Welcome to Norwegian's Q4 presentation. Today, we'll give an extended presentation with both the regular Q4 session and also an extended strategy update. After the presentation, we'll hand over the microphone to you, and questions can be sent to investor.relations@norwegian.com for those of you who watch the webcast. I turn over to CEO Bjørn Kjos and CFO Geir Karlsen.
Good morning to everybody. This 2018 has been, I must say, a year of some negative surprises, some really big surprises. First of all, we thought when the oil price coming down from around NOK 85 to NOK 70, we hedged, and we hedged for just a quarter, and it cost us NOK 2 billion in hedge loss in Q4. If anybody say to me that hedging is a safety, I don't actually agree on that. Next, it was a year full of negative surprise on the engine problems. We had to change a lot of engines on our Dreamliners, and it cost us more than NOK 1 billion in compensation claims. With 4 to 5 wet leases in half of the year, it cost us more than NOK 1 billion. It was a year full of negative surprises.
What we actually are doing then, going forward, I will concentrate mostly on going forward. In Q4 2018, we also had cost per ASK is actually coming down. You will see later on the Q4, it came down -14% on the last quarter, but over the year, it came down 4% to 0.435. That was the lower window of the guiding. The Q4 EBITDA was a loss of NOK 1,290, heavily influenced by these compensation claims and these wet leases that we had to do. We carried 9 million passengers in Q4, 37 million passengers throughout the year. In that respect, we managed to have a good filling or paying and have a very good route structure. However, all the route structure you setting, you will always miss on something, and that I will touch upon later. We have started Argentina, domestic Argentina and long-haul Argentina.
Long-haul Argentina is performing very well. Short-haul Argentina is also performing well. Actually, we expect it to be profitable already during the second quarter this year and actually repay a lot of what we have funded in Argentina for the rest of the year. Coming over to the right issue. We have a fully underwritten right issue of NOK 3 billion. That, of course, increase our flexibility and create headroom also for any covenants and also future bonds, whether we will roll it or repay it. It's underwriting consortium from 2 banks, DNB and Danske Bank. We have also been so lucky to have Sterna Finance, a company from John Fredriksen Group, into the consortium, and together with some of the large shareholders, among them HBK Holding. We have a pre-commitment of slightly more than NOK 1 billion. We are changing strategic focus. We are going from growth.
We have placed enough now routes, and we are now concentrating on profitability. Yes, capitalizing on our previous year's investments. We have had several initiatives that we have also set out, and that goes from reduction of bases, as you have seen. When we reduce a base is, of course, because it's loss-making. It's divestment of aircraft, and we are optimizing, as I said, the route network. When I go to the merger and acquisition, we have received two preliminary non-binding conditional proposals in the second quarter. As I say that we have engaged in new concrete specific negotiations related to the acquisition of shares in the last quarter. In all these negotiations, we have been, of course, advised by very professional advisors. In parallel to the last one, when we entertained one of the parties, we have only entertained one of the parties.
The company prepared for an equity raise in parallel and to secure a standby underwriting agreement. For the time being, we have concentrated on getting this underwriting agreement in place and to fulfill the right issue. As for the time being, we are not engaged in any consideration discussions. Obviously we will do that if it creates shareholder value. Yes. Highlights of the Q4. I'm going the wrong way. Okay. Highlights of the Q4 2018. I touched upon it. A negative loss in Q4 of NOK 1 billion 290 million. As I said, most of it directly related to compensation claims. Against the NOK 901 million last year. CASK is reduced by 14%. We have added six MAXes and one 787 into operation. We have been able to reach an agreement with the engine manufacturer, Rolls-Royce, on the Dreamliner, and with the settlement compensation.
The Dreamliner is up and running now, and they have a fix on these problems that we had last year. In this week, all of our Dreamliners should be up and flying. We have secured an underwriting commitment of NOK 3 billion. As I told you, we are engaged in a new concrete, and we was engaged in new concrete and specific negotiations related to the acquisition of the shares of the company. Sold and delivered A320 aircraft five of them. Was the first low-cost airline services to introduce Wi-Fi on international flights. Going back to the load factor, we had a load factor of slightly above 80%, 80.9%. We put into the market a 32% growth capacity with a 25% growth of the RPK. That gave us 9 million passengers in Q4. That was an increase of 12%.
We carried altogether 37.4 million passengers last year. If you see where our strongest places, of course in Oslo. Today, we have a 44% market share, 739,000 passengers. Stockholm also increased. Copenhagen increased and Helsinki. Our largest increase was in Gatwick, slightly more than 1 million passengers. We have also increased on the Spanish bases. Needless to say, we are the largest operator over Oslo Airport. We have continued growth and have a stronghold on our key bases. Interesting to see where our revenues from the passenger comes. If you look at our revenues, of course, Norway is the biggest country, but U.S. is coming as a good number two, and it's actually almost twice the size of Sweden. We have a very good grip on the U.S., and that's, of course, the long-haul operation.
Going further on, we have, of course, a divestment going on on aircraft, but nevertheless, we have received five long-haul aircraft. That's coming up to in 2019. We will receive five long-haul aircraft in the first half year. That will bring us up to 36 long-haul aircraft. We will receive 16 MAXes and divesting and taking out one lease aircraft. We are in the process of when we take in the MAXes, of course, we will be able to sell off NGs. Today, we have sold off 15 aircraft, and we have also entered into a LOI. Geir will touch upon this later on four aircraft. Altogether 19 aircraft. Of course, it gives us a very good cash flow on these sales.
On the NEOs that we sold off together with the lease, it's a very nice profit on all these aircraft, these NEOs that we have sold off. Finances, Geir, you give the presentation.
Yeah. I will take you through the financials quickly, and then I will touch upon the steps and the initiatives that we have started with during the last months and how we plan on those going forward as well. Looking at the numbers for the fourth quarter, it's no doubt that we are not satisfied with the numbers. Absolutely not. We have, during the last months, been trying to take steps in order to take us into a good position to start with 2019 and also into 2020 when that comes. If you look at the P&L, we have a top line of NOK 9.6 billion. We have, as you can see aviation fuel is high. It went up considerably during the quarter, NOK 3.4 billion.
As Bjørn said we have what you call other losses, gains NOK 1.8 billion in negative, which is then the mark-to-market on the fuel hedge that we have done for 2019. We were sitting there with an oil price of NOK 80 and pretty low hedged, we felt relatively uncomfortable at the time. We saw the oil price came down to NOK 75, it came down to NOK 70, it came down to NOK 67, NOK 68. We started to hedge a little bit more. We were sitting there with 22% hedged, and then we took that hedge for the first half of 2019 up to 52%, where we are currently sitting at an area of NOK 680 per ton. We are sitting there today with 22% hedge at approximately the same level for the second half of 2019.
For the time being, I think we are sitting there relatively comfortable with the hedging position. We are looking into the second quarter or the second half of the year a little bit now but relatively comfortable, also seen in combination or in comparison with our peers. If you look at the development in the oil price during January, I think if you had booked the hedge position today, you would probably have got back in the area of NOK 630 million out of that kind of mark-to-market loss that we have taken in the fourth quarter. That takes us down to NOK 3.6 billion EBIT and then NOK 3 billion loss on the net profit side. Looking at the full year, as Bjørn said, we have been very much affected by the engine issues.
If you add up the costs or the loss or what you will call it on the Rolls-Royce engine issues, it will probably come to an amount in the area of NOK 2.2 billion loss. Bjørn mentioned close to NOK 1 billion of care and compensation cost, but a very high portion of that is related to the engine issues. Between NOK 2 billion and NOK 2.2 billion is what we have lost, increased costs due to those issues. We reached an agreement with Rolls-Royce just before Christmas where we will get compensated partly for those issues and that takes care of the period behind us, meaning 2018. Even more importantly, it give us some visibility into 2019. Because the problems, as Bjørn said, they are still there. They are in the process of getting solved, but we will still be affected at least for the first quarter.
That's why we have put five of our own 787s on ground as part of a deal with Rolls-Royce which gives us a much more visibility into 2019 on the 787s and compared to what it had been in 2018. If you take the hedge loss of NOK 1.8 billion and then you add in, I will call a net cost of the engine issues in 2018 of approximately NOK 1 billion. You can just do the math and then figure out what that number on the bottom line would have been for the 2018 as a whole year if it hadn't been for those issues. On yield and RASK. Compared to same quarter last year, we are 4.9% down on RASK. If you adjust for currency and the fact that we have longer flying distances, the reduction is 2.2%. On ancillary revenue, it's developing well.
We still feel we have a lot of room there to improve. The cargo side also is increasing quarter by quarter, and we expect it to continue. With more visibility on the 787s, we really believe that both or the cargo side should continue to improve. Unit costs. I'll come back to that later in the presentation as well. It is developing in the right direction. The costs are coming down. Fuel is a separate story, as I mentioned, but the costs are coming down, so 14% compared to the same quarter last year. We have had a little bit of headwind on the currency side, but still developing definitely in the right direction.
If you look on the left-hand side there, you will also see that if you just include it quarterly from early 2017 until today, you can see that you have a good development. Second quarter, as you remember, 2018, was low, 0.23. You had a few one-offs there, which is the reason that that is low or lower than the other ones. Still, the trend is going down, and it will continue to go down, going forward with the steps that we are now taking. You can see on the right-hand side how we are doing compared to the other guys. We are still at the competitive level, as I said, but I think we will still need to improve and to push down the underlying cost base in the company, which we are in the process of doing.
Just a few comments on the different sections on the cost side. Personnel cost is down with 10%. That's mainly due to the fact that we have higher utilization on our aircraft and thereby via crew. I think on the 787s we have an increase on utilization during 2018 of 20%-25%, which is good. There's still room for improvement. We have been lagging behind on the 787s by reasons discussed. There is definitely room there to take up the utilization both on the aircraft and thereby on the crew. Still, it's down on costs. Handling cost is one of the only cost sections that is actually up for the quarter. That is, again, related to care and compensation mainly, and again, the same, due to the issues that we have had.
There is also increased costs related to the wet leases that we have taken in, which is taken in under that section. Fuel is obviously sticking out here, as mentioned. All in all, the cost level in this company is coming down, and it will continue to come down into 2019 and through the year. Balance sheet, just a few comments. We have prepayment on aircraft, NOK 8.5 billion. NOK 6.5 billion of that is related to Boeing aircraft. The rest is then in Airbus. Investments, NOK 2 billion. That's mainly the shares in the Bank Norwegian has come down since last quarter, as you know, as the share price has come down. Receivables, NOK 6.7 billion.
A little bit higher than NOK 4 billion of that is related to the credit card acquirers due to the fact that we have had an increase in revenue through the year of 25% increase, actually 30% increase in revenues. We have the same acquirers today, more or less, than we had a year ago. It's meaning that we are now in the market looking for more capacity, more volume. It's also worth mentioning that we have had some constraints on the credit because we have reached the limit with some of our acquirers, meaning that we have a holdback by the end of 2018 that is higher than it should be. The holdback here is in the area of north of 60%. In a normal situation, it should be more between 40%-50%.
That's why we feel that when we are now going out raising NOK 3 billion in equity, we will get release on the holdbacks, which will improve the liquidity in the area of $200 million compared to how it looks in this balance sheet here. We are already seeing signs from the acquirers that they are releasing more after the fact that we went out with the news to raise equity. The equity, NOK 1.7 billion. You are fully aware of the fact that we have a covenant of NOK 1.5 billion. We are not in breach. We are getting to a point where we are closer than we would like it to be. We are not in breach on covenants. Obviously, there's a few factors that has affected the equity, in addition to the normal operation of the company.
One is obviously the reduction in the share price in Bank Norwegian. That has had an effect on our equity over close to NOK 1 billion. Also, of course, the mark-to-market on the fuel hedge, NOK 1.8 billion, NOK 1.9 billion. There was some speculations before Christmas that we will be in breach, both on liquidity and on this covenant. We are not in breach in any of those. You might think that the short-term borrowings, NOK 11.5 billion, is high, and it is. Main reason for that is that the aircraft that we have sold in 2018, that will be delivered to the new owners in 2019. All the debt related to that is now classified as short-term and will be repaid as we deliver the aircraft that we have sold.
We have a EUR 250 million bond maturing by the end of this year, which is now also classified as short-term debt. When it comes to IFRS 16, that we will implement from the first quarter of 2019, that will have an effect on the balance sheet of approximately NOK 33 billion. You will add up the asset side and the liability side with that number. On the P&L side, it will have an effect. I didn't actually mention that, but it will have an effect in the area of NOK 650 million to NOK 725 million negative compared to before we are implementing IFRS 16.
The P&L effect is mostly related to the fact that the debt side of the leases will be taken through the P&L on an annuity basis, which means that you have a front-loading on the interest expense that will then be on the other side as you go down the coming years. Cash flow, just a few comments. Other adjustments, NOK 3.9 billion. In that figure, you will find the mark-to-market hedge loss. You have principal repayments, NOK 3.5 billion. NOK 3.76 billion. The normal repayment on the, let's say on the fleet financing is in the area of NOK 625 million. Due to the fact that we have sold and delivered some aircraft in 2018 or in fourth quarter in 2018, NOK 2 billion of this is debt repayment on those aircraft. A little bit on the steps that we have taken the last months.
The company for the last five to six years has been extremely focused on growth, taking delivery of the huge order book, building up and spending a massive amount of money in investing into new bases, into new routes. The training of the pilots and the crew and all in all, just building up a company with the necessary scale in order to be competitive in the market. That has been the main focus for the company. It also been the main focus for the whole organization. It has been an organization working very hard in order to make this happen. As we have said previously, it came to a point, I think it was two quarters ago, when that growth peaked. We're now into a period where the strategy for the company is changing.
We're now more going over to a focus where we don't have that growth anymore. As we have seen in the presentation, I think last quarter we guided a growth for 2019 in the area of 15%-20%. Now we are taking that down to 8%-9%. I think if you're looking at our plans now going forward for the next three to four years, you will see a growth in this company in the area of 5%-10% capacity growth. It's very different to what we have seen the last two years. In 2017, you had a growth of 25%. In 2018, you have had a growth of close to 40%. It completely change the focus going forward.
The thinking now is we will do whatever we can, and we will make sure that we take this company into a position where we actually create a profit. As Bjørn said, we have a target of being profitable in 2019. We have done very many steps in order to make sure that we can achieve that, which I will come back to more in detail. It involves that we are going through every single route in the network. We have already seen that we have canceled, closed down routes, closed down bases, and we have done a lot of reshuffling in the network. This is just an early phase, and you will probably see more of that going forward. When you do these steps, that doesn't necessarily kick in from day one.
It will take a little bit of time before it works and before you see the effects of it. As a result of that, if it then turns out that we have too many aircraft, well, then we will sell those aircraft, which we have already started to do as well. We have put together a slide just to show you the steps that we are taking and have been taking in order to get the liquidity effects. I'll get back to them in more detail. The rights issue is mentioned by Bjørn. We have sold 19 aircraft since we first mentioned that we will divest. 13 of those will be delivered in 2019, meaning that the liquidity effect will be in 2019. Net effect is in the area of NOK 1 billion after the fact that we have repaid debt on the same aircraft.
We released news yesterday on the fact that we have pushed 12 737 MAXs from 2020 to 2023, 2024. Out of those 12, six will be delivered in 2023, and six will be delivered in 2024. In addition to that, we have also pushed 4 A321NEOs from Airbus from 2019 to 2020. All in all, it will give us a liquidity effect in 2019 in the area of NOK 1.7 billion. We have #Focus2019, this is the same #Focus2019 as we have been talking about now for a couple of quarters. We're going to have a cost reduction capacity adjusted of a minimum of NOK 2 billion. I'll come back to that in a little bit more detail as well. This is mostly on the cost side on the divestment of aircraft.
You also have to see this in combination with the steps that we are doing on the top side of the P&L, on the revenue side. Rights issue. We have a fully underwritten rights issue of NOK 3 billion. We are in the process now of doing that transaction. It's underwritten by DNB, Sterna Finance control by John Fredriksen and Danske. We have a pre-commitment as for today in the area of NOK 1 billion out of those NOK 3 billion. The terms for the rights issue will be set at the 18th of February, where the market will then get that communicated. EGM is coming up on the 19th of February. The subscription period is going to be between 22 February and eight March. The transaction will be finalized in the area of, let's say on and about 11th of March 2019.
That's the time schedule on the rights issue. Divestment process. This is the number of aircraft that we have sold since we started that process, I would say. We sold six in August, et cetera. The last four ones is still not documented. It's still not a signed deal, but we have an LOI. It's kind of subject to documentation. We firmly believe that transaction will happen. We are now in the phase where we are considering how many more aircraft do we want to sell in 2019. We had a plan to sell probably more than we are now going to do due to the fact that we are pushing the 12 MAXs from 2020 to 2023/2024. We will still probably target to sell in 2019 in the area of five to 10 more NGs.
As I've said earlier, for every NG we sell, it will free up in the area of NOK 85 million-NOK 110 million in free liquidity after we have repaid the debt. On the joint venture, I would say that we are progressing on the joint venture. We have signed an LOI with the partner. The partner is an Asian company, a very strong Asian company. Part of that discussion is it's a kind of a three-part discussion we're having. It's Norwegian, it's the partner, and it's the aircraft manufacturer. Mainly Airbus but we might also include aircraft from Boeing.
As the discussion has been moving on, it turns out that we have come into a situation where we are, especially with Airbus, discussing this in a broader sense, meaning that we are also discussing the whole order book that we have with Airbus as part of the discussion on the JV. This is, I would say, the main reason that this is taking a little bit longer than what we like and probably what you like as well. The process is definitely still alive, and we are progressing, and we have all the three parties now sitting around the same table. That has taken a little bit of time to achieve. That is what we can say on that joint venture. I think by the end of the first quarter, we should have clarity on where this is moving.
CapEx and financing, not really much to say there. We have as Bjørn said, we are planning to take delivery of 16 MAXs this year and five B-minus , all coming in the first half of 2019. Then the A321s again shuffled into 2020. Then we have four A320s, which are all going to be leased out as such. Financing, no news on financing. We are comfortable on how we are going to finance the aircraft. And we will do it, as I've said many times, with a mix of typical EETC type of structure and structures where you do 80%-85% leverage at good terms. Operational improvements. #Focus2019, as we call it internally, is the cost reduction program that we started back in October, November where we are going to do a reduction in cost, capacity adjusted, with a minimum of NOK 2 billion.
It's fair to say that the internal target is a bit higher than that. That is what we have been communicating to the market. I'll come back to a little bit on details on it as well. Optimizing base structures. As I said, we have been through the whole route network. We have done some adjustments. We are closing down six bases now, as communicated to the market. We are also doing some adjustments on the long-haul pilot bases. This is a process that has been going on for a while. We have taken steps, and this is a continuous process that we will now develop and continue with going forward the next months. We will share that to the market as decisions are taken. On-time performance has been a big issue for Norwegian in 2018. Huge factor there is obviously the engine issues again.
If you look at the on-time performance in Norwegian, you have had a better performance month by month now for the last five months. Hopefully, that will also continue in 2019. As I said on the Rolls-Royce issues to the right there, we have reached an agreement. We have much more visibility on Rolls-Royce issues now in 2019 than we have had in 2018. We do expect that the care and compensation costs will go down, the on-time will come up, and all in all, it will take us into a much better position and much more visibility on that side going forward. #Focus2019. We have 30-40 people working on this project internally and have been for a while. We have 140 specific initiatives that are quantified by different parts of the company.
This involves all locations, all parts of the company, it is really a huge focus on it internally. We have also received more than 250 suggestions from employees from all over the place, which we are now working through. We have a very formal reporting internally with steering committee meetings quite often. We are also informing and reporting to the board on a regular basis. We are also planning to update you guys every quarter going forward with the results from that program. This is just a very broad overview of all the areas that we have identified so far. It involves what we call airport handling and technical costs, which is the airport expenses. It's the whole technical maintenance supply chain. It's on-time performance as mentioned. Operating efficiency is the crew efficiency, aircraft efficiency as well.
It will also involve how we are structured with regards to AOCs. We are discussing how to make that more effective and streamlined, which gives us flexibility with regards to crew movements, regards to the maintenance cycles, et cetera. It's a set of initiatives that we are now working through and which I can assure you will give results. If you look at the results so far, to be very specific, we started the program in October. By the end of 2018, we had a cost saving of NOK 100 million out of the NOK 2 billion. As it looks now for the first quarter, we will have a cost reduction achieved in the area of approximately NOK 400 million. We will try to do whatever we can to push that up to NOK 450 or maybe even NOK 500.
As it looks right now, slightly into February, we will have achieved NOK 400. If you add the NOK 100 to the NOK 400, you have NOK 500. I would say that we are on schedule. It will most likely be a little bit back-loaded into the second half of 2019 if you look at the NOK 2 billion or maybe even a higher figure. I would say that we are definitely, as it looks now, on schedule. Bjørn ?
Yeah. Finally, we are entering a phase of steadily slowing growth. Starting out from 2015 and up to today, we have received around 80 aircraft, launched a huge network of the long haul. It's been some years with substantial growth. Just to say is we are now the biggest European operator into New York and Los Angeles. We have been a huge network in the U.S., it's been a buildup. We are now going into a phase where we have the structure that we want. Now we are going into a phase where we definitely go for profit. That means that we also have to look at every route. We shouldn't fly routes that's not profitable on a 12 months rolling basis. Of course, some of the routes are huge seasonality.
If they are not profitable on a 12 months rolling basis, we should take them out or remove them. That is actually why we are evaluating also the bases, taking down the bases. That is mostly because we are not dropping out of the route structure, but the base itself is too seasonal and it is mainly focused into other areas than the Nordics. It is mainly focused, as an example, into Germany. Everybody knows that in Germany, there is a bloodbath actually with all the actors coming in. It is very much like when Sterling dropped out of the market. 12 months after Sterling disappeared, there was 3 times as much capacity as when Sterling operated. That is actually what is happening now in the market as an example in Germany and going into the Mediterranean.
We were from back alone, as an example, from Palma for a long time into Germany. Today it is so much capacity, it is not worth being there because as an example, this has no strategy for us. It does not supply us into the long haul. It is just a leisure route. If we lose money on the leisure route, we should not fly it. Simple as that. We are evaluating the route network and optimizing the cost structure. When we closed on some of the bases that we have in the U.S., it is mainly because they have to adapt into the European structure because they cannot fly on the American certificates. Only on some of the routes, not on all, then it is way too complicated. It is better to fly it out of Europe.
That also goes when we take down bases, we fly it out of Scandinavia, actually. It is not out of. Then we can cope with the seasonality in a much better way, because we can, of course, use Canary Islands. We can use much of our capacity out of Scandinavia, as an example, into Spain, while we have to take down the capacity on the Canary bases in the summertime, because it is huge in the wintertime. Now we can actually structure capacity in better ways. We will lower our risk profile when we go for the growth. Next year, you will see us. We have the network that we want. The average growth now will be between 5%-10%, 3%-5% on narrow body and 5%-10% on the wide-body operation. We have enough now, more than 500 routes.
We have a big enough network. We have a very highly cost-focused now on we will get the cost down 5% in 2019. It will go down to a unit cost of 0.295-0.300, including ownership cost and exclusive fuel. 1% is around NOK 1 billion, you can imagine we are taking down the cost considerably, to 0.4075-0.4125, including ownership cost and fuel. This is assumed on the oil price and looking forward on the EUR NOK and USD NOK as forecasted by the market. This is also, of course, based on the present current route portfolio. This is the estimated production. We are coming out of 2018 with a fairly high growth rate and taking it gradually down.
We had a lot of bookings, as an example, on the Singapore route, so we couldn't take it down before in January. We are gradually taking down the loss-making routes now and concentrating on the markets where we really make money. Fuel hedging, Geir touched upon. This is the figures of the fuel hedging. I must say that we have probably some of the lowest hedges in the market, and we lost NOK 2 billion. You can imagine the cost for the other players that have much, much higher hedging than we have, they have much higher price as well. We anticipate that we will stay on the We are always looking at the oil price and our hedging strategy, but it certainly is a risk on the hedging. Going forward, our target is absolutely to make a net profit in 2019.
Of course, if the market crashes, we have to adapt to that. When we look at the bookings, we have a slight decline in RASK in February. Easter comes in April, of course, that makes a softer March and a stronger April, it evens out. The aggregate current bookings for these two months is in line with last year. Long-haul actually is currently developing better than short-haul. I must say that especially in Norway, the market is quite good. Also, it's very soft, and the market is more or less destroyed by the overcapacity out of Germany and going south. Otherwise, in the Nordic is quite good. This is the market and the business.
The key takeaways for us is, you might say we are changing the strategy, or I would like to say that we are coming out of the growth focus, because we knew that we would come out. We still have five Dreamliners to take in next year. Our capacity on the short-haul, our strategy has always been to, the MAX is coming in, we shuffle the NGs out. We are in a position now to sell off a lot of NGs, especially in the end of this year, more than we have advised here. As Geir said, between five and 10. We will look at the market. The market is actually incredibly good to divest short-haul aircrafts. It's a simple fact that I think China didn't usually buy 400 Boeing airplanes and 400 Airbus airplanes.
Last year they didn't buy a single one, you can look at that from the trade war. There is a huge demand out of Asia for narrow bodies. If you order a narrow body today, you will get it in 2024, and that's outside the five-years plan. You can imagine there is a huge interest for the order book that we have. The focus today, we are focused on, we will be profitable in, as we believe in net profit also in 2019, and capitalize on the market position and scale that we have already built. Geir have touched upon the base structure and the route network. We will, and not at least the cost reduction of NOK 2 billion. Of course, our internal target is higher, but that's what we have told the market.
Very important for us to that was where we were able to reach a solution with the Rolls-Royce. It's a good solution for both parties. It creates a resilience towards the engine issues going forward, where we will have actually four aircrafts for the first year, first quarter available to put in if anything happens. It's taking out and we are not carrying the cost for that. It's a part of this agreement and because we know it will. Yes, they are changing. They have a fix on the engines now. After the first quarter, everything should be up and running, and we will still be able to have two Rolls-Royce, two Dreamliners in spare. We have a very good backup on going forward.
That should take care of our and mitigate obviously most of our NOK 1 billion cost in 261 care and compensation for the passengers. Yes, we have strengthened our. I might also say conclude this, we touched upon initially Argentina. We expect it to be profitable already in second quarter out of the bookings and what we have seen. We expect actually in 2019, expect it to be profitable for the whole year. The long-haul into Argentina is very strong. Obviously, when we build up the domestic network in Argentina, you don't have to be an Einstein to understand that we'll put more long-haul from other countries into Buenos Aires, where we are building up this domestic network. We are strengthening the balance sheets on the right issue for NOK 3 billion.
As Geir touched upon, we are reducing the CapEx for NOK 1.7 billion through postponement of deliveries, aircraft deliveries. We will get 24 MAXes delivered in 2020. We have pushed out 12 of them, and that gives us much more comfort also on divesting of aircraft. It's a win-win position for both of us. We have concluded the divestment of 13 aircraft with a net liquidity effect of NOK 1 billion. As I said, we will continue to divest more aircraft. The order book for the joint venture, we are in talks with a very strong partner. Finally, I also said that we have touched upon building a worldwide alliance. Yes, we have not stopped doing that. We are in talks with other airlines, huge airlines. Our hope that you will see that in coming quarters now, we will build that world alliance.
We have very large comfort in what we have been doing with easyJet now. It's really starting to take off now. Now we are concentrating on building the network on the other side of the Atlantic. It's not small plays that we want to take on board. We have a huge. We really believe that we can build a very strong short-haul, I mean, long-haul network. Tied up with internal alliance with short-haul operators on the other side of both in Asia and in U.S. So far, we are concentrating on U.S. We have now a huge and very strong network in Europe, serving all over Europe. It's going to be incredibly interesting to see how this alliance, low-cost alliance is coming. Yes. That should be just about everything. We are open for question. Fifth to exit it says.
We start from the audience. Any questions here?
Hi.
Yeah.
Cecilie Becker, NRK. Can you share some flavor on what steps you're taking on the revenue side for the coming year?
Revenue side? Yeah, I think you can talk to that.
I think then we are down to the fact that if you look at the cancellations that we have taken, for example, on long haul which resulted in the fact that we put these 787s on the ground as spare capacity. To be honest, it's pretty obvious that the routes that we took out, the routes that we canceled were the worst-performing ones. That is one measure. Also the thorough review that we have had on the 737 operation. The fact that we are closing down bases, we are canceling routes, reducing capacity in areas where we are not performing well enough. That will also contribute to making better results on the top line. In addition to that, we know that we have a lot of room on selling more products onboard the aircraft, ancillary sales.
We know that we have a lot of room on the cargo side, which is developing nicely. We still have room. I think we have ancillary sales today in the area of 15, 16, 17%. The best performance in the market is between 40% and 50%. We know there is capacity there for improvement. All in all, I will say that we are going through the network, we will fine tune where that is necessary and look at the capacity we are now flying in the different areas. By that making a better performance in total.
Yeah. We'll focus on the financial markets for now and take media questions afterwards.
Preben Askjær, Carnegie. I would like to touch upon the cost guidance you're giving. You're saying that you paid out to passengers about NOK 1 billion in 2018, and you had extra wet lease costs of somewhere around NOK 500 million. Considering those two and you're cutting NOK 2 billion, it doesn't really seem that you're doing that much on the cost side. Do you expect to pay out a lot of passenger compensation also in 2019?
Well, I don't think it's NOK 500, I think it's NOK 1 billion. In 2018, we are paying NOK 1 billion in compensation to customers. There will be compensation to customers in 2019 as well. It should definitely not be in the area that where you're talking now. If you look at the base, cost base in Norwegian in 2018, if you take out owning costs and leases, it's in the area of NOK 37 billion. The aim here is really if you do the calculations, the aim here is really As we said, also, we have a capacity increase in 2019 of approximately 9%. If you look at the targets that we are having on the cost side, the cost will only increase nominal in the area of 2.5%-3.5%. That's kind of the minimum NOK 2 billion in cost savings.
The hope here is that we can achieve more than what we have guided the market today, which means that we can also guide down the cost level going forward. This is where we are at today.
Which brings me to the next question. You're talking about the unit cost down in the area of 5%, but competitors of you are talking about price reductions on tickets in the same area, in Europe at least. Net effect would be pretty flat for your net profit unless you expect better prices on your long-haul operations. Is it anything else in why you expect net profit in 2019?
I can start to answer that. Of course, this is especially the areas that we are actually pulling out of. The areas I touched upon was as an example Spain or down to the southern Mediterranean. That's actually Ryanair was really hitting the market. Actually, it's not hitting the market in any comparable ways in the Nordics. Yes, a little bit outside Norway, but not actually. As an example, Norway is actually stronger. The long haul is gradually improving. We had also to realize that our strong hold actually on the long haul is U.S. market. It's not the European market. U.S. is going quite well. Whether we politically like it or not, it's going quite well.
I think it's definitely wrong to say that we will be hit by the same way as, for example, Ryanair is emphasizing, because if you look at our network and Ryanair, there is practically no overlap. We are the biggest operator on the biggest airports in Norway, and as I say, we have a huge operational side from all the European cities now into U.S. It's totally different. You cannot compare Ryanair and us when you talk about revenue side.
I don't think I have anything to add on that.
A question from Ole Martin Daltveit. Can you please clarify whether the IFRS 16 changes is implemented in your cost guidance and expectations of a positive net profit for 2019?
Well, I'm not going to give him the estimated net profit in 2019. On IFRS, I think I went through it in the presentation. It will have a P&L effect after the implementation of IFRS in the area of NOK 650 million-NOK 725 million negative. You will have NOK 33 billion into your balance sheet on both sides. The reason you will have a negative P&L effect is the fact that on the debt side of it, you will have an annuity profile on how to take down the debt. Meaning that you will have a front-loading on the interest expense part of that. As time goes, that will be catched up, and then you will have actually a positive side on the P&L later in the process.
That is the effect that we expect from implementing IFRS 16, which will happen from the first quarter of 2019.
The answer is yes, we are taking that into consideration when we say it will be profitable in 2019.
Yeah. Hans-Marius Lee Ludvigsen from Pareto. Is there any compensation paid in order to delay deliveries announced yesterday?
No.
Over to Petter Nystrøm from ABG. Can you give some more details on forward bookings?
I think we touched upon it.
Yeah.
It's a slightly reduced RASK in February, slightly reduced March. April is affected by movement of Easter comparable to last year. We do not see any Brexit effects. We do not see any effects, what we're talking about from the Nordic area, like you see on the Spanish into the southern part of Europe. You will see that's what we have seen for actually a couple of years now. The bookings as an example in Spain is very late. Also in Argentina, it's very late bookings. It's gradually shifting now in the Nordic market also to later and later bookings.
One more question from Petter Nystrøm. Over the last month, we've seen a solid yield increase while the load has dropped. Previously, you have used the yield quite aggressively to defend load. Can you please explain the rationale of this change? Is this change what we should expect going forward?
Of course, we don't like to see lower load. What we like to have is, of course, increase in yield and increase in load. We had had slightly too much capacity going out of the fourth quarter. That will also reflect in the first part of first quarter this year. That was especially in January and part of February. Then it will be back to normal. It's very hard to say, but we do not expect any huge drops in load factor going forward.
Any further questions?
Hans Jørgen Elnæs from Winair. I have a question regarding Brexit, which you didn't mention in your presentation. Do you have any idea how a hard or a no-deal Brexit can affect your Norwegian U.K. operations?
Since we don't have any short-haul on U.K., we are only long-haul. We do not expect, actually, to be hit by the Brexit. We have gone through the routes that we are performing and, of course, in Norway we are outside the EU, we don't expect any hit from the Brexit, actually. What we can see is, you might think that that would also have a hit on the public, that they will not travel that much on vacations and so on, we haven't seen it on bookings. Actually, the bookings are stronger this year than last year. When it comes into our long-haul operation, fortunately, in one way, we are stronger in U.S., we do not have to rely so much on the British markets. The U.S. market is actually quite strong. What will happen with Brexit?
The only thing I say, if it really goes to hard Brexit, it will be total chaos, that we all know. What type of chaos? We don't know. To say it in a way, we hope for the best, but we prepare for the worst.