Today's presentation will be held by our CEO, Geir Karlsen, and our CFO, Hans-Jørgen Wibstad. It will be followed by a Q&A from the audience and the web. Please go ahead, Geir.
Thank you, Jesper, and welcome to you all. Good to see you. We are going to take you through how we did in the second quarter of 2022. I have to say that, you know, first of all, we are very pleased to announce that we have a profit over NOK 1.24 billion for the quarter. Very nice that we could achieve that. That said, I think we also have to realize that the second quarter was a mixed quarter, I would say, where we had, you know, operational challenges throughout Europe. We also had it here in Norway, and I will come back to kind of more on the details, all that.
We have been promising our passengers and you guys that we will try to fly whatever network we have for sale. I think we have kept that promise throughout the whole of 2022, I would say so far, where we have regularity of close to 100%. This is a promise that we have given, and this is a promise that we have kept, and this is a promise that we will continue to give because it's very important for us, and it's definitely important for our passengers. We were flying close to 5 million passengers in the quarter, and with the results as you have seen.
I think, you know, when we went into the second quarter into April, it looked good. You know, we had an Easter that we were performing well. I think we have, though, to say that, you know, the you know, kind of the last portion of the pandemic still was in fact in April, I would say, because even if you look at the strong Easter, it was not that as strong as it, you know, normally is, in a normal situation. We came into May, which kind of turned out to be relatively good.
At the same time, you know, we were lower on bookings than what we were expecting, I have to say, even if it was starting to pick up. Then into June, where it really started to perform, but we had a few days there where we had a strike. We were able to fly most of the capacity during those days, but it's quite clear that, you know, we lost bookings, and in the same days.
We have continued our strategy to develop relationships with friends and we are very happy that we are now agreed with Widerøe to have a much closer relation and a cooperation with them going forward, and it will involve several areas, is what we have said. This is something that we expect to see the results of already now during the next weeks and months, and we are putting a lot of resources on both sides in order to make that happen. Very excited about that. Also very happy that we have signed up agreements with Norse Atlantic and that I'm sure that will also give us some value going forward. We have been making excuses for not making an agreement with Boeing for quite a while.
Very happy that we have now finally had an agreement with Boeing in place, and I will come back to the details on that. On ASK, you know, it's a massive increase as you can see, and we have put a lot of capacity into the market, a lot of seats for sale over a relatively short period. The next graph, or the graph you're seeing here, you know, it's looking good, but you can all see that from March to July, we have been actually putting in 1.1 million seats a month in capacity into the market and you can see how we have been performing.
I think, you know, if you look at, as I said, April, May, and June, I think May is probably the month where we expected a little bit more, and in June, it is performing well in June, I would say, but at the same time, because of the strike, we lost some revenues, I think we have to admit. Sorry. That said, you know, when we went into July, we really saw that we were performing extremely well.
We were sitting there in June, and we had been kind of patiently playing the market a bit and when we entered into July, we really believed that, you know, the demand were there and it will come, let's say, from the time when we had the school holidays here in Norway. It clearly showed that, you know, we were right and we saw a massive demand coming in July. That's why we are very happy to see that, you know, we have, I think we have all-time high RASK or unit revenue for sure. I mean, all-time high. I think we did a slightly higher yield in the period during the pandemic, but at very low capacity and very low loads.
All in all, I think this is a record month for the company, despite the fact that, you know, we have put so much more capacity into the market over a short period. I think on the operational side, we have been doing a very steep ramp up as you can see. We have had issues throughout Europe on the crew side, for example, we were struggling to get our crew, you know, getting IDs and the background checks and so on. That's an industry issue that we have seen. We had periods here where we had more than, I think, close to 150 crew employed, trained, ready to fly and with no IDs. That has been a struggle.
We have had, you know, airports issues on the luggage side. We have to admit that. I think it applies to most of the airlines. We have had it as well. It's starting to ease up now, but it has a cost involved to be able to, you know, to do our best to serve the customers and to make sure that the luggage is coming where it should come over a very hectic time. We have, you know, resource personnel issues with our, you know, suppliers, ground handlers, et cetera, that has also caused additional costs for the airline where we have had to kind of spend our own resources, which has a cost during this period.
We have had some late incoming aircraft, which has caused us to, you know, to take in wet leases. We have put priority and actually, you know, fly the network that we have to serve. Alternative would have to be to do cancellations. We have not done cancellations. We have very few cancellations throughout the whole summer. That has been a priority and we are very happy that we have been able then to take passengers to their destinations. All in all, I think, you know, operationally, we have had, you know, issues. We have overcome them in a very good way, in my opinion. We have certainly had a fantastic summer, I would say, June and especially July.
It's a big thank you to all our crew that has been really stepping up in order to be able to then deliver the services that we have done to the passengers. One issue I haven't mentioned is obviously the fuel. Fuel is hitting us big time, as it is for the other airlines as well. What we have seen over the first half of this year is the fact that the correlation between oil price and the fuel price has kind of gone, you know, the wrong way, meaning that the fuel price has increased relatively more than the oil price. That is hitting you. There's many reasons for that.
In addition to that, we are seeing on the currency side, you know, it's easing off, and it has been easing off over the last couple of months, we know, and which is a good thing. But what we are seeing is that, you know, you have a relatively strong Norwegian krone, but at the same time, you have a relatively strong dollar. That normally in a normal situation, we are normally 20% hedged, meaning that if you have a high oil price, you will also have a strong Norwegian krone, and we are not taking the benefit of that over the last months.
On the cost side, we are, you know, continuing to push, and we have a CASK this year, this quarter of low 40s, as I call it. There is a couple of cents or øre that is applied to the wet lease costs as we have, you know, taken in. Again, I mean, we are pushing, and if you look at the July figures, we are in the mid-30s on CASK, excluding then very few wet leases that we have in operation. We are starting to get down to the level where we should be, and we will continue as well over the next months and into 2023 to push that further down.
I think there is still room, and we are doing our best to deliver on that. Again, relatively happy with Q2. When we entered Q2, we were planning to have an even better result, but I think I've explained why we ended up where we did and after all, we have a profit of NOK 1.24 billion. Going into you know a little bit looking forward, the booking curve is still relatively short, and I think that applies for the industry. We have, I would say you know kind of the natural movements throughout the summer on bookings, meaning it will normally come down you know at this time of the summer, meaning in mid, late August.
We are again seeing now that the bookings are coming in the right direction and it's on number of passengers, as you can see, it's getting close to all-time high this year. We do actually expect it to continue over the next days and few weeks. Looking at, you know, August, September and October, it looks promising. You know, August is soon behind us, but it's very good to see, especially September and October now that is, you know, coming in the right direction. I think I said last time that we are seeing an increased number of passengers on the corporate side. That's kind of obvious because, you know, more people are traveling.
More interestingly, we are also seeing the share of our income coming from the corporate travelers is also increasing. That means that we are taking a small little portion of the corporate market, and that is a plan that we have going forward. We need to get better on the corporate market, and we are thinking seriously then on how we can do that even better. We are seeing good results now from kind of the product that we have been flying and are flying these days, also compared to the competition. Very happy to see that. The fleet plan. As we have said that we have ordered 50 Boeing 737 MAXs.
I think we can say that we feel that we have done a really good agreement with Boeing. The price we are paying for these MAXs are, I would say, more than 10% lower than what we had back in 2018, 2019. Even more importantly, I think we have done a top-notch, you know, protection against inflation. We know that because we are talking to most of the big players in the leasing community. We are very happy that we have done that. Part of the agreement was then to kind of have a settlement on the dispute that we had with Boeing.
That's why we are kind of booking a revenue or an income of $215 million in the quarter. This has been then applied to pay installments on this 50 aircraft order. We have also in addition to that been paying in approximately NOK 800 million in PDP installments in July. By that, you know, vast majority of the equity we need to take delivery of these 50 aircraft have already been paid in. We have started to look, you know, for financing of these 50 aircraft.
I have to say there is a lot of people knocking at our door these days, you know, wanting to finance them. Demand is really good. I think the plan here is to maybe do a few sale-leasebacks and then by that financing the small little portion of equity we need to finance the rest of the fleet of the 50. By that, you know, we are planning to own the majority of these first 50 aircraft coming in. Now it's all about, you know, to make sure that we can get the cost of capital on that financing as low as absolutely possible.
We are very confident that that should be able to be done on good terms. I mean, it is important for us to take new technology into the company. As you can see here on the red bars, this is the redeliveries as they will go over the years. The blue ones are the MAXs that will come into the projection over the next years. You can see there that, you know, let's say for summer 2023, we know that we're already receiving 15 MAXs next year.
Our aim here is to on every single of these years is to take deliveries over the spring, meaning that we will get the capacity into the summer season, and then we have all the redeliveries of the older aircraft into the fall. We can kind of flex the fleet throughout the seasons as well. There is an error there on 2024. It seems like we are going down in the number of aircraft. That's definitely not the plan. Right now, as we speak, this is the situation. We are in dialogue with parties these days in order to secure the capacity for 2024 and there will be some capacity coming in in 2024 that is not shown here.
At the same time, you can also see that, you know, even if we take the 50 aircraft that we have ordered, there is no growth. There is no significant growth there. This is more a fleet renewal, and then time will show whether we add capacity to what you're actually seeing here over the next years. We have the 30 options, as you can see, at the end there. That is 30 options that we have a couple of years to decide whether we will declare or not. And these options are priced lower than the 50 aircraft, so even more attractive, as we see it. We are planning to order MAX 8 with 189 seats. We have obviously an option also to consider the MAX 10.
We have not taken any decision on that. We are considering it. A MAX 10 is more or less the same aircraft, but with additional 30 seats. We will have to see how the market develops over the years and whether those aircraft will be attractive for a company like Norwegian. The MAXes are burning officially 14% lower, you know, less fuel than the current NG. Our calculations, when we are actually flying MAXes these days, is that percentage is more in the 16%-17% area. Yes. Over to you, Hans-Jørgen.
Thank you, Geir, and good morning, everyone. My name is Hans-Jørgen Wibstad. I am the CFO of Norwegian. I started in May. Very nice to see you all here. I will go through the second quarter results for Norwegian in some detail, starting with some quarterly financial highlights. As you can see, and as you've seen, the revenue of Norwegian increased by 154% from the first quarter to the second quarter. That is, of course, a result of higher traffic and increased yields. We see that our unit revenue is at NOK 0.62 for the second quarter, a healthy increase from NOK 0.48 for the first quarter.
As you have seen, Geir mentioned, our unit revenue in July was NOK 0.95. Quite a healthy increase and were largely explained by the market that also Geir explained to you all. A gradual ramp-up, some post-COVID effect that the market is going into, coming into speed and with the summer market approaching us. We're seeing a healthy increase that particularly towards the end of the quarter and into July with, as I said, NOK 0.95. Obviously, passenger traffic is also coming up very healthy from about 3 billion in the first quarter to 6.2 billion in the second quarter. As you've seen in July, it's at 3.1 billion in the quarter alone.
Quite a healthy figure, and we're seeing this ramp-up happening as we had expected. On the profitability, we're very happy to report a bottom-line profit of or EBIT of NOK 1.248 billion, and also a positive EBIT for the first time in quite some time. Of course, we're not happy to see that the EBITDAR is still at a red figure of NOK -214 million for the quarter. We're seeing again about a healthy increase, a healthy development from the first quarter where we reported NOK -468 million. As mentioned, we have been impacted, the results has been impacted by the fuel cost, and also one of the FX. I will talk a little bit more about the fuel cost in a minute.
We're also having a gain from the aircraft order that I'll also talk about. We're also seeing that the CASK is coming down ex fuel, it's at 0.43. Including the fuel, it's at 0.74, and of course, that is almost about NOK 0.3 per kilometer, which is a significant number. Historically, it's been, or in the first quarter, it was NOK 0.16 . We're really seeing the large impact of the increase in the fuel cost combined with the impact of the foreign exchange.
Anyway, the CASK came in at 0.43 and adding the fuel, we're at 74 and with a unit revenue of 0.95 in July. I think if you run the numbers, you will see that July came out for Norwegian with a very healthy result. On the balance sheet side, which is also, of course, very important for Norwegian, we came out of the quarter with a cash balance being very similar to where we were at the end of the first quarter, NOK 7.5 billion of cash in the bank.
We're also seeing that the equity ratio increasing from 11.3% to 15.1%, and we also ultimately have positive cash flow in the quarter, largely explained by lower level of holdbacks. Going over to the talk a little bit more about the fuel headwinds, as we call it. It's a combination of the fuel cost and the FX. The FX is costing us maybe around more than NOK 100 million compared with, let's say, Q1 level.
We're seeing clearly that the price of the fuel as a function of the macro environment we're all in came out very high in the second quarter with an average price of more than $1,300 per metric ton, which is quite significant. If we look back at the forward curve in the fourth quarter, for instance, of last year, we were talking $750. We're seeing that, you know, starting in January, it was also, you know, starting below $800. Obviously a very significant impact. We're happy to see that the fuel cost is coming down towards the end of the quarter and into August.
It has, as we've seen also recently with oil price coming up a little bit, it's a little bit on its way up, but that's obviously fluctuating quite a bit. That's something we just have to. That's part of the business, and we just have to deal with that in the best possible way. A little bit more details on the P&L. A 154% increase in revenues to NOK 4.868 billion. Nothing particular on the personnel expenses going up. Obviously the aviation fuel or the fuel cost is significantly increasing 269%. If we make a very simple calculation, our ASK increased by doubled from Q1 to Q2.
That should suggest that we should have had a fuel price, a fuel cost in the same quarter of about NOK 1.3 billion. We're at NOK 2.3 billion. That's really the magnitude of the impact of the fuel price increase. That's just giving an illustration of how much this is impacting our earnings in the second quarter. Other operating costs are just ramping up capacity. We're doing nothing special in that.
When it comes down to the aircraft lease and depreciation amortization, we're seeing that coming up a little bit more than expected, and that has to do with the wet leases that we've taken in, as Geir explained, due to late deliveries of aircraft into the fleet, as well as some delays in getting the IDs approved through the system. That is costing us a little bit extra, and that's of course adding a little bit to the CASK figure for us. Anyway, the EBIT came out at NOK 1,359,000,000 , and the profit before tax is NOK 1,248,000,000 . Quite a healthy and nice bottom line, as well as an EBIT, which is positive.
Looking a little bit more at the balance sheet. The balance sheet is increasing quite a bit, 20% from quarter -to -quarter, a reflection of the fact that the U.S. dollar has appreciated, impacting our tangible fixed assets. We're also adding a couple of aircrafts to the fleet, and we also have the prepayment, which is recorded as a tangible fixed asset. So that's, that adds to the total assets base. We're also seeing here that the balance sheet, the cash is NOK 7.5 billion, more or less as equal as possible between the first quarter and the second quarter. We're very happy to see that, and that makes that the total assets is up by 20%.
Looking at the other side of the balance sheet, the equity is healthy, very healthy, up by 61% from NOK 2.2 billion to NOK 3.6 billion. Quite a strong increase from one quarter to the next. Liabilities is reasonably flat, although it's obviously reflecting that we have higher aircraft settlement liabilities, which is good because we have more customers coming into the business. Overall increasing our bottom line equity from 11.3% to 15.1% equity ratio, which is an important thing for us as well as we're stabilizing the business and coming out of the quarter with a stronger balance sheet than we had at the end of the first quarter.
Net interest-bearing debt is still at a very healthy, and I would say low level, taking in everything into account, pretty stable. Net interest-bearing debt going from NOK 2.2 billion to NOK 2.7 billion in a quarter. Only really the additional aircraft coming in, IFRS 16 right-of-use assets, which is representing NOK 658 million, which is really driving that interest-bearing debt slightly up, but still at a very, very moderate level and a very manageable level for the business. A few words finally on the cash flow. As mentioned a few times, happy to report a strong cash balance out of the quarter going from, it's more or less the same. It's NOK 8 million difference, coincidentally.
We're delivering strong operating cash flow of NOK 556 million, where we're seeing that the holdback is actually the main driver for the improvement there, going to 67% from 74% in the first quarter and also from exceeding 100%, I think 108% at the end of the fourth quarter. That's really making a big impact as these financial institutions that we're dealing with are getting more and more comfortable with the Norwegian credit, and we're getting better terms. We're planning to drive that further down from the 67% to, you know, our long-term target is below 50%. That's a quite healthy development as well. Geir mentioned the prepayment we on the Boeing deal.
We did a little small payment in June and a further payment in July, NOK 643 million paid in July. We're very happy to report at the end of July, despite this payment, that our cash balance is more or less equal to the same level we had at the end of June. Again, we're going into the third quarter and the post-summer season with a very strong and healthy financial position. Thank you.
Okay. Just to summarize a little bit, I feel that we are getting into a position now for the company where we have you know, operations starting to work very well. I think we have you know, we are doing benchmarks compared to you know, to our peers around both in the Nordics and in Europe and on the regularity, for example, I think we are absolutely top on the list. It is important for us to be punctual as well. You know, the turnaround times is something that we have been working on very hard over the last months.
I think on turnaround times in July, for example, I think we are also on top of the list. This is important because it will also make sure that we are delivering, first of all, a good product to the customers, but at the same time, we can run the operation very efficiently and very cost-effective. That is still going to be very important for us going forward. I think I said last time that, you know, we are also having a look at the reward program. I think we have a fantastic reward program as per today. There might be a chance that we can even make it better for the customers.
That is something that we hope to be able to share news about over the next weeks and a few months. Very excited about that. The network is a good one. It's a broad one. Approximately 230 routes for sale now into the fall and winter season. On sustainability, we are spending a lot of time internally on sustainability. We have set the targets to reduce the emissions with 45% towards 2030. We hosted an event down at the Arendalsuka just recently with the suppliers, with politicians, with unions, et cetera. This is important for us. Why is it? Well, we want to reduce the emissions.
Secondly, we think this is going to be a competitive edge. We want to be in front of that, absolutely in front in that process. Realistically, in the short midterm, this is all about sustainable aviation fuel, and we need to get, you know, volumes, productions up in order for us to start using this type of fuel. We are spending a lot of time internally and towards external partners in order to make that happen.
We have, you know, we had issues with the technicians in June when we had the strike, but at the same time, you know, we have agreements now with all parties in the company and we can look forward to try to produce a good product for our customers. Just to summarize, I think we have been through most of this. I think one thing that we haven't mentioned is that, you know, looking at the winter ahead of us or in front of us, you know, you will see that we are going to take down the capacity into the kind of a low season.
Low seasons for us is to the end of October and into February. As it looks now, we have approximately 25% fewer seats for sale in the winter than what we have today. This is, I think this is the first time we have done that. Why are we doing it? Well, because we think that the demand will be lower. At the same time, we have made sure that we can actually do it. We have 19 aircraft today where we have the so-called power by the hour for the winter. We have also made good agreements with our crew that will be.
That will make us able to also have a solution with them where they're going to fly less over these months. This is important, and I'm mentioning it every time we are here. This is important this winter. We have a solution, and we are working to get the same solutions for the coming winters. You will see Norwegian taking down the capacity in low seasons, and then it's full speed into the high seasons. We are working on the cost level. That is important for the profitability, but it's also important in order for us to be able to meet the potential competition, whoever that is. We will make sure that we are as competitive as anyone else in the market that we operate.
We have also said that we have a target of below 0.4 for the remaining part of 2022, and then we will come back to what we believe that will be throughout 2023. Very high focus area, as well. We are saying that the ASK target or the best estimate for 2023 is 35 billion kilometers. That is kind of known where we are bringing in 15 MAXs next year. All in all, I think the situation for Norwegian is looking good. We have good bookings for the next months as we see it. We have a very strong, as Hans -Jørgen said, financial position.
We have preserved the liquidity position, approximately the same liquidity today as we had at the end of Q2, despite the fact that we have paid Boeing NOK 800 million. We are looking forward to the next months and the winter. With that, thank you. I guess we can open up for-
Yes.
Any questions.
Let's start with opening up for questions from the audience. Please wait for the microphone. Okay. No questions from the audience yet, so we'll start with questions from the web. We'll start with Ole Martin Westgaard from DNB Markets. How much was the extraordinary lease cost in Q2 related to the late delivery of aircraft?
I think it's in the area of NOK 150 million-NOK 200 million that we've added as cost to ensure that we are able to deliver the product to our customers. That is. It's quite a significant amount this particular quarter.
Okay. Based on the current booking trends, do you aim to utilize the flexibility you have on the production, on the winter side, on the production side for the winter season?
I think we just answered that.
Yeah.
I think the answer is yes. I think, you know, the capacity reduction will be in the area, let's say between 24% and 28%.
Okay. You have flexibility on your ASK for the second half. How should we think about this in relation to our CASK ex fuel guidance of sub NOK 0.40, so for the second half of this year?
Well, this is a lot of modeling questions as I understand it. I think, you know, even if we have, let's say, 19 aircraft on PBH, can we utilize 100% of that potential capacity reduction? Well, then we have to put the aircraft on the ground, which we're not planning to do. We are planning to fly most of them, but we will just fly them with less capacity. Why do we do that? Yes, because then we can serve the network, and we can protect the market shares, et cetera. We will not be able to take out the full effect, but the effect will be significant. I think that's what we can say.
Okay. One final question for him. You stated that you see reduction in CASK ex fuel for 2023. What level of reduction are you targeting, and is this a question of scale, or are there other cost initiatives as well?
There's no doubt that, you know, the ramp-up that we have been doing over the second quarter, you know, bringing in 1.1 million seats into the production is having a cost. You have overlaps. You are, you know, crewing these aircraft. You are training them. As we go now where we have more limited growth, at least into 2023, and with the scale that we are starting to get, going up to 85 aircraft next year, you should expect that, you know, you get the scale effect and you get the efficiency even more out than what we have been seeing over the last months.
We are not guiding anything on CASK for 2023 at this point, but I think you get the message.
Okay. That's all the questions we have from the web, so I'll give another chance for questions from the audience. There are no questions from the audience, so we conclude the session. Thank you.
Thank you.