Norwegian (NAS) Q3 2007 Bjørn Kjos (CEO) Oslo, 24. October 2007
Strong revenue growth continues in Q3 07 The Group had total revenues of MNOK 1,324 which is a 51% increase since last year Acquisition of FlyNordic contributes MNOK 153 to top line growth in Q307 MNOK 1600 1200 800 400 0 Q3 04 Q3 05 Q3 06 Q3 07 Q3 04 Q3 05 Q3 06 Q3 07 Revenue 332 590 878 1323 Domestic Revenue 191 223 353 505 International Revenue 141 367 525 819 Domestic Revenue Growth -6 % 17 % 58 % 43 % International Revenue Growth 442 % 160 % 43 % 56 % 2
Q3 07 margin improves on growing international traffic and ancillary revenue Group earnings (EBITDA) of 168 MNOK in Q3 07 (54 MNOK) Group earnings 76 MNOK after tax (28 MNOK) Group margin (EBITDA) of 14 % (6 % in Q3 06) EBITDA MNOK 200 160 168 120 80 40 64 54 Negative earnings impact from launching Poland base 0-11 Q3 04 Q3 05 Q3 06 Q3 07-40 Q3 04 Q3 05 Q3 06 Q3 07 EBITDA MNOK -11 64 54 168 EBTIDA margin % -3 % 11 % 6 % 14 % Earnings after tax MNOK -11 44 28 76 Eearnings Per Share 0.6 2.4 1.4 3.7 3
The Polish operation shows positive results (EBITDA) in Q3 07 Polish operations EBITDA 10 MNOK 13 MNOK earnings improvement since Q2 2007 The Warsaw base continues to improve, but is influenced by seasonality EBITDA MNOK 50 30 10-10 -3 Q4 06 Q1 07 Q2 07 Q3 07 10-30 -36-50 -52 4-70
Cash Flow fluctuation due to seasonality Cash flow from operations of MNOK -68 (-137) Decrease in air traffic settlement liabilities Cash Flow from investments affected by: Deposit for 42 new aircraft: MNOK -266 Acquisition of FlyNordic: MNOK +126 Cash and equivalents MNOK 810 (387) Net Change CF MNOK 600 400 200-200 Q1 Q2 Q3-400 2005 2006 2007 5
39 % of Boeing 737-800 purchase has been hedged Instruments used are knock-in forwards Accounting standard IAS 39 hedge accounting Inefficiency in hedge compared to cash flow on hedge object results in loss in Q3 of MNOK 31 charged to financial items 6
Production growth of 21 % absorbed by 23 % traffic growth 21 % production growth since last year, international growth of 24 % Load factor at 86 %, international load factor is leveling out at 87 % August & September 7 Norwegian (million) Q3 03 Q3 04 Q3 05 Q3 06 Q3 07 ASK 331 683 1033 1693 2042 RPK 221 468 892 1434 1767 Load Factor 67 % 69 % 86 % 85 % 87 % FlyNordic (million) Q3 03 Q3 04 Q3 05 Q3 06 Q3 07 ASK 291 RPK 242 Load Factor 83 %
2 million passengers were carried through Norwegian s network last three months Number of domestic passengers is growing at approx 13 % Number of international passengers is growing at approx 56 % Passengers (Thousands) 2300 1800 1300 International Passengers Domsestic Passengers 800 300-200 Q3 03 Q3 04 Q3 05 Q3 06 Q3 07 8
Domestic market share approaching 45 % on key routes as low fares stimulates and increase the total market Price and product enhancements stimulates business and leisure travel and increase the total market Increased production on Bergen and Trondheim attracts business travelers % Market Share 50 % 40 % 30 % 38 % 44 % 39 % 45 % 42 % 43 % 40 % 20 % 10 % 35 % 30 % 23 % 33 % 24 % 35 % 26 % 34 % 26 % 0 % Stavanger Bergen Trondheim Tromsø 9 Q3 04 Q3 05 Q3 06 Q3 07
Cost development Unit cost of 0.50 in Q3 2007 Added cost of 0.01 from wet lease of two aircraft CASK NOK 0,55 0,5 0,02 Fuel 05-06 0,03 Fuel 05-07 and Wet Lease costs 0,45 0,50 0,51 0,47 0,46 0,4 Q3 04 Q3 05 Q3 06 Q3 07 10
Ancillary revenue grows as new products are introduced to the market still upside potential Q3 07 ancillary revenue 30 NOK per passenger (114 % growth) Driven by new and improved products maturing; seating, baggage/carry on, commission from hotel and rental car bookings Major LCC s ancillary revenue ranging from 50-70 NOK per passenger Ancillary revenue per passenger 50 40 30 20 30 10 15 14 14 0 Q3 04 Q3 05 Q3 06 Q3 07 11
The credit card Norwegian Reward was made publicly available on 17 October The card is not only a credit card issued by Bank Norwegian, but also an integrated part of Norwegian Air Shuttle s frequent flyer benefit program More than 15,000 cards were ordered within the first week. Conditional upon Norwegian Air Shuttle ASA to hold max 20 % Minimum share capital of 270 MNOK Project on track Equity issue will be carried out in November and the bank will be fully operational in the middle of November The roadshow for the coming equity issue will start this week 12
New, environmentally friendly fleet of Boeing 737-800s 13
The most environment-friendly airplane in production Up to 43% reductions on a flight from Oslo to Alicante New technology engines + Blended winglets 4-5% extra CO2/NoX reductions 14 Source: Boeing
Expectations for remaining 2007 Expected business environment: Increased competition on international routes Stable competition in Sweden and Poland Expected results (ex FlyNordic): Unit cost for 2007 in the area of NOK 0.53 May be negatively influenced if the fuel price remains at the current high levels or the US dollar strengthens USD hedged 65 % H2 07 and 20-25 % H1 08 Increased revenue from third party sales Expected results Poland start up: The Warsaw base continues to improve. We expect negative results for the Warsaw base in Q4 2007 and Q1 2008 due to seasonality. 15
Expectations for 2008 The growth in ASK for 2008 is expected to be in the area of 50 %. Growth target depends on the final delivery schedule of new 737-800 and finalization of route program Unit cost to come down to NOK 0,51-0,52 due to changes to route portfolio mix Growth target ASK for 2008 2007 2008 Q1 Q2 Q3 Q4 16
Plenty of opportunities - 129 routes to 76 destinations 127 routes to 75 destinations
Thank you! 18