Hi, welcome to Norwegian's Q1 2019 presentation. We will have a Q&A session after the presentation.
Also here
We'll pass around the microphone to those of you who are here, and then we will take questions from the outside through the Investor Relations mail, and I will read them out loud. First, presentation by CEO Bjørn Kjos and CFO Geir Karlsen.
Hello to everyone, and starting Q1. Starting with the highlights of the first quarter. We have been through and completed a preferential rights issue on NOK 3 billion oversubscribed, that was well done. In Q1, we have sold and delivered aircraft, two Neos, and that gave a cash effect on $26 million. In Q1, we also postponed deliveries of 12 MAXs and four A321s with a CapEx of NOK 200 million, and as you have seen recently, we have deferred more deliveries. Two Dreamliners are coming into operation, and we have continued working on the operational improvements. Our Focus 2019 have exceeded targets, ended on NOK 467 million. Target was NOK 400 million. Finally, also improved the punctuality. I'll come back to that later, that have a huge effect on compensation. EBITDAR improved since last year, despite Easter was, of course, in the first quarter last year.
If you look at the load factor, of course. We put the 17% growth of capacity into the market. Easter is affecting us, of course, 12% growth in the RPK. As you will see, we had 81% on load factor. Normally it would have been much higher if we had had Easter also in the first quarter. 8.1 million passengers. You will also see that on the rolling, we are flying 38 million passengers now. The people are flying with Norwegian. We have growth in all the airports. We are the largest carrier over Oslo Airport with 44% market share. Our largest growth is actually in U.K. at Gatwick. That's, of course, because of all the Dreamliners we have now in Gatwick. We have altogether 13 Dreamliners now in Gatwick.
The market have taken it very well, even though we have put in a lot of capacity. You can see where our revenues come from. Norway is our biggest market. We have growth of the Nordics on a 12 months rolling basis of 7%. The largest growth in absolute terms are U.S., both in Q1 and 12 months rolling. U.S. is absolutely very vital for us, especially on the long haul. More than 60 long haul routes now into operation. We recently were aware of that we are now the largest foreign carrier into New York, larger than the Canadian carriers that was on the top list before us. Needless to say, U.S. is now a very vital market for us in our long haul operation.
If you come down to the, we have told the market that we are taking down our capacity. If you see here, we have grown from 164 last year up to 171 with five Dreamliners. It's about more or less flat here. You can see this is the short haul operation. You can see it's more or less flat. We have sold 13 NGs, coming from 52 to 39. We have 16 MAXs coming in this year that should have come in and should have been up and flying. None of them are, of course, up and flying. We don't expect them to be up and flying this summer. We have redelivered one NG. Needless to say, we have a leasing capacity. We don't expect any problems to fly all our passengers that will book on Norwegian throughout the summer.
We have also two Dreamliners in operation that can take, actually, the top, especially going down to the Mediterranean in the peak. Our on-time performance, we have had a real focus on getting the on-time up. There is a lot of problems connected to long-haul punctuality. It was down in Q1 in 54%, affected a lot by the Rolls-Royce engines. You can see that, what does that mean? That means that almost 4% of our flights were affected by more than three hours delays, compensation and care to the passengers. You can see also that the NG is performing well. It's more than three hours delays, 0.3%, practically nothing. If this dies, the cost dies.
Now you can understand why is we will not be affected the same way with the MAX operation as we had with the Dreamliner operation. The Dreamliner, that was on and off on the engine problems, and we were affected by 4.1%. When we wet lease, we flew 340 passengers, and wet lease aircraft could only take 250-260. That means that we had to pay compensation for 90 passengers on the flights that we had to cancel and do wet leases for. When we wet lease now, you have the same amount of seats that we have on these narrow bodies. We don't anticipate at all that we will have this care and compensation cost that we had last year, even though we have all the MAXs grounded.
This has been a huge improvement, and if you think about it couldn't be higher than 76%. I can say that in one, if you go back from New York, you can easily see that we fly to actually more than 600 knots, up to 650 knots. But due to the wind, it might be below 500 knots. You don't have to be a mathematical Einstein to understand that that affects more than 15 minutes. Well, Geir, you can now take over and explain the financials.
Yes, thank you. Okay. Let's just jump to the P&L. If you look at the top line or the total revenue, it's at NOK 7.908 billion for the quarter. I'll go through the operating expenses more in detail a little bit later. You have other losses, gains of NOK 804 positive million. That includes NOK 880 million in positive on the fuel hedges. It includes NOK 25 million-NOK 30 million in profits on sale of aircraft. You have some negative effects on currencies. On aircraft lease depreciation amortization line, that is kind of changed now from this quarter due to the IFRS 16. Now it doesn't really include aircraft lease anymore. It's more depreciation and amortization. I'll come back to the IFRS 16 effects for the quarter a little bit later. That IFRS 16 also influences the net financial items of NOK 522.
Of the NOK 522, NOK 706 is interest expenses, of which approximately NOK 412 is related to the leases that has now been brought into the balance sheet. That takes us down to EBT of NOK 1,978 and a net profit or net loss of NOK 1,489. Comparing ourselves to the first quarter of last year, have in mind that in Q1 2018, we had the so-called effect from the holding of NOK 1.9 billion positive. Going into the revenue side. The RASK for the quarter compared to the same quarter last year is down 3%, very much affected by the Easter effect. If we are looking at March and April this year compared to March and April last year, we are definitely up on the RASK, meaning that April looks to be very promising this year. Ancillary revenue is continuing to increase 3% from last year, and it's now approximately 17% of total revenue.
Cargo revenue is also developing good, 34% up from same quarter last year. Of the other income, 65% of that is approximately revenues from the cargo side. The cost side, I will come back more in detail to the Focus 2019 program and how that looks as for today. The base cost, underlying cost in Norwegian is continuing to decrease. We don't have any help from the currency side this quarter, but even without, we have 85% reduction compared to last year on unit costs for this quarter. We expect that this will continue the same trend, meaning that we will see the cost level and underlying cost base in Norwegian to come down over the coming quarters. Going a little bit more into details on the different cost segments. You can see that more or less all cost segments is coming down except fuel.
On fuel, we have a headwind on the currencies. I will also like to say, the handling cost is not moving the way we would like it to move. It's flat for the time being. I think the reason for the relatively high handling costs last year is due to the care and compensation cost that we had to pay on the EU261 last year. You have a time lag on it, so we are still continuing to pay that into the first quarter this year. We do expect that to come down from the second quarter and into the remaining part of the year. As it looks now, the care and compensation cost will be more than halved in 2019 compared to 2018, where we paid close to NOK 1.1 billion in care and compensation cost or EU261, as we say. Technical cost is also coming down.
That is partly due to some compensations that we have received from an engine manufacturer. That has to be taken into consideration. Focus '19 is a big project in Norwegian and has been for a while. We have a guided market that we are going to take up at least NOK 2 billion in cost savings for 2019. This is how it looks for the first quarter. The actual cost savings is NOK 467 million realized in the first quarter. It involves a lot of initiatives already that has given results, we are definitely putting in even more resources now to make sure that we can take out the same effects for the coming three quarters. These descriptions on each area is just some examples on what we have been doing, this work will continue.
I would also like to just give you an update on how we are calculating the NOK 467 million and how you should look at it when you look at the financials. If you look at the cost base in Q1 2018, it was NOK 7.8 billion. You have a 17% increase in capacity since then, meaning in this quarter or the first quarter, that should have given a raise in costs of NOK 1.3 billion, NOK 1.4 billion. We have the fuel effect. What you should compare against is NOK 9.4 billion for the quarter. We have saved NOK 467 million, plus we have also taken out NOK 302 million in other savings, which we are not including in the Focus '19 program. That takes us down to the cost as for today of NOK 8.7 billion.
I would say that we are definitely on schedule when it comes to the Focus 2019 program. The forecast for the second quarter looks like we are going to take out savings in the area of NOK 550 million-NOK 600 million, meaning that as it looks now, we will also be able to deliver in Q2. That said, the MAX situation is giving us certain concerns about the NOK 500 million-NOK 600 million in Q2, but that is still the target and that is still what we are guiding on for the time being. We are also looking at at the cost side is that the fact that as you saw from Bjørn's fleet overview, we are taking down the capacity even more this quarter than what we guided on last quarter.
What we need to do now is to make sure that we take out at least NOK 2 billion in cost savings. I mean, the total target in Norwegian is definitely higher than the NOK 2 billion, and that is now what we are heading against, meaning that we should at least see NOK 3 billion when we end 2019. Balance sheet. Not that much to comment on. Fixed investment, it's very close to cash. It's related to the financing facilities that we have. This is cash sitting in certain bank accounts. Investments still includes our shareholdings in Bank Norwegian. Receivables is NOK 10.7 billion. That is a high figure. That is a ticket sold, not cash received as such. As we have guided earlier, that we have reached the limit on capacity with the credit card acquirers.
We have been in the market now the last months in order to secure new capacity and new credit card acquirers. We have just recently signed up for two new ones. I would say material capacity. I would say that during the next months into May, June, and into the summer, these credit card acquirers will come online and we can then increase the capacity we have. It doesn't really mean that much in the summer period because then the holdbacks will come down anyway because people are traveling through the good season. This should give us the necessary capacity when we head into Q3 and Q4, and not at least into the winter next year. That should make sure that more of the cash sitting with the credit card acquirers is transferring into our own cash as such.
On the other side of the balance sheet, you can see that we have brought in then all the leases taking up the debt in total, both on long-term and short-term of approximately NOK 33 billion. Cash flow, a few comments. You might think that you have a very high figure on purchases, proceeds, and prepayments of NOK 2.455 billion. That relates to a PDP financing that we had on certain Dreamliners that is now transferred into a sale-leaseback. It comes back in the financing for the principal repayments. What we have done, we have repaid the PDP loan on those aircraft, and then we have sold them to the leasing company. If you look at the principal repayments of NOK 3.7 billion, that includes then NOK one and a half approximately on the so-called PDP repayments.
You have NOK 900 million in IFRS 16 effect, meaning that we are repaying the leases. That is a portion of it. You have a normal repayment of debt in the area of NOK 600 million. You have repayment of debt on the aircraft that we have sold and delivered of approximately NOK 700 million. You can say cash flow-wise, and in this cash flow statement, the IFRS effect is in the area of NOK 1.3 billion. In the financing cost as such, of the NOK 705 million, in that sum, NOK 400 million relates to the interest portion of the leases that we have taken into our financials. IFRS effect from January 1 is approximately NOK 33 billion. This is exactly what we guided last quarter.
You have had the NOK 33 billion into your asset side and the same into the liability side of the financials. If you look at the P&L effect of IFRS 16, EBT ex IFRS 16, NOK 1.8 billion. We have some effects on ops, meaning that you're putting certain items into your balance sheet and then depreciate them instead of just making them as a cost. Obviously you don't book lease cost anymore, but you take that through depreciation and interest cost. The net effect for this quarter is NOK 176 million negative, if you look at the P&L as a whole from the IFRS 16. CapEx. As you probably saw last night, we sent out two press releases, and we have been working for a while with both Boeing and with Airbus.
The aim of that process is to make sure that we can align the delivery schedule going forward to the redeliveries that we have with the leased aircraft and where we can line it up for the next years in order to have a modest growth, first of all, on short haul. On that basis, we have now reduced the CapEx for 2019 and 2020 with NOK 2.1 billion. It divides approximately by NOK 500 million for 2019 and NOK 1.6 billion for 2020. This is also for us to be able to build ourselves a room in order to take the CapEx down as much as possible and where the company can focus on the operational and to make sure that we can get into a profitable situation.
We don't have to be concerned about all the CapEx coming in and all the deliveries that we previously had scheduled for 2019 and 2020 and 2021. I think we could probably say today that on the restructuring on the order book, we feel ourselves as finalized on that now. We don't expect to do any more schedulings, at least for the short term. Now we can go forward focusing on turning this company into profits. If you look at the 2019 CapEx, we have taken it down, regarding now NOK 1.7 billion. We are on the Airbus side, taking delivery of only five aircraft for the next two years or one and a half year. All those five will go to HK Express. We are still listing 16 MAXs in 2019.
Let's see how many we will take actually delivery of due to the current situation on the MAX side. We are now taking down 2020 on the MAXs down to eight aircraft. It started at 24, so we have now pushed 16 aircraft out in time as such. On the Airbus side, I would say that after the fact that Cathay Pacific is now looking into buying Hong Kong Express, the value of these aircraft have certainly not come down. I think we have between five and 10 bids now for these five aircraft at good profits for Norwegian. The 12-year lease rate on those five is also pretty attractive, and that's probably the reason why people are willing to bid high figures for those aircraft.
Due to the MAX situation, it's no doubt about the fact that the value of the neo order has also come up during the last months as such. On financing, we have financed a bunch of the MAXs that is scheduled to come. No one is taking delivery of MAXs these days, but we are still comfortable that we will secure financing for the MAXs delivering going forward. On the two remaining 787s this year, we are also comfortable that that will be taken well care of. After all, they are both delivering within the next two months as such. Going forward on the MAX orders, we will still continue to focus on the 85% levered financing deals at attractive terms. Outlook. On unit costs, we are guiding at 30, 0.3.
It's slightly up, that is mostly due to the fact that we are actually taking now and guiding that we could see losses due to the MAX situation in the area of NOK 300 million-NOK 500 million for the two next quarters. We are planning for the MAXs to not be up running until at least August. Have that in mind when you look at the NOK 500 million. We are not able to come into very much more details on how those NOK 500 million is calculated, by obvious reasons. On the including fuel, we are taking up the guiding slightly as well. That is mostly due to the fact that the fuel price has come up. Have also in mind that the hedges that we put on last year is now also profitable as such.
We have also guided the market on profitability from the 2019. Obviously, there's much more uncertainty around that now due to the MAX situation. We are also taking down slightly the guiding on capacity for the year. Now we are saying 5%-10%. It's a wide range, we know. As you know and as you understand, that is also due to the MAX situation and how that develops for the next months. Fuel hedging. It might look that we have taken up the percentages for 2019, that we haven't really done that. We have taken up the percentage, that is mostly related to the fact that we have taken down the capacity. As such, we are more hedged for 2019. On market and business.
If you look at the bookings going forward, especially for the second quarter, it looks very promising, I would say. It looks and it's very good to see that especially long haul is developing very nicely. Q2 on long haul looks very good compared to the same quarter last year. That is very good to see. Also, as I said, if you look at March and April together, they will on RASK level be better this year than last year. That means that April especially looks very promising. Just to sum it up, what we are trying to do in Norwegian these days. We have taken out the CapEx, as I said. We finalized the restructuring on the Airbus order yesterday, or late yesterday, actually. That restructuring, that's a complete restructuring of the whole order.
We will come back with much more details on it when we have signed the documentation. We are now in the process of finalizing that documentation. What we can say is that it reschedules the delivery stream. We have renegotiated certain terms, meaning that we have got better terms. When it comes to the so-called partner, JV partner, we feel that we have aligned this order even better now to fit the needs of a potential partner than how it looked before. Meaning that that JV discussion is definitely not dead. It's continuing. We have an agreement with Airbus. Now it's more easy for us to negotiate with the other party. That is really what has taken a lot of time in order to get a proper deal with Airbus. We have sold 15 aircraft with delivery in 2019.
We will carefully evaluate on what we can sell going forward. Now, obviously, we are not going to deliver any aircraft as long as the MAX situation is ongoing. We do have some capacity to sell more of the NGs. The value of the NGs or the attractiveness of the NGs has definitely come up since we have seen the situation with the MAXs, as such. Focus 2019 is continuing. We are on schedule, even better than schedule, actually. Q2 looks good, have in mind that we will have to see any potential effects on the MAX situation and how that will potentially have an effect on the cost-saving program. On the grounding, we are guiding a potential loss of NOK 300 million-NOK 500 million. That is for the period from now until, I would say, mid-August, which is what we are planning for these days.
We have secured wet leases. We aim to produce and to fly the whole summer program as originally planned.
As you know, we have a very good relationship with Boeing. We are in a good dialogue with Boeing in order to find a way where we both can come through this situation on the MAXs. For next quarter, obviously we will update you more on the MAX situation, on the financial figures affected by it. That's the best guiding we can give as for today. I think that concludes it, Stine.
Any questions?
We'll start with one here from Alex Irving, Bernstein. How confident are you that you will not need to raise additional equity in the next 12 months? What steps are you taking to ensure this?
You're the financial guy, Geir.
If you see what we're doing now, we have taken out NOK 2.1 billion in CapEx for 2019 and 2020. That gives us a relief also on liquidity. We are doing a lot of measures in order to plan for the coming winter, which is going to be a very important winter for Norwegian. We are going to make sure that the results from Q4, Q1, will be much better than from, let's say, from the winter that we have behind us. We have secured more capacity from the so-called credit card acquirers, which should give us a lower holdback as such, which will also bring us more working capital. In sum, that is what should take us through on the liquidity for the next, let's say, 12 to 18 months.
Can also add to that, what we are seeing in the 12 to 18 months window, we don't foresee any need for any additional equity.
Hans-Jørgen Elnæs, Aviation Analyst from Winair. You guide that the revenue from the long-haul flights seems to be improving for the next quarter. You don't guide any RASK figures in the presentation. Do you expect that the competition in Europe would put pressure on the unit revenue in Q2 and the summer period?
I can add on that. There is always competition, it's been from day one. It varies very much. Summer looks quite good, to be honest, quite good. It's very nice to see the development of the RASK figures on the long haul. Especially out of London, where we have a large capacity, not at least Paris and Netherlands and Amsterdam. We also see that's picking up very nicely, these new routes that we have put into the market, flying out of U.S. into like Athens. That looks quite promising market. Not too much competition in these markets. We have put a lot of capacity in these markets, huge capacity. We had to anticipate that a lot of people would fight us. We started with four daily into New York from London. I mean four weekly, now we are up to three daily.
There is a lot of capacity that's put into the market, the market have adapted it and very interesting to see. We have the majority of our passengers flying over the transatlantic is U.S. citizens. We have actually a stronghold in U.S. and needless to say, it's going to be incredibly interesting to see the development of how it will play out, these things that we are planning to do on the long haul side. It's huge because America is incredibly interesting in summertime. Nobody flies to Rome in November and February. They fly there of course throughout Christmas. We have to be cautious to actually utilize the capacity with full power, full effect in the summertime and then actually adapt it to the seasonality. On the other side, people really like to fly to [Grabby] in the wintertime.
I don't know if that was a good enough answer.
I think you talked already about everything on the long haul side, but I think we also would like to know how is the future bookings and the RASK looking on the European operation, because here the pressure from the competition is going to be more intensified this summer. We already see that some of the operators in the markets indicate that the summer can be tough in terms of RASK. Is there some comments you can give on that?
Yeah, I agree on, especially on the Southern Mediterranean. Fortunately, we pulled out of a lot of these routes and took down the capacity considerably because it's a war in the Southern Mediterranean. That's right. We haven't seen that actually in the Nordics. The thing we can see, the bookings are a little bit later year by year. Far we can see that the bookings is better than last year in the second quarter. RASK and yield is increasing. It is dependent on the area where we are. There is too much over capacity as an example out of Germany down to Mediterranean.
Good morning, Martin Stenshol from Danske Bank. First a question relating to the Focus 2019 program. Just to get it right about this, let's say midpoint capacity guidance is taking down, and did I hear you right, that we should expect an at least NOK 3 billion in cost savings instead of NOK 2 billion on back of this?
I'll expect. That's what we internally are-
I didn't hear that. We are guiding on NOK 2 billion.
I would say that, you heard, let's call it capacity adjusted. We're still going to take out the NOK 2 billion, but because we are taking down the capacity compared to what we guided previously, the cost level nominal should also come down in addition to the NOK 2 billion. You can also discuss, there's a typical question, okay, what's the run rate? We are saying NOK 467 million for this quarter. What's the run rate on that? I guess there's a few one-offs in Q1 and actually Q4 last year where we took out NOK 100 million. It's actually NOK 560 million that we have taken out since we started the program. I would say that, in the area of NOK 350 million-NOK 400 million of the Q1 figure is something that you will carry forward into a run rate for 2020 and onwards.
Thank you. Regarding the grounding of the MAX aircraft, do you expect some kind of compensation from Boeing on the NOK 300-NOK 500?
I can answer that. We have a very good relationship with Boeing. We have a very good relationship with Rolls-Royce. Anything on that Rolls-Royce agreement or Boeing agreement will be subject to the NDA, I will never give you the numbers.
Okay, fine. Thank you. The last questions, regarding the renegotiation or restructuring of the aircraft deliveries. You mentioned better terms. Would you please be able to comment on what elements of the contract you are getting better terms on, please?
We are not allowed to give you too much specifics on it. You could say that we have done restructurings where we are pushing deliveries out in time. Obviously, you have what you call escalation clauses, for example. That is certain terms we would like to discuss with the guys. They are very late delivering the aircraft, which could give us a strong hand also when it comes to other terms like, it could be the engine side of it could be the base pricing and so certain terms around those is what we have kind of been discussed. We have done a package, a restructuring of the whole order, especially with Airbus. We are not allowed to disclose too many details.
We feel that we have aligned now the delivery schedule more to the kind of planned growth that we are seeing going forward. We will disclose more when we have signed up the whole thing. It's approved by both parties.
Okay.
I can add to that, actually, when you take, as for Boeing, when they take down the capacity, the production, as they have done considerably on the MAX, there will be a shortage of aircraft, of course. That's why it's much easier now to come to an agreement with what we would like.
Thank you. Just a follow-up on the JV you're working on. I think that it was mentioned back in March that we maybe could see a final agreement by the end of Q1. Would you be able to comment anything about expected timeline where we can see a JV agreement?
The way you have to look at that is that, yes, we have been working on this so-called JV or to find a partner to co-invest with us into part of that fleet. That is continuing. Those discussion has been between three parties up to now. It's more like we have now a fixed set deal with Airbus, it makes this much more easy for us to potentially discuss with the same partner on a JV. I think we have aligned delivery schedule now that fits better. You have to also think that we have actually bought ourselves much more time now. We are not going to have any PDPs to Airbus until second quarter of 2021. Now we have to evaluate now, do we want to go into a partnership now?
Would it make sense to wait because we think the values are going to come up? We have optionality as I see it. That said, those discussions are definitely not dead. They're still very much alive.
Thank you. The last question from me regarding Brexit. Could you please share some thoughts about Brexit and how you're preparing for the rest of the year and into 2020 regarding Brexit? Thank you.
We have a long list of all things that we have to go through to be able to adapt to a Brexit and to be prepared for a Brexit. Of course, the date for the Brexit was much closer than we anticipated. We have been aware of these Brexit dates and I think, obviously, there might be things that you haven't even thought about when Brexit comes, if it comes. It seems like they're losing Scotland. You never know. If it comes, I think what you can see is everybody is more cautious. They want to go on holidays, that's for sure. They book their holidays and so on.
What we see is that I think that a lot of people, especially in the business banking sector, as an example, they're moving out, so they are more cautious about it. We cannot see it precisely because the majority of our customers or our passengers come from U.S., and it's cheap enough to go to London than it was before. That's why what is the actual effect? It's very hard for us to see. I think that people flying out of Heathrow, as an example, would see it much easier than we would.
A quick question from me, Preben Alfsgaard, Carnegie. You seem very comfortable with Q2 bookings and also the RASK. What about the very important July and August? Can you say something about how much is booked of your capacity in those two months? How much is booked now compared to the same period last year?
The only things I can say, actually, is that the people that are sitting with these numbers, they are quite confident. That is the only thing I can say. We are aware that have been gradually later and later bookings throughout July, August. We can see, as an example, out of Sweden, the APD, the taxes out of Sweden has actually hit everybody. Mainly domestic in Sweden. People are traveling on holidays. We don't expect, actually, in July, August, to be something quite different. We expect that the travelers will fill the airplanes. It's nothing that we can see in this picture that we should stay awake in the night for.
One question from Petter Nystrøm, ABG. What is the base case for your EUR 250 million loan maturing late 2019, pay down or refinance?
Yeah. Well, that's the two alternatives, I guess. We are trying to make sure that by the kind of initiatives that we have done, discussed here today, in order to give us exactly that flexibility, either to refinance it or to repay it, or partly refinance it, for example. We don't necessarily have to do the whole amount if we decide to refinance. What we will do now, we're already in discussions with our advisors in order to prepare to see if, find a market window from now until then, where we could potentially refinance it going forward. We would like to have the flexibility. We're definitely on it already.
I can add to that, obviously taking down the CapEx gives us a lot more maneuvering room.
One from Håvard Hansen. Regarding JV and reschedule of deliveries, did Norwegian lose value when postponing deliveries? Is MAX less interesting for the JV now?
I think I've answered that question. I don't think it has taken any value out of it, definitely not. On the MAXs, those discussions are kind of a little bit dead now as we have the current situation. That means that there's no one taking delivery of MAXs. There is no one really looking into financing MAXs. It's in a limbo situation amongst everybody. We will have to see when this aircraft is starting to fly again. Value-wise, it's impossible to come up with a value on a MAX today, by obvious reasons. On the JV, on the Airbus order, if anything, the value of that order has gone up, also due to the same issues.
Of course, just to add to that, needless to say, the American authorities like AFIC is even more behind financing the MAXs, my guess, in the future than they have ever been. They will not see that you are not running out of options to finance MAX because of this. That has been actually, we have seen, we saw it through when they had this turbulence in the market for EXIM, as an example. They stepped up the financing to be sure that shouldn't impact the financing or the purchase of the aircraft. Because Boeing is the biggest export customer or exporter out of U.S., and it will be a failure, I think, for any administration to see that these are failed because they cannot finance it, whether it will be from AFIC or EXIM.
I think also looking at the MAX that we have financing on that hasn't delivered yet, that will be delivered at some point. There's absolutely no signs that those financiers will back out. Absolutely not. They're still there. They're just sitting, waiting, and then they will come.
I just would like to follow up on the Eurobond. Two alternatives, as you mentioned, to refinance or repay, or maybe a combination if it's possible. The bond is yielding quite high % now. Could you please share your thoughts on what you would prefer or what kind of, let's say, threshold you would be willing to accept on, let's say, a yield on the refinancing alternative? Just to get it clear that what we should expect on these two alternatives. Thank you.
As you're saying, it's now trading at unattractive levels if you say. I think the focus that we have now internally is to make sure that we now, we're going to get through the summer, we're going to take the necessary steps in order to make sure that the next winter, which is the next difficult season, is not even close as bad as the one that we have behind us. Right? We're going to do whatever we can in order to convince the market, including the bond market, through the summer and after the summer in order to give confidence that we will go into 2020 making a profit in Norwegian. By that, we should get better terms on the bond.
On that basis, we will consider to refinance it, but definitely not at the terms that we could get today.
Looking to the Far East, I know Bjørn Kjos was recently in Moscow. Are there any news on traffic rights flying in the Siberian corridor and over Russia? Looking also into Finnair's Q1 results, which were very poor, also forecasting that competition will increase, and has increased from Asian carrier to Europe. Are you still as hungry as you were earlier to fly massive to Asia?
It's obviously a huge market, growing market. It will have dips from now and then. Especially from, not only from the Nordic cities, but as an example, from U.K. It's a huge market. This is a lot of politics into it, so we'll have to see. It's actually interesting to watch. We will decide It have to be economy for us to, whatever we are doing. If you look at the way to operate both East and West, it will definitely take down the cost by doing it.
Any further questions? Good. Thank you.