Norwegian Air Shuttle Asa · OSL:NAS

Norwegian Air Shuttle Asa — Q3 2016 Earnings Presentation

25 slides from Norwegian Air Shuttle Asa's earnings presentation, Oct 20, 2016

  1. Slide 1: Norwegian Air Shuttle ASA Q3 2016 Presentation

    Norwegian Air Shuttle ASA Q3 2016 Presentation 20 October 2016

  2. Slide 2: Highlights Q3 2016

    Highlights Q3 2016 Awarded Europe’s Leading Low-Cost Airline 2016, by the World Travel Awards for the second year running Start-up of low-cost long haul between US and Paris. Announced new long haul routes between US and Barcelona for summer 2017 Added 14 new 737-800 aircraft and three 787-9 Dreamli

  3. Slide 3: 8.6 million passengers in Q3 2016 (+12 %)

    8.6 million passengers in Q3 2016 (+12 %) 10 + 12 % 9 8 7 6 5 4 3 Passengers (million) 2 1 0 Q3 07 Q3 08 Q3 09 Q3 10 Q3 11 Q3 12 Q3 13 Q3 14 Q3 15 Q3 16 Pax (mill) 2,0 2,6 3,1 3,8 4,6 5,2 6,0 7,1 7,7 8,6 3

  4. Slide 4: Available Seat KM (ASK)

    Q3 load factor up to 91 % (+0.6 pp.) 16.6 % growth in capacity (ASK) 17.3 % growth in traffic (RPK) Average flying distance increased by 4 % Load ASK Load Factor 20 000 +0.6 p.p. 100% 19 000 90,7 % 91,3 % 18 000 86,1 % 84,6 % 90% 84,4 % 81,8 % 82,2 % 82,6 % 81,4 % 17 000 80,5 % 16 000 80% 15 000 14

  5. Slide 5: Building presence in Spain and UK

    Building presence in Spain and UK 12 000 000 + 740,000 pax 41 % mkt share 10 000 000 8 000 000 + 1,275,000 pax + 405,000 pax 4 % mkt share 21 % mkt share 6 000 000 + 412,000 pax 17 % mkt share + 533,000 pax 10 % mkt share 4 000 000 + 160,000 pax 13 % mkt share 2 000 000 0 Oslo Arlanda Copenhagen Hel

  6. Slide 6: Over 1 million passengers in Spain

    Over 1 million passengers in Spain Number of passengers booked in Spain increased to almost 1.2 million in Q3, an increase of more than 400,000 Approaching 50 % share of passengers outside Scandinavia Growth in number of passengers (%): Split passengers by origin: Hungary Other Spain Italy Poland US

  7. Slide 7: 15 % revenue growth in Q3

    15 % revenue growth in Q3 Unit revenue RASK reduced by 3 % on higher load, no net currency impact 4 % lower yield due to mix and increased sector length Growth in domestic revenue mainly related to Spain and Sweden + 15 % 9 000 8 000 7 000 6 000 Domestic revenue 5 000 4 000 International revenue 3 0

  8. Slide 8: 23 % growth in total ancillary revenue in Q3

    23 % growth in total ancillary revenue in Q3 14 % share of Group revenue Per passenger sales increased by 10 % to NOK 139 Ancillary (NOK) short haul vs long haul: Split by category: Q3 15 492 139 473 Q3 16 126 Flexibility/ modifications Flexibility/ modifications Pre-sold Pre-sold packages packages

  9. Slide 9: Currently operating 40 long haul routes

    Currently operating 40 long haul routes First Trans-Atlantic flight to Paris in July 9

  10. Slide 10: Over 50 long haul routes in 2017

    Over 50 long haul routes in 2017 New routes in 2017 to/from USA-Barcelona and Copenhagen-San Fransisco More new routes to be announced Adding frequency to existing routes 10

  11. Slide 11: Scaling up the wide body fleet to 32 by 2018

    Scaling up the wide body fleet to 32 by 2018 Widebody aircraft Deliveries 787-8 Deliveries 787-9 (delivered and firm orders) (291 seats) (344 seats) 2013 2014 2015 2016 2017 2018 Aircraft 3 7 8 12 21 32 Seats 873 2 037 2 328 3 704 6 800 10 584 11

  12. Slide 12: Top modern fleet with an average age of 3.6 years

    Top modern fleet with an average age of 3.6 years Deliveries 787-9 Deliveries 737-800 Re-deliveries 737-800 2016: +1376 seats +3,162 seats -744 seats 163 160 B788/B789 owned 12 144 B788/B789 leased 140 7 20 B737 MAX 8 owned 14 B738 owned 16 120 116 6 B738 S&LB 3 9 B738 leased 99 100 96 3 B733 owned

  13. Slide 13: Operating cost EBITDA level per ASK (CASK)

    Unit cost comparison based on the latest full-year results (in NOK) 0,90 0,80 0,82 0,77 0,70 0,67 0,60 0,60 0,50 0,54 Operating cost EBITDA level per ASK (CASK) 0,51 0,40 0,42 0,30 0,29 0,27 0,20 0,10 - Sources: Based on official full-year 2015 annual report for Norwegian Air Shuttle, Finnair, Vueli

  14. Slide 14: Financials

    Financials 14

  15. Slide 15: EBT improved to NOK 1.3 billion in Q3

    EBT improved to NOK 1.3 billion in Q3 (NOK million) Q3 15 Q3 16 Change Revenue 7 277 8 360 EBITDAR 2 046 2 573 528 EBITDA 1 484 1 725 241 Pre-tax profit (EBT) 1 098 1 270 172 Net profit 833 992 EBITDAR development Q3 EBT development Q3 3 000 1 500 2 500 1 250 2 573 1 270 1 098 2 000 2 046 1 000 NOK

  16. Slide 16: Underlying EBITDA increased to NOK 2.3 bn

    Underlying EBITDA* increased to NOK 2.3 bn NOK million Q3 2015 Q3 2016 chg Revenue 7 277 8 360 1 083 EBITDA as reported 1 484 1 725 241 Other losses/gains -62 -207 -146 EBITDA excl other losses/gains 1 546 1 933 387 Non-recurring items: - additional expense enigne overhaul -22 - passenger compensati

  17. Slide 17: Unit cost cut by 5 % to NOK 0.39

    Unit cost cut by 4 % to NOK 0.39 Unit cost adj. for currency -5 % Unit cost excl. fuel of NOK 0.30 (flat). Down 1 % adj. for currency 0,50 CASK excl fuel 0,45 Fuel share of CASK 0,13 0,40 0,19 0.15 0,35 0,11 0,14 0,11 0,09 Operating cost EBITDA level per ASK (CASK) 0,14 0,13 0,14 0,30 0,25 0,20 0,32

  18. Slide 18: Full impact of lower fuel cost, fuel unit cost -15 %

    Full impact of lower fuel cost, fuel unit cost -15 % 0,16 Sales/ Depr. distrib. 4% 2% Other Flight ops. exp. 0,14 4% Gen. and Fuel adm. exp. 5% 22 % 0,12 Technical 7% 0,10 Leasing Personnel 13 % 15 % Fuel 0,08 Personnel Handling Airport & ATC Airport/ATC 12 % 14 % 0,06 Handling Leasing Other 0,04 Te

  19. Slide 19: NOK 2.8bn cash-flow from operations first 9M

    NOK 2.8bn cash-flow from operations first 9M Invested NOK 5.4 bn in new aircraft of which NOK 3.1 bn financed by own cash NOK 2.2 billion in cash at the end of Q3 Q3 Q3 9M 9M NOK million 2015 2016 Chg 2015 2016 Chg Profit before tax 1 098 1 270 172 778 1 209 431 Paid taxes -48 -29 19 -44 -29 16 Depr

  20. Slide 20: Strengthened equity in spite of adding on-balance aircraft

    Strengthened equity in spite of adding 15 on- balance aircraft Added 15 new 737-800 on balance the last 12 months + PDP’s NOK 18.7 bn net debt 10 % equity ratio (16 % incl. mv of Bank Norwegian) 36 000 33 000 30 000 Aircraft 27 000 Financing Aircraft 16 145 24 000 20 573 14 209 21 000 17 902 18 000

  21. Slide 21: Financing on-track

    Financing on-track Expected capex (all aircraft incl. PDP) USD 1.0 bn for 2016 USD 2.1 bn for 2017 PDP financing / liquidity Tapped unsecured bonds (NOK 965 million) New PDP financing with backstop lease for five 737-800 PDP Financing for 50 A320 Neo in place Long-term financing EETC financing of te

  22. Slide 22: Outlook for 2016

    Outlook for 2016 Markets and business Soft macro and passenger tax introduced in Norway Monitoring demand in the UK post Brexit, limited changes to bookings Bookings volumes on par with last year, capacity adjusted Negative impact on RASK by mix and distance. Use lower price to stimulate volume An e

  23. Slide 23: Outlook for 2017

    Outlook for 2017 An estimated production growth (ASK) of 30 % Narrow body + 20 %, wide body + 60 % 737 Max representing 5 p.p. of the growth for narrow body Increasing distance driven by mix (long-haul) Unit cost target of NOK 0.38 to 0.39 Assumptions: Fuel price of USD 500 per metric ton, USD/NOK 8

  24. Slide 24: Summary

    Summary Strongest result in the company’s history Maintaining a strong and stable load factor Ramping up long haul. Launched new long haul routes between USA and Barcelona Launch of the 737 Max in 2017 Completed tap of bonds above par 24

  25. Slide 25: Norwegian operates 460 routes to 130 destinations

    Norwegian operates 460 routes to 130 destinations From bases in SWEDEN DENMARK Long Haul FINLAND From bases in From the From bases in SPAIN UK base NORWAY 25

Norwegian Air Shuttle — Q3 2016 Earnings Presentation on 6ix