Norwegian Air Shuttle Asa · OSL:NAS

Norwegian Air Shuttle Asa — Q3 2004 Earnings Presentation

19 slides from Norwegian Air Shuttle Asa's earnings presentation, Nov 11, 2004

  1. Slide 1: Two years of strong growth

    Norwegian Air Shuttle ASA (NAS) Two years of strong growth Q3 2004 November 11, 2004 Oslo

  2. Slide 2: Two years of strong growth

    Two years of strong growth ● Q3 results in line with expectations ● Financial position maintained ● Improved earnings capability ● Potential upside ahead 2

  3. Slide 3: Turnover up 44% from Q3 2003

    Turnover up 44% from Q3 2003 ● 332 Mill NOK in turnover in Q3 2004, compared to 230 (212 from low-fare) in Q3 2003 ● Growth driven by increased production and higher passenger volumes ● Rapid expansion accomplished with continuously higher load-factor (67% in Q3 03 to 69% in Q3 04) 44 % MNOK 350 300

  4. Slide 4: Close to Break-Even

    Close to Break-Even ● EBITDA result of -11 MNOK in Q3 2004, versus -13 MNOK in Q3 2003 (low-fare) ● July was positive with a strong load-factor of 80 % ● Negative impact from external factors – fuel prices and flight-control disruptions constituted 11 MNOK in Q3 MNOK EBITDA level B-737 40 30 20 10 0

  5. Slide 5: Two years of strong growth

    Two years of strong growth ● Q3 results in line with expectations ● Financial position maintained ● Improved earnings capability ● Potential upside ahead 5

  6. Slide 6: Cash follows sales pattern

    Cash follows sales pattern ● Cash-balance down from Q2 2004 to 235 MNOK as of Oct 1. 2004 ● A period where people travel what they previously have bought ● Sales has picked up after summer vacation CASH FLOW (MNOK) 2003 2004 From: Q1 Q2 Q3 Operation activities 61,5 12,2 0,7 -79,4 Investments -28,6 1

  7. Slide 7: Strong financial position maintained

    Strong financial position maintained ● Total assets of 513 MNOK ● IPO proceeds of 235 MNOK ”still in the bank” ● Equity-share of 36% Third Quarter FIXED ASSETS 2004 2003 EQUITY 2004 2003 Intangible assets 97,4 52,1 Tangible fixed assets 28,6 48,5 Paid-in equity 267,2 71,2 Financial fixed assets 18,1

  8. Slide 8: Two years of strong growth

    Two years of strong growth ● Q3 results in line with expectations ● Financial position maintained ● Improved earnings capability ● Potential upside ahead 8

  9. Slide 9: Rapid capacity expansion

    Rapid capacity expansion Growth 02-04 Sept. 02 Sept. 03 Sept. 04 Man-years 254 300 400 57 % Fleet 6 8 11 83 % Number of passengers 65 879 129 298 184 043 180 % Airborne hours (ABH) 769 1 311 2 355 205 % Avail. Seat Kilom. (mill ASK) 57 119 224 300 % Passenger traffic (mill RPK) 29 77 141 386 % Numbe

  10. Slide 10: Costs are down

    Costs are down ● Average unit costs of 0.50 NOK in Q3 2004, down more than 30 % from Q3 2003 (0.75 NOK) ● Scale benefits from increased production and longer sector lengths, have been main drivers ● Cost effective distribution solutions, renegotiated supplier agreements and higher fleet and crew uti

  11. Slide 11: Market penetration continued

    Market penetration continued ● 110 % production increase from Q303 to Q304 ● Load factor increased to 69 % in Q304, up 2 %-points from Q303 ● Load factor maintained in the 65-70 % range, and steadily increasing 80 % 683 642 70 % 60 % 370 331 349 50 % 40 % Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 ASK (MILL) Loa

  12. Slide 12: Earnings capability improved

    Earnings capability improved Mill NOK 350 45 % 300 35 % 250 200 25 % 150 15 % 100 50 5% 0 -5 % -50 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 -100 -15 % -150 -25 % -200 -250 737 Revenue EBITDAR Margin EBITDA Margin -35 % 12

  13. Slide 13: Two years of strong growth

    Two years of strong growth ● Q3 results in line with expectations ● Financial position maintained ● Improved earnings capability ● Potential upside ahead 13

  14. Slide 14: Two years of price war

    Two years of price war Tilbake til Q104 -nivå Jul Okt Consumer price index, domestic air-fares 14

  15. Slide 15: Yield pressure has softened

    Yield pressure has softened ● Aggressive price competition had a strong adverse effect on yield levels in Q2. This continued somewhat in the start of Q3 ● As predicted, the yield pressure has eased off in the latter part of Q3 ● Recently realized beginning of year price-levels NOK 1,20 1,00 0,80 0,6

  16. Slide 16: High operational leverage

    High operational leverage MNOK 25 20 15 10 5 0 Fuelprice 1 % up on 10 NOK up on Cost down by down NOK Loadfactor average price 1 øre/ASK 100 per ton *) Baseline: Annual Turnover of 1.4 BNOK with 2 Mill passengers 16

  17. Slide 17: Cost base Q3 2004

    Cost base Q3 2004 Cost / ASK versus average sector length (1) 2000 KLM 1800 1600 British Airways 1400 1200 lberia Lufthansa Air France SAS km 1000 800 Easyjet Braathens (2003) (2003*) Ryanair Norwegian** Q402 600 (2003) (Q3, 2004) 400 200 0 0 20 40 60 80 100 120 øre (1) Source: Goodbody Stockbrokers

  18. Slide 18: Top-line growth is key

    Top-line growth is key Ongoing improvement program 3-6% 5-10% 180 MNOK 5-10% improvement 140 potential* 70 Revenue Network & Sales & Management Product Marketing 18 *) Baseline: Annual Turnover of 1.4 BNOK

  19. Slide 19: Two years of strong growth

    Two years of strong growth ● Q3 results in line with expectations ● Financial position maintained ● Improved earnings capability ● Potential upside ahead

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