Norwegian Air Shuttle Asa · OSL:NAS
Norwegian Air Shuttle Asa — Q2 2014 Earnings Presentation
25 slides from Norwegian Air Shuttle Asa's earnings presentation, 2014
Slide 1: Norwegian Air Shuttle ASA Q2 2014 Presentation
Norwegian Air Shuttle ASA Q2 2014 Presentation Photo: Lasse Andreas Vestli Berg / Fugløya on approach to Bodø in Northern Norway Europe’s best low-cost airline 2013 & 2014
Slide 2: Double digit revenue growth in Q2
Europe’s best low-cost airline Double digit revenue growth in Q2 2013 & 2014 • Group revenues of MNOK 5,043 in Q2 2014 + 26 % 5 000 4 000 3 000 Domestic Revenue (MNOK) International Revenue (MNOK Total Revenues (MNOK) 2 000 1 000 MNOK 0 Q2 11 Q2 12 Q2 13 Q2 14 Revenues 2 725 3 170 4 012 5 043 Domes
Slide 3: Q2 affected by one-offs and price pressure
Europe’s best low-cost airline Q2 affected by one-offs and price pressure 2013 & 2014 Q2 14 Q2 13 EBITDAR MNOK 563 878 EBITDA MNOK 94 574 EBIT MNOK -85 446 Pre-tax profit (EBT) MNOK -137 277 Net profit MNOK 129 197 EBITDAR development Q2 EBT development Q2 900 300 878 277 800 250 700 200 680 150 600
Slide 4: Operational and currency headwinds in Q2
Europe’s best low-cost airline Operational and currency headwinds in Q2 2013 & 2014 • Wet-lease on long-haul – Previously delayed Dreamliner deliveries with knock-on effects (crew training) – Slow US DOT approval process causes suboptimal scheduling • One-man strike caused MNOK 101 in lost revenue •
Slide 5: Ancillary revenue remains a significant contributor
Europe’s best low-cost airline Ancillary revenue remains a significant contributor 2013 & 2014 • Ancillary revenue comprises 14% of Q2 revenues • NOK 110 per scheduled passenger (an increase of 38% from last year) 5
Slide 6: Continued positive cash flow from operations in Q2
Europe’s best low-cost airline Continued positive cash flow from operations in Q2 2013 & 2014 ● Cash flows from operations in Q2 14 MNOK 416 (MNOK 1084) ● Cash flows from investing activities in Q2 14 MNOK -1 902 (MNOK -702) ● Cash flows from financing activities in Q2 14 MNOK 660 (MNOK 96) ● Cash a
Slide 7: Strong operating cash flow invested in aircraft
Europe’s best low-cost airline Strong operating cash flow invested in aircraft 2013 & 2014 • Cash flow from operations NOK 8.2 billion since aircraft renewal program began in 2007 • Invested NOK 14.0 billion of which NOK 6.4 with internal funds • Future sublease or sale of aircraft will boost cash 3
Slide 8: Equity ratio affected by increase in non-current assets
Europe’s best Three on-B/S737-800 and one on-B/S 787-8 delivered in Q2 alone: low-cost airline 2013 & 2014 Equity ratio affected by NOK 4.5 billion increase in non-current assets ● Total balance of NOK 18.9 billion ● Net interest bearing debt NOK 6 billion ● Equity of NOK 2.3 billion at the end of Q
Slide 9: Record-high Q2 load in spite of 41% capacity increase
Europe’s best low-cost airline Record-high Q2 load in spite of 41% capacity increase 2013 & 2014 • 46% traffic growth • Average flying distance up 18% • Short-haul load up 2.0 p.p. + 41 % 100.0 % 12 000 ASK Load Factor 11 000 79.1 % 79.4 % 78.4 % 79.8 % 10 000 77.7 % 78.3 % 78.3 % 76.5 % 76.9 % 80.0
Slide 10: 6.4 million passengers in Q2
Europe’s best low-cost airline 6.4 million passengers in Q2 2013 & 2014 • An increase of 900,000 passengers +16 % 6.00 5.00 4.00 3.00 2.00 Passengers (million) 1.00 0.00 Q2 05 Q2 06 Q2 07 Q2 08 Q2 09 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Pax (mill) 0.9 1.3 1.6 2.3 2.8 3.2 4.0 4.5 5.5 6.4 10
Slide 11: Growing market share in all markets
Strong demand: Europe’s best low-cost airline 2013 & 2014 Growing market share in all markets • Business model works – lower costs and prices attract volume + 174,000 pax 47% of mkt growth 40 % 35 % 30 % + 193,000 pax 33% of mkt growth 25 % + 90,000 pax 20 % 14% of mkt growth + 47,000 pax 15 % 26% o
Slide 12: Lowest cost always wins
Europe’s best low-cost airline Lowest cost always wins 2013 & 2014 Sources: Norwegian Q2 2014 report (period displayed July 2013 – June 2014), SAS Interim Reports (including latest February 2014 – April 2014). Figures as reported in respective quarters and not restated - Scandinavian Airlines (SK) o
Slide 13: Operation skewed towards high cost competitors
Europe’s best low-cost airline Operation skewed towards high cost competitors 2013 & 2014 • Competitors largely high-cost and/or charter • Highest cost competitor also the largest competitor Routes which overlap Volume-weighted city-pair overlap (% of Norwegian’s total – Summer 2014 – not volume wei
Slide 14: Cost gap is widening in favor of Norwegian
Europe’s best low-cost airline Cost gap is widening in favor of Norwegian 2013 & 2014 Sources: Norwegian Q2 2014 report (period displayed July 2013 – June 2014), SAS Interim Reports (including latest February 2014 – April 2014). Figures as reported in respective quarters and not restated - Scandinav
Slide 15: High cost competitor with the highest capacity growth
Europe’s best low-cost airline High cost competitor with the highest capacity growth 2013 & 2014 Source: OAG Aviation Worldwide Schedules Analyser. The graph depicts change in departing intra-Europe seat capacity from Scandinavian airports April 2014 – September 2014 as per April 30 2014.
Slide 16: Unit cost at constant currency and excl one-off down 7%
Europe’s best low-cost airline Unit cost at constant ccy and excl one-off down -7% 2013 & 2014 • Unit cost ex fuel down 4% - hampered by weak NOK & Long-Haul wet lease • Unit cost including fuel down 2% - hampered by weak NOK & Long-Haul wet-lease 0.50 Fuel share of CASK 0.45 -2% CASK excl fuel Oper
Slide 17: Aiming for FY CASK NOK 0.25 excluding fuel
Europe’s best low-cost airline Aiming for FY CASK NOK 0.25 excluding fuel 2013 & 2014 Scale economies New more efficient aircraft Growth adapted to int’l markets • Uniform fleet of Boeing 737-800s • Flying cost of 737-800 lower than 737-300 • Cost level adapted to local markets • Overheads • 737-800
Slide 18: Unit cost under control – further upside
Europe’s best low-cost airline Unit cost under control – further upside 2013 & 2014 0.16 – Phase-out 737-300 (Fuel, Tech, Handling, Airport/ATC & Personnel) – Phase-in Max / Neo / Dreamliner (Fuel & Tech) 0.14 Fuel – Larger scale (Overhead, Sales & distrib., Personnel) – Further automation (Overhead
Slide 19: Long-haul financial targets maintained
Europe’s best low-cost airline Long-haul financial targets maintained 2013 & 2014 • 2014 CASK in the area of NOK 0.36 (excl. accrued IRR costs) • 2015 CASK target NOK 0.34 – 0.35 (not previously disclosed) • 2015/16 CASK target NOK 0.35 – 0.30 (unchanged) – Higher-end of range with majority of US bo
Slide 20: A fleet of 17 Dreamliners by 2018
Europe’s best low-cost airline A fleet of 17 Dreamliners by 2018 2013 & 2014 Seven 787-8 in operation One 787-8 on firm order Nine 787-9 on firm order 2015 2016 2017 2018
Slide 21: EU-AOC necessary to obtain traffic rights for growth
Europe’s best low-cost airline EU-AOC necessary to obtain traffic rights for growth 2013 & 2014 • Norway not part of European horizontal Air Traffic Agreements • Irish AOC necessary to fly to Asia, Africa and South America from Europe • Local employment irrespective of country of incorporation EU-AO
Slide 22: Current committed fleet plan
Europe’s best low-cost airline Current committed fleet plan 2013 & 2014 Deliveries 787-8 Deliveries 737-800 Re-deliveries 737-300 Re-deliveries 737-800 2014: +1,164 seats +2,604 seats -740 seats -558 seats 22
Slide 23: Leasing company provides tremendous flexibility
Europe’s best low-cost airline Leasing company provides tremendous flexibility 2013 & 2014 • Arctic Aviation Assets (AAA) with up to 466 aircraft in 2022 – 316 aircraft delivered or on firm order – 150 purchase rights (100 max, 50 neo) • Permits a flexible fleet growth for the airline - tailored to
Slide 24: Expectations for 2014 (Group)
Europe’s best low-cost airline Expectations for 2014 (Group) 2013 & 2014 • Business environment – Economic uncertainty in parts of Europe – Seasonal fluctuations – Yield pressure from capacity investment – Increased competitive pressure in the Nordic region • Production – The company expects a produ
Slide 25: Norwegian offers 417 scheduled routes to 126 destinations
From bases in NORWAY SWEDEN From bases in DENMARK Norwegian offers 417 FINLAND scheduled routes to 126 destinations in 39 countries From bases in the USA & THAILAND From bases in SPAIN From the UK base
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