Q4 2018 Yield up 10% and load factor up 4.0 p.p. 35 ASK (billion) Load Factor 100% 85.8 % 85.3 % 90% 84.9 % 84.9 % 30 80.9 % 80.7 % 77.4 % 78.5 % 77.9
Slide 6: Improved punctuality with 3.1 p.p. in Q4 2019
Improved punctuality with 3.1 p.p. in Q4 2019 → Punctuality improved to 79% in 2019 → Six consecutive quarters with improved punctuality 6
Slide 7: Exhaustive review of the short-haul operation
Exhaustive review of the short-haul operation SUMMER 2020 AIRCRAFT ALLOCATION Focus on Nordic core Existing base Closed base () Versus same season last year Short-haul network connectivity and density NO TRD FI 40 (+1) SE 7 (-2) BGO 14 (-3) OSL HEL ARN Support long-haul feed, where appropriate SVG C
Slide 8: Consolidating long haul to major hubs
Consolidating long haul to major hubs SUMMER 2020 AIRCRAFT ALLOCATION Closed down more than 20 routes on long haul Low growth and wet lease due to engine issues NO 787: 2 Consolidate into fewer airports (SFO, JFK) and consolidate Nordics operation to OSL UK Concentrating on London, Rome, Paris, 787:
Slide 9: Growth in revenue outside Scandinavia in 2019
Growth in revenue outside Scandinavia in 2019 Revenue split by origin in 2019: Revenue growth yoy: Share of customers outside Scandinavia has 19% revenue growth from the US increased significantly, with the strongest customer High growth in the key European markets on growth in the US transatlantic
Slide 10: Financials
Financials
Slide 11: Lower operating expenses more than offset impact from capacity reduction on revenue
Lower operating expenses more than offset impact from capacity reduction on revenue INCOME STATEMENT Q4 2019 NOK million Q4 2019 Q4 2018 Passenger revenue 7,179 7,693 Ancillary passenger revenue 1,375 1,523 Other revenue 390 441 Total operating revenue 8,944 9,658 7% lower revenue driven by capacity
Slide 12: 11% higher unit revenue in constant currency
11% higher unit revenue in constant currency Q4 unit revenue (RASK) +16% to 0.34 (+11% in constant currency) 4% reduction in average sector length Ancillary revenue per passenger increased by 8% to NOK 182 (169) UNIT REVENUE ANCILLARY PER PASSENGER NOK NOK Q4 15 Q4 15 126 0.36 Q4 16 0.32 Q4 16 129 Q
Slide 13: Unit cost development (excl fuel)
10% increase in unit cost excl fuel in constant currency Chart Title Unit cost development (excl fuel) Unit cost incl fuel increased by 10% yoy (4% in constant currency) Unit cost excl fuel increased by 15% yoy (10% in constant currency) JUL AUG SEP OCT NOV DEC 2018 2019 0.60 CASK excl leasing, depr
Slide 14: Lower fuel and handling cost, but negative impact from capacity reduction and currency
Lower fuel and handling cost, but negative impact from capacity reduction and currency Lower fuel cost (-1% per ASK) driven by lower share of wet lease and lower jet fuel spot prices (-7%), partially offset by stronger USD vs NOK (+8%) Higher personnel cost (+19% per ASK) due to grounded aircraft an
Slide 15: #FOCUS2019: Successfully delivered on FY target with savings of NOK 444 million in Q4
#FOCUS2019: Successfully delivered on FY target with savings of NOK 444 million in Q4 Actual Actual Q4 Cost area Completed cost initiatives FY 2019 (MNOK) (MNOK) Airport, handling • Renegotiated technical/MRO agreements providing recurring and one-off effects and technical • Reduced airport charges
Slide 16: Underlying EBITDAR doubled to NOK 6.5 billion in 2019 from NOK 3.2 billion in 2018
Underlying EBITDAR doubled to NOK 6.5 billion in 2019 from NOK 3.2 billion in 2018 INCOME STATEMENT FY 2019 Full year Full year NOK million 2019 2018 Passenger revenue 35,216 32,560 Ancillary passenger revenue 6,651 6,267 8% revenue growth mainly driven by improving Other revenue 1,654 1,439 unit re
Slide 17: Reduced assets and long-term debt
Reduced assets and long-term debt BALANCE SHEET No additions of aircraft in Q4, completed sale of five 737-800s 17
Slide 18: Reduced interest-bearing debt (excl IFRS 16) by NOK 6.7 billion
Reduced interest-bearing debt (excl IFRS 16) by NOK 6.7 billion CASH FLOW Full year Full year NOK million 2019 2018 Profit before tax -1,688 -2,490 Paid taxes -38 -23 Depreciation, amortization and impairment 6,457 1,668 Changes in air traffic settlement liabilities -801 414 Changes in receivables -
Slide 19: Significant actions to increase financial headroom while transforming the business
Significant actions to increase financial headroom while transforming the business #Focus2019 Sale of NOFI Sale of aircraft Capital raises Target achieved Completed sale of Concluded 24 aircraft Private placement of through continuous shares with final sales for 2019 and NOK 1.1 billion and CB cost
Slide 20: Outlook
Outlook
Slide 21: Guidance on fleet plan and capital expenditure
Guidance on fleet plan and capital expenditure Capital commitments* Deliveries B737 MAX8 Deliveries B787-9 2020: USD 1.5 billion (previous estimate USD 1.4 billion) 16 (16) 4 (4) 2021: USD 0.6 billion 10 (10) 0 (1) * Total contractual commitments (all aircraft incl PDP) The deliveries of MAX aircraf
Slide 22: Disruptions to operations
Disruptions to operations Grounding of the 737 MAX Optimizing the network and securing leased capacity to make sure the core production is covered for Summer 2020 without the MAX An estimated negative impact on P&L of NOK 1 billion in 2019 Still in discussions with Boeing regarding compensation 787
Slide 23: Outlook and guidance for 2020
Outlook and guidance for 2020 Estimated production (ASK) 13% to 15% ASK reduction in 2020 (previous estimate: -10%) Guidance for 2020 Unit cost incl depreciation excl fuel of NOK 0.33-0.34 Unit cost incl depreciation and fuel of NOK 0.44-0.45 The company targets a positive net profit for 2020 Assump
Slide 24: The Way Forward
The Way Forward 24
Slide 25: First impressions
First impressions I’ve met over 1:1 meetings with Been to… 50 senior 900 Dublin, passionate employees managers Barcelona, in the air and on the London, Fornebu from more than ground 30 departments and OSL/Hangar 25
Slide 26: More than 250 initiatives identified across six workstreams
More than 250 intiatives identified across six workstreams 277 Identified initiatives 6 Workstreams 1. Network 2. People 3. Product, pricing and revenue management 4. Operational performance 40 Completed initiatives 5. Cost reduction/procurement 2 6. Value proposition
Slide 27: Driving NEXT to deliver significant value in 2020
Driving NEXT to deliver significant value in 2020 NOK 1.5 billion Network People Product & Operational Cost-out / NEXT impact PRM performance procurement 2020 Key focus areas for 2020 • Cut loss-making • W19/20 crew • New core system • Support tools and • Optimized ticket routes reductions training
Slide 28: My long-term ambition: Establishing Norwegian as a great global enterprise within future mobility
My long-term ambition: Establishing Norwegian as a great global enterprise within future mobility GREAT enterprise Optimizing the organization & GOOD organisation within future mobility positioning for profitability within aviation industry From 2025 onwards From fall and Until summer next 3-5 years
Slide 29: Defining strategic platform and value proposition for the next phase of Norwegian
Defining strategic platform and value proposition for the next phase of Norwegian Value proposition: Strategic How do we Platform: Who are we and + competitively position what do we ourselves to stand for? win our customers? Value proposition 29
Slide 30: Cost and carbon efficiency advantage go hand-in-hand
Cost and carbon efficiency advantage go hand-in-hand Fleet carbon efficiency 70 grams CO2 per RPK, 4% improvement from 2018 Net carbon advantage 1.7 million metric tons CO2 saved in 2019 compared to industry average Carbon offsets > 40% of total CO2 emissions offset through EU ETS 123,000 customers
Slide 31: Fly Norwegian
Fly Norwegian Book tickets at Norwegian.com
Slide 32: Appendix
Appendix 32
Slide 33: Stable demand at Norwegian's key airports
Stable demand at Norwegian’s key airports Source: As reported by Avinor, Swedavia, Copenhagen Airports, Finavia, Gatwick Airport, Aena, Aeroporti di Roma and ADP. 33
Slide 34: Market shares at key airports
Market shares at key airports 2014 2015 2016 2017 2018 2019 14 - 107,000 passengers 43% mkt share 12 10 - 531,000 passengers 4% mkt share 8 - 623,000 passengers 23% mkt share - 532,000 passengers - 375,000 passengers 17% mkt share 10% mkt share 6 - 406,000 passengers 4 12% mkt share 2 Passengers (mi
Slide 35: IFRS 16 income statement effects in Q4 2019
IFRS 16 income statement effects in Q4 2019 35
Slide 36: IFRS 16 income statement effects in 2019
IFRS 16 income statement effects in 2019 36
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