Norse Atlantic Asa · OSL:NORSE
Norse Atlantic Asa — Investor Presentation (November 2022)
48 slides from Norse Atlantic Asa's investor presentation, Nov 24, 2022
Slide 1: Norse Atlantic Airways Investor Presentation
Norse Atlantic Airways Investor Presentation – November 24, 2022
Slide 2: Important information
Important information This presentation, together with its enclosures and appendices (collectively, the "Presentation"), has been produced by Norse Atlantic ASA (the "Company"), solely for use in connection with a contemplated offering of shares ("Shares") by the Company (the "Transaction"). This Pr
Slide 3: Summary of risk factors (1/2)
Summary of risk factors (1/2) An investment in the Company's Shares involves inherent risks. Before making an investment decision with respect to the Shares, prospective investors should, in addition to thoroughly reading this summary of risk factors, carefully consider the full form risk factors se
Slide 4: Summary of risk factors (2/2)
Summary of risk factors (2/2) • While the Company's operations are not located in either Russia or Ukraine, its business, prospects, financial condition and results of operations depend substantially upon aviation fuel prices, which have been affected by the Russian/Ukraine conflict and other global
Slide 5: Table of contents
Table of contents 1 Summary 2 Business update 3 Financing and outlook
Slide 6: Background and Summary
Background and Summary Building a leading low-cost transatlantic airline: UK landing slots are a crucial step forward • Norse Atlantic has a once-in-a lifetime opportunity to create a UK transatlantic airline and secure valuable slots for free Once-in-a-lifetime • New requirement to invest & ringfen
Slide 7: We have adapted to the market
We have adapted to the market Impact Response 2021/22 Covid19 Renewed travel restrictions delayed • Delayed first flight to June 14, 2022 Delta & Omicron reopening of leisure travel market • Cost flexibility and Pay-By-Hour lease arrangements • Norse has the most fuel-efficient planes in the industr
Slide 8: Investment Highlights
Investment Highlights The leading low-cost long-haul transatlantic airline Strong rebound in transatlantic travel expected to continue Modern and fuel-efficient fleet at historically low costs Strong operational performance and progress Target profitability in 2023
Slide 9: Significant value created since inception
Significant value created since inception Early investments are paying off Established UK subsidiary is a game changer • Unique in the industry: a fully-fledged, low-cost • UK AOC and US DoT approval granted long-haul operation • Secured valuable slots at LGW and JFK • Brand recognition is positive
Slide 10: Norse has come a long way in a short time
Norse has come a long way in a short time Founding and IPO Norwegian AOC1 First flight UK AOC Feb 2021 Mar/Apr 2021 Aug 2021 Dec 2021 Mar 2022 Apr 2022 Jun 2022 Aug 2022 Sep 2022 Nov 2022 Norse Atlantic NOK 1,275m Signs lease Norse Atlantic Norse Atlantic Norse agrees First flight Inaugural Norse re
Slide 11: Connecting key destinations across the Atlantic
Connecting key destinations across the Atlantic Destinations S22 LAX MCO JFK OSL FLL LGW BER Destinations S23 LAX MCO JFK OSL FLL LGW BER IAD CDG DUB BOS
Slide 12: Modern and more environmentally friendly aircraft
Modern and more environmentally friendly aircraft Modern and homogenous fleet • Homogenous fleet of modern 787-9s and -8s • Freshly checked aircraft – 3 years until next service Superior environmental performance • 25% lower CO2 emissions 50% quieter than the previous generation of aircraft still i
Slide 13: Fuel-efficient aircraft is a significant benefit
Fuel-efficient aircraft is a significant benefit Jet fuel price at record heights1 Fuel consumption vs. best-in class long-haul competitors Aircraft First flight Seats Sector Fuel per seat (USD/gal) Norse Boeing 787-9 2019 338 9,208 km 2.08 L/100km3 6 Boeing 787-10 2017 337 10,240 km 2.27 L/100km2 B
Slide 14: Experienced Senior Management
Experienced Senior Management Core Coreteam teamofofdedicated dedicatedindustry industryprofessionals professionals Bjørn Tore Larsen Ben Boiling Thom-Arne Norheim Chief Executive Officer Chief Financial Officer Chief Operations Officer Ted Hutchins Bård Nordhagen Kristin Berthelsen Chief Informatio
Slide 15: Market is approaching pre-COVID levels
Market is approaching pre-COVID levels World commercial flights (thousands of flights) Comments 140 • The market has rebounded, although later than 100% originally expected, and remains below 2019 levels World commercial flights (indexed) 120 - New Delta/ Omicron COVID wave during winter 21/22 100 8
Slide 16: The UK market is key to transatlantic travel
The UK market is key to transatlantic travel $12.00 • London by far the largest European hub for US traffic, Yield (Avg. by EU base for subset of routes, USD) ZRH and also has among the highest $10.00 LON yields MUC DUB • Large and high yield market $8.00 BER FRA AMS PAR creates opportunity to carve
Slide 17: Norse Atlantic UK is a once-in-a-lifetime opportunity
Norse Atlantic UK is a once-in-a-lifetime opportunity Well capitalized • USD 46m invested of which USD 41m in cash ringfenced and available for with USD 41m Norse UK operations only available liquidity • 5x London Gatwick slot pairs secured at no cost under “use it or lose it” Attractive slots schem
Slide 18: Table of contents
Table of contents 1 Summary 2 Business update 3 Financing and outlook
Slide 19: The 5 pillars of Norse commercial strategy
The 5 pillars of Norse commercial strategy 1 2 3 4 5 Lowest available Smart Business Ancillary Best-in-class cargo Revenue from economy fares Class services product leases and charter Unlocking new areas Targeting cost- Gives flexibility to Wide-body aircraft Attractive lease-in of demand through co
Slide 20: Network expansion key to revenue growth
Network expansion key to revenue growth Rolling seven days revenue in USDm and number of passengers by booking date (2022) $ 6.0 M R7 Revenue R7 Volume 20,0 00 • Marketing initially done through media and word Launch Launch Sale1 Sale2 (OSL) (LGW) SAS strike 18,0 00 of mouth $ 5.0 M Launch • Sales h
Slide 21: Strong ancillary sales boost revenue
Strong ancillary sales boost revenue Average ancillary revenue position per passenger (2022) • 450 USD per passenger (per booking time) 60% Norse is the world’s 4th best-performing carrier in terms of ancillary revenue per passenger1 400 40 • Multiple projects in the pipeline to further improve 42 5
Slide 22: Strong cargo revenue growth
Strong cargo revenue growth Net cargo revenue development by country pairs (2022) • Cargo revenues have been better than 3.0 0 8,0 00 USD per month USD per flight 7,778 7,148 7,0 00 initially expected - Norway/US is the leading cargo revenue pair 2.5 0 6,383 6,0 00 0.41m 0.53m - Germany/US and UK/US
Slide 23: Underlying CASK close to target
Underlying CASK close to target CASK excluding fuel and leases¹ (USD cents) Costs expected to come down with increased scale Average is temporarily increased by short-haul route LGW-OSL Targeted employees per operational aircraft 16 100 16 90 15 14 14 80 12 12 70 60 10 10 10 50 8 8 40 90 87 84 6 6 R
Slide 24: Flexible Aircraft payment schedule
Flexible Aircraft payment schedule • 15 modern Dreamliners on Aircraft fleet delivery and employment schedule, YE21 – Jan 24 long-term leases 16 • 14 received; the final to be delivered in Q422 14 • 11.5 years average remaining 12 lease term at low cost with no 10 inflationary adjustments 8 • Pay By
Slide 25: Lease contracts have significant value
Lease contracts have significant value Timing is everything: NPV of remaining lease advantage NPV at various rates and WACC = 10%, USDm 492 437 • With rates capped at approximately 50% of historical 328 cost, the present value of the difference between 173 219 Norse’s lease cost and current market l
Slide 26: Norse will have 15 revenue generating aircraft operating in 2023
Norse will have 15 revenue generating aircraft operating in 2023 Expected development of seats per base1 S22 W22 S23 • Capacity in W22 significantly reduced to better accommodate demand and improve cash position • Total cost reduction during W22 of USD 35m • Capacity to gradually ramp up in towards
Slide 27: Table of contents
Table of contents 1 Summary 2 Business update 3 Financing and outlook
Slide 28: Cash flow since inception to 30-Sep-22
Cash flow since inception to 30-Sep-22 Cash development to 30-September 2022 (USDm) Total liquidity $64 million Lease deposits • $41 million free cash Other • $19m VTIP investment investments has been liquidated during Q4 Aircraft investments FX • $5m restricted cash Working capital VTIPs • Total Ca
Slide 29: Q3 2022 earnings – first full quarter of operations
Q3 2022 earnings – first full quarter of operations Ramp-up through the quarter; $21.9 million non-cash lease accounting impact Income statement Q3 2022 USD thousands 3 months 9 months 6 months 11 months¹ • Revenue $54.9m Q3 2022 YTD H1 2022 FY 2021 - $43.1m passenger revenue on 66% load factor Reve
Slide 30: Q3 2022 balance sheet
Q3 2022 balance sheet Statement of financial position USD thousands Q3 2022 H1 2022 FY 2021 • Aircraft lease right-to-use asset $943.2m (H1: $920.5m) Non-current assets 956,790 937,591 141,991 - Average remaining fleet lease length 11.5 years Total current assets 129,350 133,150 134,959 - Total leas
Slide 31: Q3 2022 cash flow statement
Q3 2022 cash flow statement USD thousands 3 months Q3 2022 9 months YTD 6 months H1 2022 11 months¹ FY 2021 Q3 2022 Operating CF before WC (29,608) (47,273) (17,665) (7,556) • Operating cash flow before working capital movements Working capital approximately equal to EBITDAR (8,546) (10,492) (167) 1
Slide 32: Cash projections until end-24
Cash projections until end-24 Cash flow incl. USD 30m new equity (USDm) 350 300 250 200 150 100 50 0 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Jul-24 Sep-24 Nov-24 • Base case key assumptions: - Average monthly load factor 74% in 1H23 and 78% full-year 2023 - Average tick
Slide 33: Strong earnings potential from a mature business
Strong earnings potential from a mature business Earnings scenarios (USDm) 300 250 200 150 246 100 50 119 81 44 56 48 55 - 7 26 27 -5 -5 EBITDA Average Average 80% 75% 70% +10%1 +10%1 +10%1 2024 @ - 75% - 2024 @ -50 fare fare load load load cargo fuel total 80% load 70% load +10%1 -10%1 factor facto
Slide 34: Summary and outlook
Summary and outlook • Unit costs in line with target, and will further improve with increased scale Strategy and business • Lease contracts substantially in-the-money case validated • Target 2023 profitability USD 30m equity raise • Capital raise replaces capital invested and ringfenced in UK operat
Slide 35: www.flynorse.com
« NORSE www.flynorse.com
Slide 36: The strategy is working
The strategy is working Our message in March 2021 Today • “Secured 9 modern aircraft at 50% discount” • Long-term leases for 15 attractive aircraft secured at the absolute trough of the market Unique opportunity • “Saving USD 6 mill per aircraft per year“ • “Flexible payment terms first two years” ✓
Slide 37: Key financials since first flight
Key financials since first flight 14 June to 31 October 2022 Jun Jul Aug Sep Oct Number of aircraft in fleet 11 13 13 13 14 Aircraft subleased out 2 4 4 4 4¹ ASK (millions) 54 248 505 663 567 RPK (millions) 44 212 349 373 338 Load factor 82% 86% 69% 56% 60% Number of passengers 6,633 31,842 58,702 6
Slide 38: Key production figures since startup
Key production figures since startup 14 June to 31 October 2022 Production Fleet M km # A/C 800 100% 15 82% 86% 600 69% 60% 10 400 56% 50% 5 200 0 0% 0 June July August September October June July August September October ASK RPK Load Factor A/C delivered In production Subleased Passengers Weekly fl
Slide 39: Risk factors (1/9)
Risk factors (1/9) An investment in the Company's Shares involves inherent risks. Before making an investment decision with respect to the Shares, prospective investors should carefully consider the risk factors set forth below and all information contained in this Presentation and any publicly avai
Slide 40: Risk factors (2/9)
Risk factors (2/9) The Company may experience capacity constraints at airports or an inability to acquire new and maintain existing airport slots or transit rights • The Company is dependent on obtaining agreements with airports to commence flights. Air traffic is limited by the infrastructure of ai
Slide 41: Risk factors (3/9)
Risk factors (3/9) The outbreak of the COVID-19 pandemic has had a dramatic impact on the airline industry and may continue to have negative impacts in the future • The outbreak of the Covid-19 pandemic has had a dramatic impact on the airline industry and may continue to have negative impacts in th
Slide 42: Risk factors (4/9)
Risk factors (4/9) Airlines are often affected by factors beyond their control, including technical problems, adverse weather conditions or other natural or man-made events • The Company is subject to disruption risks beyond its control, including risks of technical problems, problems with informati
Slide 43: Risk factors (5/9)
Risk factors (5/9) Geopolitical tensions and political uncertainty may have a material adverse effect on the demand for international air travel • Factors such as war, geopolitical uncertainty, trade wars, the threat of terrorism and other potential external disruptions may significantly affect the
Slide 44: Risk factors (6/9)
Risk factors (6/9) The Company is subject to counterparty credit risk in relation to its sub-leased fleet • The Company's fleet currently consists of 14 delivered aircrafts, four of which are currently sub-leased to a third-party lessee, and a term sheet signed for a fifth aircraft to be sub-leased
Slide 45: Risk factors (7/9)
Risk factors (7/9) The operations and development of the Company is dependent on traffic rights • The right to fly from a European Economic Area ("EEA") state to a non-EEA state is regulated by bilateral agreements that typically restrict access to carriers and aircraft based on the agreement partie
Slide 46: Risk factors (8/9)
Risk factors (8/9) The Company may be party to various claims, legal proceedings or disputes, including class action lawsuits • There are currently no material claims, legal proceedings or disputes where the Company is involved. However, the nature of the Company's business exposes it to the risk of
Slide 47: Risk factors (9/9)
Risk factors (9/9) An investment in the Shares involves risk of loss of capital • The market value of the Shares may fluctuate significantly in response to a number of factors beyond the Company’s control, including adverse business developments, variations in operating results, changes in financial
Slide 48: To Dream Is To Explore
To Dream Is To Explore Norse Atlantic Airways brings much needed competition into the transatlantic market Allowing customers to explore at an affordable price
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