Q1 presentation here at Fornebu. Today's presentation will be held by our CEO, Bjørn Kjos, as normal. Today he's accompanied by our new CFO, Geir Karlsen. After the presentation, we will have a Q&A session. We'll pass around the microphone to provide sound for the live stream. Please wait until you receive the microphone. Let's go ahead.
Good morning, everybody. Welcome to the first quarter presentation. As you can see, we have successfully completed a private placement of NOK 1.3 billion. This year, we added 2 NG800, our last NG order of 100. We also put 6 Dreamliners into operation. A new first quarter is, of course, the interline agreement with Widerøe. As we have told before, Norwegian Air Argentina received an operating license first quarter. We had an EBITDA loss of NOK 850 million, compared to NOK 1,233 million last year. Of course, this quarter has been a quarter with very high growth. Despite of the high growth of 36%, you see our RPK has increased to 37%. We have been able to keep a good and stable load throughout also the last 12 months. Look at the number of passengers first quarter, 7.5 million, up with 12%.
On a yearly basis, we are now flying 34 million passengers. Looking at where do we fly those passengers. We have continued high growth at actually all key airports. Oslo, we increased close to 1.2 million passengers. We have a market share of 43%. Of course, the biggest operator at Oslo Airport. We have grown the numbers all over, as you see, and especially also in Spain. Where do our passengers come from, and where do their revenue generate? Actually, 56% of our revenues are generated outside the Nordics. The growth, however, is of course going from all sectors. Nordics is still very strong, 14% revenue growth in the Nordics. If you see, the most significant growth is actually U.S. U.S. is now our next biggest territory after Norway, 15%, the same as Spain. This is on a 12-month rolling basis.
We have definitely been able to attract the American passengers on our wide-body operation. What comes out of all these passengers flying in and out of Europe? Well, Menon has made a report on this. Norwegian passengers contribute to creating 40,000 new jobs in Scandinavia. Of course, these jobs are created on all the sectors and all where they actually either transport or accommodate or serve these passengers. It's a huge number of jobs that we create. Today we have a network of 60 intercontinental routes. We more or less are now actually set on U.S. with the most of the destinations. You will not see any much more destinations coming out of U.S., you will obviously see what's happening next. That is that we are going to actually add more and more frequencies on these routes.
Some of these routes will, of course, they will be seasonal, either taken up or as we leave them in the winter season, and you will see new destinations coming up in the winter season, and then going back on into the summer season. The majority of these routes will obviously be flown year-round. We added 25 new aircraft in operation in 2000. We will add 25 new aircraft in operation in 2018. We will also redeliver some of the oldest airplanes that we took initially on these. Four will go back this year. This is beside, as we will come to later, we always have had a strategy of divesting old aircraft that we will not use in the future, or that old aircraft. The fleet by the end of this year will be over 165 aircraft.
The majority of our growth this year will of course be on the long haul, but by the summer we will have set most of our capacity. Yes, financials. Geir, you're welcome to present the financials.
Thank you. If we start with the profit and loss, when we go back to March, we guided on the top line of NOK 7.1 billion. We are slightly below that now. We are at NOK 7 billion on the top line. We also guided on NOK 2.6 billion loss on EBT. If you adjust for this ownership in the Bank Norwegian of NOK 1.9 billion, you will see that we are approximately NOK 100 million better than what we guided on EBT as such. I will come back to the details on it. Ancillary is NOK 1.2 billion now. We are seeing a quite good growth in ancillary income. Leasing expenses, NOK 1 billion. As for today, we have 83 aircraft leased. That consists approximately of 53%-54% of the fleet when you just count aircraft. We have another gains and losses of NOK 40 million loss.
We have a fuel hedge profit of approximately NOK 72 million. We have a slight loss on the TRSs due to the fact that the share price in Bank Norwegian has gone from, I think it was NOK 92 to NOK 88. It is now up again. We have these adjustments, as I would call it, on the Bank Norwegian ownership. It is included in the net financial items. Going forward, as a gain of NOK 1.9 billion, and going forward, the development in that ownership will only be taken directly into the balance sheet. You will not see any effect on the change in that ownership going forward, except the TRSs, which will still stay in the P&L. Takes us down to EBT of NOK 515 million, and to a net loss of NOK 46 million. Looking at the income side. We have the RASK down 1%.
Adjusted for currency, it's unchanged. Flying distance compared to last, let's say the first quarter last year, up 17%. Ancillary revenue, as I said, nice increase, now NOK 1.2 billion. Cargo revenue is now NOK 162 million for the quarter. Unit costs. Unit cost compared to last quarter, the same quarter last year, is down 5%. We are helped by the currency, especially the US dollar. Constant currency is 3% down. If we include fuel, as you all know, the fuel prices have gone up quite a lot during the quarter. Including fuel, we are 2% down, and we are 2% up if you adjust for that currency. Just to comment on the few items on the cost side. As you can see, it's mainly the fuel that is increasing. The spot price has gone up 26%. The spot price now these days are close to $700.
Forward curve, though, looks as if it's going to come slightly down. We have lower personnel costs. That is due to the fact that the growth pace is now reducing. We do expect that that will continue to go down. Leasing costs is going up. This is due to the fact that we have more aircraft leased. In the quarter, we have NOK 26 million of wet lease accounted for. Leasing would also have to be seen in combination with depreciation, which is falling. Again, it's due to the fact that we have more leased aircraft on average as part of the fleet. Balance sheets. We have prepayment aircraft of NOK 6.2 billion divided into approximately 70% to Boeing, 30% to Airbus. We have investments of NOK 3.2 billion. NOK 2.7 billion of that is Bank Norwegian. We have approximately NOK 500 million of market-to-market gain on our fuel hedges.
Takes us down to NOK 3.2 billion in cash by the end of the quarter. This includes tranche one of the equity raise we did in March. It's NOK 450 million included. That means that the NOK 850 million in tranche two will come in in Q2, as well as the NOK 200 million in the repair equity raise that we are planning to do late May. From the equity raise, we have a little bit above NOK 1 billion coming into the balance sheet. On the other side of the balance, you can see that air traffic settlement is now NOK 10.9 billion, which reflects the bookings for the months to come. Cash flow. Purchase proceeds, meaning that what we have paid to Boeing and Airbus is NOK 3.6 billion. It's pretty much 50/50 divided into aircraft that we have taken delivery of and aircraft that we will take delivery of going forward.
Financing costs looks a little bit high, of NOK 400 million. Approximately half of it is just pure interest costs, and half of it is related to the guarantee premiums we are paying when we raise new debt and where we are paying it upfront on day one. This is taken into the balance sheet, and it's going to be amortized over the life of the lease. As mentioned, we have NOK 450 million of the cash from the equity raise included in the balance sheet. If you look at the cash and cash equivalent at end of period, NOK 3.2 billion. As I said, NOK 1 billion will come in from the equity raise.
We have from the PDP financing that we released news about during the quarter, we also expect in the area of $112 million that will come in as a cash contribution during the next couple of months. In total, we are expecting NOK 2 billion, approximately, to come into the balance sheet during the next quarter. This is a little bit of old news now, but Tranche 2 was decided earlier this month, and we are planning to do the NOK 200 million raise late in May. CapEx. For 2018, it is approximately NOK 1.9 billion in CapEx. We have NOK 2.6 billion in 2019. This does not include any sale of aircraft or any divestment of aircraft.
As we are saying in the press release, we are in many processes where we are evaluating to divest or to take aircraft or commitments, obligations out of our balance sheet and into a potential leasing structure. I am sure we can share more news on that later in the quarter, hopefully. PDP financing. As you know, we did the PDP financing with BOCA on the 787s earlier this year, and that will cover the PDP payments for the Dreamliners until the end of 2019. We also did a tap on the bond, and we still have NOK 300 million undrawn on the credit facility. Long-term financing, we did the UCFF and JOLCO financing on the 2 787s. We have closed 2 sale-leasebacks. We are in the process, I would say, to close the financing on the 2 next MAXes coming in now during the next couple of months.
That will be done with an AFIC and a guarantee. I will see it as very attractive. A cost of capital between 2%-3% all in. Going forward, we will not do any more leases, at least not the traditional operating leases, or at least that is not the preferred way to go. We will focus on ECAs, supported facilities, where we have a very low cost of capital. In case we will do other type of financing or other type of leasing structures as such, we will do it only with very attractive cost of capital. We will do it with longer repayment profiles, and with some extent of optionality with regards to either being able to refinance or to take them out as a whole. Shortly on outlook. Bookings. Except April, we are above last year on the coming months. As such, it looks good.
The markets, I would say that the European market short-haul is very good, with extensive growth we have on long-haul. The wide-bodies, we also find the bookings on that side of the business acceptable. We guided on ASK in March. That is unchanged as for today. On fuel hedging, we have hedged 27% for 2018 at $500 a ton, and just a minor portion of 2019 as per today. On cost guiding, it is also unchanged. What we have done here compared to what we did in March, we have taken up the fuel price slightly. That is a negative as such. We have a little bit of help on the currency, on euros and dollars. We are still maintaining the guiding. Obviously, going forward, it will be a tremendous focus on the cost side of the business.
We hope to share good news on that side during the next 2, 3 quarters. With that, Bjørn?
Yes. Thank you. We have this subsequent offering to existing shareholders of NOK 200 million. Of course, it's very attractive for those shareholders that participated when we did it. We have a lot of focus as we speak on the cost initiatives. I will be very disappointed if we cannot reach a much better goal than what we have actually told today. The initiatives we are hardly implementing as we speak. We are reviewing strategic opportunities for Norwegian Reward, especially, of course, we have set it up as an own entity, and it's a huge value in Norwegian Reward. We have to see what we are going with that value. If you remember the numbers from NOK 700 to NOK 1,000 per Reward member as a normally going rate, and this year we'll be close to 9 million members.
You can imagine it's a lot of strategic opportunities in that company. Yes, we are in the process of divesting up to 140 aircraft. This has been the strategy all along. We will only fly new aircraft. We will divest all the older aircraft, and we will also divest the aircraft that we are not going to use in the future. Like we have started with Hong Kong Express. But again, now when we can get the delivery times out of Airbus, also we will, of course, part of that together with the Boeing aircraft will be divested into either leasing company set up by ourself or together with others. Highly likely it will be together with others. We have, of course, been approached actually by several interesting parties. It's highly likely that you will see it being divested in the near future.
Whether it will be up to 140, we haven't decided upon. That's what the investors are actually offering. It will be a replacement of all the aircraft, and it will be a spin-off excess aircraft into a leasing structure. The last thing that's upon the agenda today, IAG's acquisition of Norwegian shares. We have said, we are happy to have IAG as an investor. Needless to say, it's not the only actually interesting parties that have approached us. After that has become known, we have had several inquiries following IAG. We treat them as very professional and very serious interesting parties. We have established a steering committee and hired financial and legal advisors to review the situation and, as I say, handle relevant inquiries and safeguard the interest of all shareholders. I'm only one of the shareholders.
I'm not the one to decide what's going to happen in the future. This is the common interest of the shareholders that we have to take care of. That is Norwegian as we see it today. Going forward, as I told you, I think we are the largest operator of most routes over the transatlantic. It's needless to say we have 50% of our passengers now on Norwegian airplanes. We fly a huge amount of passengers in and out of U.S. and also starting Buenos Aires. It's very successful. We're starting going forward now. You will see us as said, setting up many more frequencies on the existing routes. We have just started on South America. That seems very interesting. That's for me. Thank you.
Let's go over to the Q&A session.
Preben Aas-Olsen, Carnegie. Two questions. First, on other revenues. Seems a bit low considering the very high growth in cargo. Has anything changed in that part of the revenue?
Yeah, you might add on to this, Geir. First of all, our cargo is actually going a lot better than we had anticipated. A lot better. Yes, you will see a huge growth on the cargo revenues.
I think the main explanation is the fact that in prior quarters, we have done a gross accounting for the cash points, which is now netted. Before it was an income and a cost, and now it's netted. That's why it's taken down a bit year-over-year.
Then to the slide number nine, where you show the number of airplanes in 2019 and 2020. Is this how it will look if you start divesting airplanes, or will there be changes?
To this outlook, if you do divest some airplanes.
I can say that we have not had in our agenda to fly with 225 aircraft in 2020. It's always been our intention to divest some of the aircraft. When we divest it today, it might be that some of them will be leased back to Norwegian. Especially if we divest up to 140 aircraft. That is a discussion that's going on with the different investors. I don't know if you want to add something to that, Geir.
No, this one includes everything as we know. In case we divest or when we divest or spin off, it will look different.
from Pareto. If you look at the 140 aircraft, I guess you have mentioned previously the Airbus you are looking to doing a transaction on and also the older Boeing 737NGs. I guess, anyway, you have a tremendous flexibility for the next three to four years in terms of capacity growth. That's my first question. If you could elaborate around that. Secondly, with the fuel price, you're lifting the total fuel cost, but I guess also that you have a fairly new aircraft fleet. How is the value? Have you seen any changes for new aircraft over the last year to date or something? Also, I guess, people New aircraft, 15% lower fuel burn. It has to do something with the demand side there.
Thirdly, my last question is, you have a pre-booking around NOK 11 billion, how do you see this playing out in the ticket prices? Normally, I think the fuel price increase normally tend to end up at consumers. I guess this is the same this time.
Well, just to start with the first question, divesting of aircraft. Remember that in the next three years, we will have around 70 aircraft, 80, between 70, 80 aircraft. I haven't the exact number coming in. Divesting 140, it's not that many we have to divest and use later on. It is the strategy coming in, divesting out. It's obviously we can divest a lot of aircraft, including the Boeing, the Airbus order, if we are not going to fly. We are highly likely going to fly at least 30 of the Airbus order, but still it's 70 aircraft that can be divested into such a company. We might use some of them. It's actually no problem. We will still have a normal growth on the short haul. I know I'm talking about the short haul. It's unlikely that we will divest wide body.
The second question about the value of the aircraft. Needless to say, there is a shortage of narrow-bodies today, the prices are keeping up very well. That you will see in the next 2 years, not at least with all the engine problems that is popping up and that popped up for the last 2 years. It will be actually a shortage of aircraft. We have a lot of interesting parties. Of course, we have deliveries in years where the big lessors doesn't have deliveries because they come after, always after the aircraft, the airlines. We have very attractive delivery positions. Besides, also the NG is keeping up very well in value. The third question, what about the prices? We have affordable fares for everybody, of course.
Needless to say, with the fuel prices coming up to more than $70, it is unlikely, I would say, that you can be profitable on some of the aircraft flying out there. With the four-engines. If you think about it, just one trip over the Atlantic, the difference in the fuel burn from a Dreamliner to some of the four-engine aircraft, it is the same. The difference is the same as the consume of 50 cars in a year. 50 cars in a year. You can see, is it possible to earn money with such high fuel burn? Then you can think about it yourself, that it is around up to 8 tons different an hour. You have around 30 tons difference on one trip. How can you earn money on all the aircraft with such high oil prices on these fares today? You cannot.
You have to raise the fares. As you have seen, most of the airlines, they have old trash. To say it right, straight up. They should not be allowed to fly with them. That is my meaning.
A few questions from Petter Nystrøm, ABG. I will split it up. Does the divestment of aircraft mean that you will increase the leasing of aircraft going forward?
No, we will not increase the leasing of aircraft. As I said, we have 206 aircraft coming in. Even if we divest 140, it's still a huge growth for us.
What do you expect net CapEx to be in 2018 and 2019?
It's difficult to say, I would say, because it depends on how much we divest.
Exactly. That's difficult to say.
It should definitely be lower.
Will definitely be lower than the figures that we showed here.
Forward bookings is ahead of last year, but seems slightly down versus the last update given mid-March. Is this a correct understanding?
We have very good bookings, as we have always said, except for the Easter not coming this time in the April, but after April it looks very good. Very strong bookings going forward. Compared and adjusted for the capacity. This is always capacity adjusted.
Last question. Can you give a market comment on long haul? Which markets are most challenging and most profitable?
Of course, where we go in with high frequency. The more frequencies you add on, the more profitable it will be. Needless to say, we will have 12 Dreamliners in London from this summer on, and needless to say, with high frequencies. You will see us adding more and more frequencies on the existing routes. The yield will come up. That's what we always see. We are now flying twice daily between London and New York. We could easily fly three and four.
Daniel Røskaft, Bernstein. How would you plan to further improve operating performance on long haul, intra-Nordics and European short haul?
Intra-Nordics, you have to remember that long haul from Nordics is Nordic is a very strong market. It's a small market. Slightly less than London itself, big London. The Nordic market is not a huge market. The huge market are out of Paris, out of London, to some extent out of Barcelona, Madrid, and Rome. Except for, of course, parts of Germany, but it's not the Nordics. It's a very strong market, and we should never underestimate it, but it's a small market. We are not that many people living here.
Ole Martin Westgaard, DNB. What explains the significant increase in receivables in Q1?
Well, if you look at the traffic guide, if you look at the other side of the balance sheet. It reflects that with the higher bookings that has taken part now during this quarter and for the next months to come, and for the summer. We all know we are going into a period now which usually is the best quarters. So it kind of just reflects that the bookings are looking good for the summer, really. Which will also then increase the receivables.
There has been lots of talks about ending problems for the Dreamliners. Are you affected by this, and does your ASK guidance already account for this?
Yes, of course. Everybody is affected by the problems that the new engines have. I must also say that we are not the ones that are building the engines, and we are not the ones that are building the new airplanes. Why should we pay for it? It's normal that if you sell a car, a new car, and something problem, you have to fix it. It's not for the owner to fix it. This have to be the same in the airline industry as well. Yes, we will see. We will need the wet lease for a certain time period. The time period it takes to change and to do the inspections of the engines, because this is a lot of inspections. This is not on our new Dash 9s. With the Dash 10 engines, it's not affected.
It's some of the older, what you call taxi engines, that are affected.
Hello. Bibiana Piene, NTB. I just wonder, something I'm not sure if you mentioned it, the Air Passenger Tax. Just a quick calculation tells me that you should have got NOK 600 million from that tax. Where is that in the figures here? I also wonder if there is now talk of changing that tax into smaller amounts on shorter routes and higher amounts on longer routes, to differentiate it, and what would that mean for your traffic, and what's your view upon that?
I can answer the last question. Geir can answer the first question. I can answer the last question first. Obviously, needless to say, we create 40,000 jobs. We have 50% Americans on board. Obviously, that higher taxes will affect it, because then it will be more expensive to fly into Oslo, people will fly into other places in Europe. The jobs will be created elsewhere. That is the simple answer to it.
On the first part of the question, this is netted off. It will fly through the balance sheet, we receive it in, then we will just pay it out. It doesn't really show in the books.
Do you have any idea how much it does amount?
Yeah. NOK 600 million.
Of course we have the numbers, we haven't disclosed the numbers.
No.
We haven't disclosed the figures. By the end of the year, like in Sweden, it's a huge figure. It will obviously affect jobs and people flying into Sweden, needless to say. They closed off, you should remember, they closed off Rygge.
Just before the end.
We'll do media after. We'll do one-on-one, so you'll have time then.
Any more questions from the audience? No.
Okay. Thank you.