Good morning. My name is Surespi, and I would like to welcome you to this presentation of the first half of twenty 21 and the Q2. The presentation will be held by our CEO, Geir Karlsson and then also our Vice President, sustainability. Anders Fagnes will have share some thoughts on our sustainability strategy. Nineteen.
After the presentation, we will open up for a Q and A session related to the financial report. Media will be also kind of given availability, ask questions related to the report. Questions may also be emailed 2 Investor Relations at norwegian.com. So with this, I'll give the floor to you, Guy.
Thank you, Torje, nineteen. Welcome to all of you. It's very good to be back here in doing the regular quarterly presentations. I think it's nineteen. As a year ago, since last time, I guess we can all agree that it has been a very special year for all of us, and I can certainly nineteen.
Say that, that has been the fact for Norwegian. Today, I was planning to go through a few areas nineteen and update you on the financials for the Q2, but also give you a little bit of insight on how we are doing now into the 3rd quarter, nineteen. Our liquidity position is developing and then trying to give you a little bit of insight on the plans nineteen. I'll take you through the restructuring and how we look more or less from a mostly from a balance sheet point of view. Nineteen.
We are coming out of the quarter with close to net 0 net interest bearing debt, and we have a cash position, as we have seen, of NOK 7,500,000,000. I will take you through how we are thinking now to get back in the market, nineteen. To get the passengers up in the air and the focus that we have doing that. Looking at the financials, I would say that, nineteen. At least from our point of view, it is as expected.
I think when we went to market to raise capital earlier this year, we promised nineteen. Investors are certain balance sheets. I think we have delivered that. We have maybe even over delivered a little bit, in my opinion. Nineteen.
We have we are planning to say a little bit about our sustainability strategy. Nineteen. So Anders will give us a little bit of insight of that. I will also go through the momentum that we are seeing now in the markets when it comes to bookings. Nineteen.
It started back in June, and it has certainly continued through July and also through August. Nineteen. I'll give an explanation on how we are thinking on ramp up for the months to come and through the coming winter nineteen and also give you some updates on the big projects that we're running internally these days, meaning twenty two and to make sure that we have a company when we're coming into Easter next year nineteen. That is extremely competitive, maybe as competitive as ever before, and we are going to play it smart from now to then nineteen to be ready. The reconstruction is, I guess, for many of you, a little bit old news, nineteen.
But the balance sheet is new news as per today. I mean, we have taken out debt and forward nineteen. Liabilities in the area of NOK 140,000,000,000 through the restructuring. We have taken out more than twothree of the fleet, nineteen. And we have taken out and canceled 185 aircraft orders.
Nineteen. We have, as you know, terminated or exited the long haul business, and we are focusing now on the Nordics, into Nordics and in and out of the Nordics 2 to Europe. Unfortunately, when we have downsizing the company the way we have, we have also reduced the workforce nineteen. We had more than 6,000 employees. And then we rent then we raised SEK6 1,000,000,000 in capital, as you know.
Nineteen, and we are sitting with a very comfortable cash position as of today. We were able to negotiate nineteen. With the leasing companies, what we call Powerbody Hour towards Easter next year, which gives us a massive flexibility nineteen through the remaining part of the COVID-nineteen situation, I would say. And then we did, at the same time, reduce our ownership costs with more than 35% compared to pre COVID that we will benefit from during the next years. Nineteen.
We have also done quite a lot on the organizational side. So right now, we are nineteen. Having 51 aircraft, we own 4. We have leased the rest of them. As I said, more than 35% reduction in costs, nineteen.
This will make us more competitive, obviously. We were also able to negotiate a complete reset to what we call the maintenance accruals. Nineteen. That is an obligation you're building up when you lease an aircraft and where you would have to pay that amount normally when you redeliver it.
Nineteen. That was reset to 0.
So by that, you can treat it as we are sourcing aircraft on the market nineteen. And again, no aircraft orders. Nineteen. We have approximately 3,200 employees in Norwegian today. 24% of them are still furloughed, nineteen.
But that won't last long. Many of these are in Spain. By end of October, we expect to have all Norwegian crew up in the air again, which is nineteen. Fantastic. We are still working to streamline to continue the streamlining of the company, and that will continue throughout the winter.
On the cost base, we have, as mentioned earlier, in sourced crew management, nineteen. And we have worked very hard through the last year, I would say, to create better deals for ourselves from vendors, from credit card companies nineteen. And from others, we have also been talking about the so called AOC structure over the last 2, 3 years. Finally, I think we can say that we have now nineteen. We are very close to finalizing that project.
And within the next couple of months, we will end up with more or less, for all practical purposes, 1 AOC, which will be a Swedish one. We have a Norwegian one as well, but then that job is done, and we can start to take out nineteen. So with that, I think we have created a company now that has the right fleet, nineteen. The right balance sheet, the right debt and the right cost level. The cost level will still be something we will continuously nineteen.
Bombard every single day throughout the next 6 months, but it takes us into a position where nineteen. We can start really to focus on our customers again. We have a very attractive reward program, nineteen. More than 4,000,000 members still only in the Nordics alone. I think we are we would like to have a little bit more scale, But with 50 aircraft, we were able to or maybe to bring it up to 60, 70 aircraft.
We are, after all, able to put out for sale more than 2 50 routes for the summer of 2022. Nineteen. A little bit on the financials. The T and L is really not very exciting, I would say. We had SEK335,000,000 for the quarter.
We have SEK 1,000,000,000 in loss in EBITAR sorry, SEK538,000,000 loss on EBITAAR. I think it is important to say that this P and L for the quarter is including nineteen. Kind of the last elements from the restructuring. We have had to let people go and we will have to kind of pay severance packages. Nineteen.
And everything is now included in Q2, even if many of these employees are still with us nineteen at least for a period. So this is what we call one offs. We also have that on, let's say, on the more financial side nineteen and with SEK130 1,000,000 in what you say call off, the one offs. And if you take this out, you could say that the EBITDA, excluding the one offs, nineteen is in the area of SEK 336,000,000 loss. And then you have also the last kind of nineteen.
Portion of the financial restructuring, which is SEK 3,800,000,000 and it is included in the SEK 3,500,000,000 there on net financial items, nineteen, which takes us then to a profit of SEK 2.8 billion for the quarter and SEK 1,600,000,000 for the half year. The balance sheet, that is probably a little bit of news for some of you. Nineteen. The intangible assets there is deferred tax assets, and that is an asset that you will nineteen, and it includes both the leased and the owned. And the rest is properties that we own and equipment nineteen related to the aircraft.
Then we have receivables. We Still have an issue with the credit card companies. That has been easing up through the Q3, and we do expect it to continue to ease up nineteen. Through the remaining part of the year. Now we are in a situation where it's not that much related to the credit, the Norwegian credit.
It's more related to nineteen. IT issues with between us and the credit card companies or the credit card acquirers, and this is nineteen. About to be sold and then we can this is 100 of 1000 of transactions that is involved, and we do expect that this will get back to not normal levels, nineteen. But we will certainly get back to 100 percent holdback very soon, and then we will start to work with these guys over the next months in order then to bring it back nineteen to normal levels. Then down to the debt side.
Nineteen. In-depth today in Norwegian, you can see it on the right top side there. We have SEK 4,700,000,000 in aircraft financing. Nineteen. We have the SEK 700,000,000, which is the new bond, NASDAQ 13.
That is the bond that is having nineteen. I'm very, very happy that we reached an agreement in the bondholders here because that could nineteen. Make us keep all the London Gatwick slots. And I certainly believe that as the market is coming back, these values will come up. Nineteen.
The value of the Lund and Gattis slots in our balance sheet today is listed as 0, so it's clearly an upside. And if we can keep these slots for the next years, nineteen, it will certainly give us value going forward. Cash nineteen. And cash is cash equivalents, SEK 7,500,000,000 which is good. We know that nineteen.
We have promised to pay the creditors CHF 500,000,000 and that has been paid now since we raised capital and up until today. I'll come back to the cash position as per today a little bit later. You might be a little bit surprised of the equity level, SEK 1,500,000,000. Nineteen. You might have expected it to be a little bit higher.
We will convert the dividend claim in the current quarter of SEK 1,245,000,000. So in real terms, The equity book to equity is close to NOK2.8 billion. Nineteen. We also have this 0 coupon bond, SEK 3,750,000,000 that is discounted down 2,409,000,000 as you can see on the right hand side there. And if you add up all these debt instruments, you could say that and take nineteen.
That's why we say that we have close to 0 net interest bearing debt of NOK483,000,000. Nineteen. Other than that, I mean, we have traffic liabilities that you all know, SEK 1,122,000,000 nineteen. And then you have the SEK 4,300,000,000 other current liabilities. That one includes cash points of in the area of SEK 2,400,000,000.
Nineteen. That is cash points that belongs to our customers. Obviously, when we have exited long haul, quite a portion of these cash points nineteen. Might not be used, and thereby, you will have a positive effect accounting wise if that's going to be the case. Nineteen.
So I think we have a balance sheet here with SEK 17,600,000,000 and then you have SEK 1,200,000,000 that will be converted into equity nineteen. Cash flow, not very exciting, I would say, but what we had done through the quarter is to repay nineteen. The debt that we had on the hangar at Gardemont, SEK 250,000,000 that was the old NAS 9 bond. We have paid down SEK 50,000,000 on the 13, and we have also paid down on a bank facility adding up to NOK351 NOK. Dan Anders is you and I will wrap it up thereafter.
Good morning. Nineteen. I'll take you through our environmental sustainability strategy. And
nineteen. I think Norwegian
is well positioned to tackle the transition to a low carbon economy. As you can see from the graph, over the last decade, we have Our low cost business model has reduced fuel and resource consumption by 28%. Nineteen. And at the same time, as we cut emissions, we cut ticket prices and costs. Nineteen.
We measure our emissions as grams of CO2 per revenue passenger kilometer. Nineteen. And the efficiency gains that we've got over the last decade is mainly through fleet renewal and carbon efficiency. Nineteen. But although that we are on the right track, we must do more to get an environmental performance at an acceptable level.
Nineteen. And in 2019, we started integrating environmental sustainability into our business. Nineteen. Our overall strategic goal is to use fewer resources and increase profitability. Nineteen.
And this overall goal rests on the principle that environmental actions must deliver a profit And to measure how we perform, nineteen. We've decided upon 3 key performance indicators that you see on the left hand side. The first KPI is carbon efficiency. Eighteen, scientists at the International Panel on Climate Change found that to limit global warming to 1.5 degree, nineteen. Emissions must be reduced by 45% by 2,030 compared to 2010 levels.
This also forms the basis of our target. Nineteen. We're committed to reducing our emissions per passenger kilometer by 45% by 2,030 compared to a 2010 nineteen. It's an ambitious but achievable target. Nineteen.
And if we look at the numbers there, that means that we're going down from 97 grams in 2010 to 53 grams in 2,030. 20. And in 2020, we jumped up to 82 grams, mainly due to lower load factor and shorter average sector length nineteen because of COVID-nineteen. In Q1, we emitted 190 grams CO2 per R per k, while in July, we were down to 84 grams. Nineteen.
For the Q2 in total, we landed on 119 grams, and we expect a slight increase in 2022 compared to 2019, nineteen mainly due to shorter sector length in our network. Nineteen. The second KPI is waste optimization. We consume large quantities of disposables and single use plastics in our operations. Nineteen.
These items have apparent benefits, such as low weight, which reduces fuel burn and efficient infection control. Nineteen. However, we believe it's possible to improve the in flight service we offer and reduce costs at the same time. Nineteen. Therefore, we will remove all unnecessary waste onboard our flights and make sure that our waste resources can be used again.
Twenty. We commit to stop all consumption of non recyclable plastics by 2023 quite fast. Nineteen. In the same period, we will also reduce consumption of single use plastics by 30% and make sure that all single use plastics nineteen. And the 3rd KPI is accountability.
Nineteen. We have developed our targets, so they are action oriented and measurable. We will be open and share our progress actively. Nineteen. We commit to integrate climate risk and environmental factors into corporate governance, nineteen.
And this year, we reported our assessment of climate related risks and opportunities to the Carbon Disclosure nineteen.
So
We know where we are and we know where we want to go. And the big question now is how to get there in the most cost efficient way. Nineteen. This picture you see here illustrates the main levers we can pull. We've developed the carbon efficiency model nineteen based on the actual fuel burn from our fleet.
And the model allows us to estimate the level of carbon efficiency each action must nineteen. The numbers that you see there in italics nineteen. Refer to the potential each action has for improving our grams of CO2 per RPK in the period 2022, 2030. Nineteen. Firstly, on the bottom right hand side, operational efficiency would deliver a reduction of 5 grams CO2 per per K, nineteen mainly through improved fuel management and improved load factor.
We've started implementing a set of environmental actions that are both nineteen. In 2019, we started testing the Skybreed pilot app, nineteen, which gives our pilots feedback on how they perform on various fuel savings best practices right after they've landed. Nineteen. We're now intensifying training to scale and improve our performance. We've also partnered with the Swedish nineteen.
We have
a very strong company, Avtec, which delivers real time advanced weather data straight into the cockpit during flights. Nineteen. This allows our pilots to adjust the altitude according to the best wind conditions. Flying in tailwind instead of headwind is much more efficient. Nineteen.
We've also signed an LOI with MSG Aviation, a Norwegian company nineteen. The plan is to build a semi automated washing machine at Gare de Mon Airport. Clean aircraft, reduce friction and lowers fuel burn, nineteen. And in aviation, an empty seat is considered waste. Nineteen.
And the fuller the plane is, the more people share the environmental costs. Higher load improves both our bone line nineteen and our carbon efficiency KPI. And secondly, on the top left corner, nineteen. We need sustainable aviation fuels to reach our target. Our NGs, nineteen.
We have now can tank up to 50% sustainable aviation fuel today, which is more than sufficient for the 15 grams contribution we need. Nineteen. Thirdly, full renewal of the NGs can deliver 9 grams of CO2 per RPK. And in this scenario, nineteen. So in conclusion, nineteen.
Our strategy allows for flexibility, and we can reach our target without fleet renewal. Nineteen. Future projections and profitability assessments remain uncertain under current market conditions and regulatory framework. Nineteen. We're working to improve visibility and reduce uncertainty in key variables before deciding upon the most cost efficient way to achieve our targets.
Thoughts. Nevertheless, we remain committed to deliver on our targets and show our customers and investors nineteen. That we deserve our current rank as the most sustainable brand airline brand in Norway. Thank you.
Nineteen. So if we look a little bit forward, and I will also give you some insight on how this summer has been developing for us. Nineteen. I mean, we came in or out of the restructuring in May into June, and suddenly, we saw a quite nice nineteen. Curve on bookings.
This is 7 day rolling sales from, let's say, from June up to Friday last week. And you are seeing that we have been ramping up definitely into, let's say, from 10 up to 30 aircraft. Nineteen. We have continued throughout July and into August where we are flying more than 40 aircraft. And we came out of June with 74.4 percent load.
August, as per today, is looking at approximately 70%. So still a good load even if we have put more capacity into the market. Nineteen. And if you look at the very nice curve in August, we are really seeing a momentum now in the booking curves. Nineteen.
Looking at the sales for the last 2 to 3 weeks, we see a lot of these travels are also meant for September. So September is also looking nineteen. Very good. It's still not enough, but it's very good. And if you look at the cash position that we have in Norwegian, we came out of the quarter It's SEK 7.5 billion, SEK 7.5 billion.
SEK 500,000,000 of that is owed to the creditors, so you have to kind of take that out. Nineteen. But even then, you could say that the cash position today is more than SEK7 1,000,000,000 nineteen. And with the sales we are seeing now for September, we have a target of having the 3rd quarter nineteen. I think the way we have organized the fall, meaning the 4th quarter, nineteen.
It's also looking good when it comes to cash burn. And I think we could end the year with a nineteen. Relatively low cash burn, so to say. And that will take us into a position through Q1 next year as well, nineteen where we should sit very comfortable with a good cash position and ready to compete 22. If you look at nineteen.
The ramp up, as mentioned, as I said, we have 30 to 40 or more than 40 aircraft in the air today. Nineteen. We have power body hour throughout the winter. That means that we can fly when we want, and we will not fly nineteen. But at the same time, the way we have structured the power of our agreements works in the way that we can keep A higher portion of the fleet in the air, even if we fly it with reduced capacity.
That means that over the winter, we can nineteen. We can cover wider parts of our markets, but still with lower capacity. Nineteen. This is a massive flexibility and obviously gives us help to get through the low season, and we will definitely play smart as well 22. If you look at 20 22.
That is really our main project internally these days. We have just put summer sales for 2022 out in the markets. We are offering more than 250 routes. We have 50 aircraft, as I mentioned earlier. Nineteen.
We have a plan of increasing that fleet with 10 to 20 aircrafts, then first of all, nineteen to the second, Q3 of next year. That will be on, let's say, on the basis that we can find good terms with the leasing companies. They are still available for us. I think even one of them are represented here today. Nineteen.
And we are very excited now to start looking at how we can source aircraft for the years to come. Nineteen. We have also launched an internal program where we are going to deep dive into all kind all parts of our organization nineteen. I think one of my kind of concerns since I came into the company is that nineteen. We are losing way too much money in low season.
And I really think that the bottom line in Norwegian is not delivered during the summer. It's actually delivered through the winter. So what I think you will see going forward is that we will take out much more capacity than before in the winter season. Nineteen. We will park aircraft during the winters.
And we so the project in itself will be to try to get out the cost base nineteen. We are also looking into crude efficiencies. We are not good enough compared to the best in class, for sure. We are good enough in part of the markets we operate, but we are certainly not good enough in other parts of the market. This is a very high focus internally now, and we will make sure that we can, for 2022, have a better crew efficiency and more in line with nineteen.
We will also focus on ancillary revenue as we have, but We implemented quite a few of these kind of products, I would say, already back in 2019. It never came into action because of the COVID-nineteen. And we are seeing now when we have started to really sell tickets That the ancillary revenue is also coming up as an amount per ticket. So the focus now is to make sure that we can play the fall, coming winter smart. We're going to preserve a lot of liquidity.
Twenty. It's looking really, really good. And then the business plan for 2022 is in the makings, And that's really the year when we are going to deliver results for the company, for the shareholders and also being able then nineteen to continue to offer the really liked product Norwegian to our customers. Nineteen. So by that, I think we end the presentation, Thore, and there might be some questions.
Nineteen. Yes. Thank you, Gerd. If there are any questions, please wait for the microphone because of the live stream. I think I'll start with a question from the web from Peter Nystrom at ABG.
On the cash flow, you had positive working capital effect on both traffic settlement liabilities and receivables. Nineteen. What is this related to? And how do you see the working capital development in second half?
Nineteen. Well, as I said, we came out of the quarter, the 2nd quarter with SEK 7,500,000,000 in cash. Cash position, as per today, is nineteen. Also, let's say, above SEK 7,000,000,000. And I'm saying that the 3rd quarter is, as it looks now, cash neutral.
Nineteen. And I think we can also get through the fall if we play this smart with a very limited cash burn eased up a little bit now during the Q3, and I think it will continue to ease up through the fall, which is also helpful for us.
2nd quarter from Peter. Your book equity is expected to increase by NOK 1.25 SEK 1,000,000,000 in the Q3, as mentioned, given dividend claims. However, can you remind us if there are more 1st debt that could be converted to equity in the next coming year.
I mean, We have done a legal process as well where we are going to streamlining the legal structure in the company. When we entered pre COVID, we had 74 companies in Norway, in the whole group. When we are ending all these restructurings on the legal side as well, we will most likely not have more than 20 to 22 companies. And that nineteen. Gives efficiency gains in itself.
So I think because we are not completely fine with all that all those processes. I think we could say that in on the debt side, there are there might be some reserves that could potentially be converted to equity, yes.
Nineteen. And then the Q3 from Peter, how do you what do you think about the ticket prices post COVID versus pre COVID?
Nineteen. No, I think the bookings we're seeing today and throughout the summer is showing, I would say, nineteen. Good signs, really good signs. And looking at the load factors that we're seeing these today seeing today as well nineteen is very promising. It's still not good enough, but it's definitely moving in the right direction.
We are nineteen. We are seeing, in general, I would say, that the booking curve is getting shorter. So you have to wait longer before you are starting to nineteen. Before you start to yield up, as you know, Thor. And that applies more or less due to the whole market regardless of where we are.
But nineteen? I think Norway domestic today is performing well. The best country in performing right now is actually Denmark, nineteen, followed by Sweden, I would say, thereafter. And but the booking curve and the load factors I showed you here actually applies to nineteen. All markets now we are operating in.
That means Norway, Sweden, Denmark and Finland nineteen. Domestically and also international. So it's not good enough still, but it's moving in the right direction.
A question from Kenneth Sievers at Pareto. Based on your comments, nineteen. Is it correct that expected cash flow for Q3, Q4 is about 0?
Well, I'm At least I'm saying that it's probably cash neutral for the Q3. And I think the cash burn for Q4 depend a little bit depending on the market as well, nineteen. But it will be a very low cash burn, that's for sure.
2nd question from Kenneth. Booking compensation sorry, Boeing compensation discussed, could you please provide an update?
Nineteen. Well, we haven't really moved that we haven't really progressed that much with Boeing. We have a litigation case. Nineteen. Right now, we have a fight with Boeing discussing where these litigations should take place, whether it should be in Chicago or somewhere else.
But But as we have said earlier, we have $252,000,000 paid in PDP to Boeing on these MAXs that we had on order. Seventeen. So that's what we have. It's written down to 0 in our balance sheet. So in that sense, you could say that in case we should find nineteen.
A commercial solution with Boeing, there should be an upside for Norwegian, but difficult to say what that upside is. Nineteen. But ideally, we would like and I think Boeing would like us to find a commercial solution. So but I think nineteen. Now we are out of the reconstruction.
We are looking much better. We are much definitely much stronger. Maybe over the next couple of months, we will have discussions with Boeing. Let's see.
A question from Ole Martin Wesker at DNB. Can you provide sorry, how has the response from the credit card acquirers nineteen to do refinancing? And do you expect any when do you expect a normalization?
I think we have a good relationship still, obviously with these companies. They have been very supportive throughout a very difficult period. They have been playing it very careful, as nineteen. Meaning that we have very low high holdbacks. You could say when we enter into the COVID situation, it was actually helpful that we had a High holdback because then it meant that the cash that belonged to the customers were actually sitting with the credit card companies and not ourselves.
Nineteen. And that was not the case with one of our competitors. So in that sense, you could say that it was okay. But nineteen. I think for now, it is all about getting down the holdback to 100%, which we're close to do.
Nineteen. And then we will start to work with these guys on more on the credit, which is much better credit obviously now and then to get the holdbacks down. Nineteen. That said, I think that for the industry as a whole, I think it's going definitely going to take a while before we are back to the old days where you had holdbacks down in the 40% to 60% area. That will probably take a couple of years.
And last question from Ole Martin. How quick can you adapt in order to bring aircraft into the market then and or reduce nineteen case of necessary reductions or restrictions.
I'm not 100% sure I understood the question, but it's just The fleet flexibility. Fleet flexibility. Well, we have the 50 aircraft. We have helped by the power by the hour until Easter next year. We are in the market now to try to source more aircraft.
Nineteen. The leasing market is definitely tightening up, meaning it's getting more expensive. So we have to take some decisions over the next couple of months on how aggressive we would like to be, especially then for 2022. But we will be careful, nineteen. Not too defensive and not too aggressive.
We would like to play it in line with the market, but some growth, I think, you should expect into 2022 when the world is hopefully more normal again.
And then I have a final question from the web. Nineteen. It's from Jacob Skorblen. When do you expect Norwegian to again have a positive result on EBITDAR? Nineteen.
Well, I don't think we should guide that at this point,
nineteen. Any other questions from the audience? Nineteen.