Norse Atlantic Asa · OSL:NORSE
Norse Atlantic Asa — Q3 2023 Earnings Presentation
29 slides from Norse Atlantic Asa's earnings presentation, Oct 31, 2023
Slide 1: Norse Atlantic Airways Q3 23 Presentation
» Norse Atlantic Airways Q3 23 Presentation 31 October 2023
Slide 2: Disclaimer
Disclaimer This presentation and its appendices (the "Presentation") has been produced by Norse Atlantic ASA (the "Company", and together with its direct and indirect subsidiaries, the "Group"). This Presentation has been prepared for information purposes only, and does not constitute or form part o
Slide 3: Low-cost, long-haul works
Low-cost, long-haul works Q3: Best in class CASK and ancillary revenues Net profit USD 16 mill Load factor 83% CASK USD 3.63 in Q3 excl. non-cash lease* Load factors and yield increasing Revenue management and profitable growth Considering capital raise From 10 aircraft to 12 in 2024 Strong performa
Slide 4: Highlights from summer and Q3 2023
Highlights from summer and Q3 2023 1 All 15 aircraft revenue generating from 1 July 2 Strong summer season, softening towards quarter-end 3 High regularity – 99.8% 4 Overall good profitability on routes, but some lessons learnt 5 Some headwinds from fuel costs and cargo market 6 More potential on th
Slide 5: Strong operational performance
Strong operational performance % of flights completed and arriving on time Punctuality (A15) Completion 90% 100.0% 80% • 100% completion 70% 99.0% from late April through to early 60% September 98.0% 50% • In September 40% 99.4% completed 97.0% 30% • More than 70% of flights arrived on- 20% 96.0% ti
Slide 6: Larger scale and improved pricing
Larger scale and improved pricing Record number of passengers and load Increasing ticket prices and ancillary factor sales Passengers USD per passenger Load factor 500 160,000 100% 450 90% 140,000 80% 400 120,000 70% 350 100,000 60% 300 80,000 50% 250 40% 200 60,000 30% 150 40,000 20% 100 20,000 10%
Slide 7: Higher revenues and lower costs
Higher revenues and lower costs The lowest CASK1) in the transatlantic Continuing to increase RASK2) USD cent per ASK market USD cent per ASK 8 8 7.1 7 7 5.9 6 6 5.3 5.0 5 5 4 3.6 4 3 3 2.2 2 2 1 1 0 0 Q1 2023 Q2 2023 Q3 3023 Q1 2023 Q2 2023 Q3 2023 • • 1) CASK defined as CASK ex. fuel 2) RASK defin
Slide 8: Ancillary sales are increasing
Ancillary sales are increasing Ancillary revenue per passenger $ $131 • Norse’s fare model provides pricing flexibility to $120 passengers $42 • Ancillary revenue consists of: $33 ⚬ Upgrades to Premium cabin $84 ⚬ Extra baggage $78 $73 ⚬ Seat selection ⚬ Food and beverages $35 $26 $28 ⚬ 3ʳᵈ party sa
Slide 9: The importance of fuel-efficient aircraft
The importance of fuel-efficient aircraft Jet fuel price at record heights1) Fuel consumption vs. best-in class long-haul competitors USD/gallon 4,5 Norse inception & operations 4,0 Aircraft First flight Seats Sector Fuel per seat 3,5 Norse Boeing 787-9 2019 338 9,208 km 2.08 L/100km3 3,0 2,5 Boeing
Slide 10: Transatlantic cargo market – high volumes, declining prices
Transatlantic cargo market – high volumes, declining prices Mill. tons USD/ton 300 6.00 • Since July 2021, cargo volumes are 250 5.00 down 2% 200 4.00 • Prices Europe to North America are down 49% and 21% return 150 3.00 • USD 16 million lower cargo revenue in 2023 YTD compared to expectations 100 2
Slide 11: Increased working capital
Increased working capital The challenge of being a new airline Strong earnings balanced by adverse working capital ...leads to reduced available liquidity movements in Q3... USDk USDk 40,000 80,000 30,000 60,000 20,000 40,000 10,000 20,000 - - (10,000) (20,000) (20,000) (40,000) (30,000) (60,000) (4
Slide 12: Financing and strategy update
Financing and strategy update • Following adverse working capital movements and an accelerated payment plan with a key supplier, Norse will explore additional fundraising of up to USD 45 million • Pareto Securities and SpareBank 1 Markets are engaged as advisers • B T Larsen & Co and Scorpio Holding
Slide 13: Q3 highlights
Q3 highlights • Q3 revenue more than doubled from Q2 to USD 205 million Activity and revenue • Number of passengers, ASK and RPK also more than doubled compared to Q2 doubled • 1,547 of 1,550 planned flights were completed (99.8%) Low-cost confirmed, • Ramping up activity while keeping costs under c
Slide 14: Income Statement
Income Statement First quarter of profit as capacity and revenue increase largely during summer season 3 months 3 months 3 months 12 months USD thousands Q3 2023 Q2 2023 Q1 2023 FY 2022 Revenue 204,796 100,101 39,757 104,269 • Q3 2023 revenue up 105% versus prior Personnel expenses 27,508 23,590 19,
Slide 15: Cash Flow Statement
Cash Flow Statement 3 months 3 months 3 months 12 months USD thousands Q3 2023 Q2 2023 Q1 2023 FY 2022 Operating cash flows 34,479 (4,672) (39,590) (90,862) before WC1) movements • Q3 2023 total cash decrease of $16 million mainly driven by outflow from financing WC1) movements (32,409) 23,667 18,81
Slide 16: Balance Sheet
Balance Sheet Statement of financial position • $890 million aircraft right-of-use asset USD thousands 30 SEP 23 30 JUN 23 31 DEC 22 ⚬ 15 Boeing 787 Dreamliners on leases with average remaining life 10.5 years Non-current assets 930,589 949,004 973,037 ⚬ Corresponding lease liability of $962 milli
Slide 17: Adjusted Financials
Adjusted Financials Book Financials adjusted with effects of leases USD millions 30 SEP 23 • Lease accounting generally implies a “front- loading” of expenses above cash Total Book Equity (80) expenditures in the early phase of a lease Accumulated non-cash lease expenses 131 • Paying flexible Power
Slide 18: Market recovery post-COVID continues
Market recovery post-COVID continues Global air passengers, RPKs, bn per month Comments • The market has rebounded to 2019 levels 12 • Lagging recovery in Asia has led to temporary capacity reallocation to Transatlantic market 9 Trillion RPKs1 per year • Economic uncertainty indicates softer demand
Slide 19: Sharpening the strategy
Sharpening the strategy 1 Flexible market strategy – dynamic pricing 2 Increased brand awareness 43 inches in Premium Economy Eurowings: 38 / Singapore Airlines: 38 / Air New Zealand: 41 / Cathay Pacific:40) 3 Premium cabin rolls out in Q4 4 Growing ancillary revenue 5 Well positioned for ACMI (wet-
Slide 20: More in place to generate higher revenues
More in place to generate higher revenues 18-Apr 1-Jul 8-Sep 19-Sep Various Q4 Upgrade Expedia Paxport Travel insurance Virtual Interline In-seat ordering bidding system More airlines added In-seat ordering Norse inventory for Allows UK travel Generated extra to our virtual system expected to Increa
Slide 21: Launch of upgraded premium product in Q4
Launch of upgraded premium product in Q4 Launch of upgraded service concept to fully deliver yield potential of our leading Premium product “Norse is making enough room to stretch on a long-haul European low- cost carrier possible yet again. The ample legroom and generous recline also come coupled w
Slide 22: Higher yields as routes mature
Higher yields as routes mature • Routes show high growth in their second year of operations – several second-year routes give higher unit RASK Increase Year over Year revenue growth opportunities in 2024 Q3 2023 vs Q3 2022 74% • Markets launched in our first year of 70% flying, 2022, show above aver
Slide 23: Connecting key long-haul destinations
Connecting key long-haul destinations
Slide 24: Dreamliners are in demand
Dreamliners are in demand Aircraft employment strategy S23-S24 • 15 Boeing 787 Dreamliners leased1) • 10.5 years average remaining lease Employed in 3 term at fixed low cost with no sublease/ ACMI 5 inflationary or other adjustments ~ 6-8 • We estimate our lease rates to have an NPV of more than USD
Slide 25: Summary and Outlook
Summary and Outlook Building a profitable long-haul low-cost transatlantic airline Strategy and business • Low and decreasing unit costs (CASK) case validated • High load factors with increasing fare levels through summer season • Production doubled in Q3 compared to Q2 Increased activity • All 15 a
Slide 26: Norse will be...
Norse will be... The first truly low-cost sustainable transatlantic airline The lowest unit cost airline amongst peers The highest ancillary revenue per passenger in the industry The lowest emissions per passenger versus long-haul peers The most affordable and best value transatlantic product 26
Slide 27: Appendix
= Appendix
Slide 28: Key Operational Numbers
Key Operational Numbers Monthly break-down over last five quarters Jul22 Aug22 Sep22 Oct22 Nov22 Dec22 Jan23 Feb23 Mar23 Apr23 May23 Jun23 Jul23 Aug23 Sep23 Number of aircraft 13 13 13 14 14 15 15 15 15 15 15 15 15 15 15 in fleet Number of aircraft 4 4 4 4 4 5 5 5 5 5 5 5 5 5 5 subleased out ASK (mi
Slide 29: Contact
Contact: Investors: investor.relations@flynorse.com Media: media@flynorse.com