Very good morning, everyone. Welcome to the Norse Atlantic ASA Q2 Presentation 2025. My name is Bjørn Larsen. I'm the CEO and founder of Norse , and I'm also joined with our CFO, Anders Jomaas. Following the presentation, we will have a Q&A session, and you can put your questions into the chat at this point or whenever you want, and then we're going to take them up as we get to the end of the presentation. There we go. Starting with a few headlines, we have been through a massive transformation the last six months. Those of you who have followed us know that we in November announced that we are going to transform the business model. We're going to be a more optimistic carrier that will fly our own network as well as more charter operations whenever the time is right for that. We're going to redo our cost base by having people, our crew, great crew, flying to and from, or based at the locations where they are flying to and from. On top of that, we have introduced state-of-the-art in-house developed technology that helps us improve revenues and manage our flights in a very, very different way than we did in the past. We are now halfway through the transformation, and you will see that we already see massive results of the efforts that we have done. Very quickly on numbers, this is the first Q2 that we have ever presented a positive operational result of $4.4 million. It's a good improvement from last year, an improvement of more than $26 million. We also have a good revenue uplift from $164 million to $202 million. We're seeing that the revenue side is very much on the right to move, and we still have a lot of potential for extra revenue as the total production capacity was not at its max in Q2 for a number of reasons, which I'll come back to. You'll see a part of the numbers, which is isolated, a great improvement. There is a lot of extra opportunity and potential for us in, call it, a normalized quarter. You also see that we had a cash ROB of $24 million. In addition to that, we had a $20 million facility from a bank that is undrawn in June. We have successfully completed the ACMI negotiations, so we are now going to charter six aircraft to one of the world's leading carriers, wet-lease, with our crew, technical staff, etc. We have renewed a contract with P&O Cruises. That is a very good contract for us in the winter months. All in all, the commercial strategy has worked well, and we are very happy with what we have seen so far. The forward bookings are also looking very good for the winter. It is quite a bit above where it was the last time, or same time last year. I talked about load factors briefly, and this obviously is one of the areas where we have been able to achieve good performance. I think it's a world-class number that we are presenting, 97% for the quarter, and we see a consistent growth. We expect load factors to be above 90% every month going forward, as far as we can see. Also, the passenger growth has been good, up 36% compared to the same quarter last year. You will also see that there is a potential for more passengers, and that is due to that we have extra production potential and capacity that we will roll out in the coming months. Revenue per passenger is fairly stable, slightly down. The main reason for the reduction is a little bit softer fare in the transatlantic market. We still see that we are able to get slightly better ticket prices than last year, but the ancillary revenue is a little bit down. The reason is that we have now included the carry-on luggage for all customers, regardless of which class and how cheap ticket they buy, they are allowed to carry on a hand-carry luggage. Whilst the ancillary revenue has gone down per passenger a little bit, the total revenue has gone up. We have done significant A/B testing to ensure that we don't leave any revenue behind. This picture, now we're starting to get into the interesting stuff. We see, looking 12 months in the mirror, last 12 months, we see a great improvement compared to last year. We see that the revenue went up by 24% to $673 million versus $543 million last year. We also see that the EBITDA went up to $61 million versus a - $12 million last year. Even more impressively, the cash flow from operations went up to a + $110 million last 12 months versus - $15 million a year ago. We can see that the changes we have made and that the transformation process we are in the middle of actually has a great effect. We are pursuing a more optimistic strategy. Definitely, we are an airline. We have a network. We have a lot of customers, more than 550,000 of them in Q2. We will definitely take care of our customers in the future. We also know that there is a strong demand right now for long-haul aircraft in the charter market. The reason for that strong demand right now is that the aircraft manufacturers, Boeing and Airbus, are not able to deliver long-haul aircraft. They are far behind on the delivery schedule. Many of the airlines that had planned more capacity into their production can't find it. It has been a good time for us to make a long-term contract for a sizable portion of our fleet, about half the fleet. We have done so with IndiGo. It's a very reputable, strong airline and with an investment grade. We also made a deal with P&O Cruises. We have been flying cruise customers for them for one season, and they were very happy with the product, and they have renewed the contract for an additional two years. For us, it's a testament to the product we have and to the great crew and people we have to deliver it. Whilst we are pursuing an optimistic approach, doing both charter operations and our own network, we are obviously keeping the most lucrative routes, the most profitable routes. What you will see from this graph, which I think is one of the most exciting too, is that we are actually making the cash contribution from each route or each aircraft twice as high on the routes we are keeping as the routes we are letting go. It's a significant difference. That will generate strong results for the own network portion of our fleet. As I said, the charter business is profitable for us, and it is more profitable than the least, sort of 50% least profitable routes we've been flying ourselves. This slide, I think, should be of particular interest to those of you who are looking into how we're going to do and why we're going to do charter operations and own network and why we do it in this proportion. The last, but perhaps most exciting slide I have here, is the extra production capacity we have. When we started Q2 this year, we were actually planning in our long-term plans to have more aircraft on charter at that time. For whatever reason, deliveries and negotiations took a longer time, and it was a bit late for us to put aircraft into production and still make money on them. We had idle capacity through the quarter, but we still had the cost. We had all the aircraft, we had the crew, etc. The difference there is that we could actually produce 24% more than we were able to do this year, and that is what we have planned to do next year. We are planning to fly all our aircraft about 16 hours a day, except when they are doing heavy maintenance. That is a realistic target. In July, as an example, this year, we've been flying more than 16 hours a day per aircraft. We know it is, again, close to a world-leading utilization, but we have great aircraft, great support from the aircraft manufacturer and from Rolls-Royce who makes the engines, and we are very happy with the performance there. As I said, we have a huge potential for more production, and that is what is being planned for Q2 next year, about 24% more production than we had this year. In summary, we've been able to increase our revenues. We have been able to get our costs down. We are in the middle of the transformation program where we have said that we're going to reduce, like for like, the cost by about $40 million, and we are halfway through that. We started that program end of last year, and we have come a long way both when it comes to SG&A and when it comes to other efficiencies. Where we still have a way to go is to ensure that we have optimal crew bases because in order to be efficient, in order to have a competitive cost, we need to have crew based at the same places that we are flying to and from. Since we have been changing our network the last year, we have a job to do to ensure that the crew bases are more aligned with the network we are flying. It's a work in progress. As I said, we have good results both when it comes to generating more revenue and reducing costs. More to the Q2 numbers, Anders.
Thank you, Bjørn Tore. Looking more specifically at the Q2 numbers, this is almost the same graph as Bjørn Tore presented, but this is then related to Q2 this year alone. We see exactly the same trend. PRASK, which means passenger revenue per available seat kilometer, is increasing. It's increasing by 8%. This is mainly driven by the load factor, as we have seen. We're carrying more passengers per aircraft than we did the same quarter last year. Also, we have increased production, and the CASK, meaning the cost per available seat kilometer, has reduced by 9% this quarter compared to last. These are the important key metrics for us to keep improving PRASK and keep reducing CASK. That's our challenge. In the income statement, we're happy to say that we have crossed also now in Q2 the $200 million mark, very important. This is up $37.8 million compared to the same quarter last year, or as much as 23%. EBITDA has increased by $20 million, up to $23.1 million. The costs mostly follow the volume. We fly more, we carry more passengers, but it's also worth noting that we have reduced the SG&A by $4.2 million. If you analyze that, you will see that we are already on a good way to materialize the $40 million Bjørn Tore just mentioned. We're not there yet, but we have come a long way, and you will see that gradually also being realized. Operational profit is + $4.4 million, also an improvement of $26.7 million. When it comes to net profit, - $5.5 million, but we're getting there. In the cash flow, have a look at the working capital. It's positive to see that we have neutral working capital movements this quarter. The improved performance that we saw of approximately $26 million-$27 million flows this quarter directly into the operating cash flow. That's always a good sign, and that's worth noting. Available liquidity is $44 million. This is then constituted by $24 million in the bank and $20 million of an undrawn overdraft facility with a good bank. In the balance sheet, funds held by the credit card companies end of this quarter were $141 million. We have a good cooperation with these companies. We work closely with them. As we expect our financial results to improve, as we expect the balance sheet to improve, we can also work together with this. Hopefully, we'll down the road see improved terms also with the credit card companies. Many of you have probably seen also this morning that we have launched a convertible bond of $30 million that is fully underwritten. The main purpose of that is to refinance existing shareholder loans. By doing so, we will reduce the... It will be issued at significantly lower interest than what the shareholder loan is currently carrying. We will invite investors in who see the possible upside in our company, while at the same time limiting the dilution by having a strike price, which is quite well above the current share price. For those of you interested in learning more about that, we have issued a press release at 7:05 AM . this morning. All details are in there. Please follow that release and the links therein if you're interested to learn more about that. For that, Bjørn Tore, some concluding remarks.
Thank you, Anders. Again, we are happy with the quarter. We are definitely on the right track, and arrows are pointing in the right direction. You never know about tomorrow, and we are subject to a changing world. What we see in the crystal ball right now is, we think, quite positive. Also, we had a good technical and operational performance in the quarter, which is important to mention. A lot of people working very hard to make a successful, exciting product for our customers every single day. We've been able to execute on our strategy, which we have communicated in the past. We sort of ticked the boxes, but we have a lot of work to do, and we are working very hard to ensure that we will deliver a profitable company, and we're aiming for a full-year profit of 2025. With that, I'll open up for any questions that might have come in here, and we have our moderator board here. Thanks.
Thanks, Bjørn Tore. We have a few questions. The first one is, with continuous load factor of high 90%, how will Norse Atlantic continue to improve profitability going forward?
It's a good question. Load factor is very important. We are a great value carrier. In other words, we have low cost. We want to pass that on to the customer, but at the margin and make money on it. We do make money on all the routes we are flying. In Q2, for example, and that is for quarter two, we are seeing that we are not utilizing the entire production capacity we have. The reason is that we were planning to have more aircraft into charter, and for whatever reason, it took longer time than expected. On a normalized quarter, if we had the same average fares at the target production capacity, it would have been a profitable quarter with a good margin.
All right, thank you. As a follow-up question, someone is asking, would you consider taking on a few more aircraft and expand your successful formula?
To buy more aircraft? That's a very good question. The answer is no. I mean, it's way too expensive right now to buy or charter aircraft. We are only going to manage, or not only, we have 12 long-haul widebody aircraft. That's the biggest long-haul player in Scandinavia. It's not insignificant, but we think it is much more important to make money with the aircraft we have than to plan any expansion whatsoever. Of course, if we can make money and the formula continues to work and the market is there, there might be a time when there will be cheap aircraft again, but there is nothing in the near horizon we think that will happen. It's a very strong market for aircraft, what should I say, owners or manufacturers right now. There is a long line of customers who are waiting for their aircraft, long-haul and short-haul, and we think prices are going to stay high for quite a while.
Thank you. A kind of a relevant question is, with some geopolitical issues and trade tariffs, do you expect Norse Atlantic ASA to reduce the route focus on the U.S.? What is your view on the transatlantic market in general?
We are very optimistic. We think America is going to be a great place for us to do business short and long term. It is true that the prices across the Atlantic have come down a bit this year compared to last year for whatever reason, and there might be a little drop in demand for Europeans going to America. We do see that Americans still want to go to Europe. Their dollar is strong and they are eager to travel, and America is expensive for them as well. We think there's going to be a strong demand across the Atlantic also in the future, of course it will go up and down and fares will go up and down depending on what type of capacity the airlines are putting in there. Typically, what we are seeing and that we are doing, we have most of our customers, or 70% of them in summer, are American. We are flying Americans to Europe, and in winter we are flying Europeans to Asia and South Africa and Florida. That's sort of the big picture on the big spread. America is going to be very important for us also going forward.
All right. There's a question here. Could you explain the upside or repeat the upside of the IndiGo agreement in general?
Yeah, the upside, there's a couple of upsides. First of all, it's secured revenue. We know that we have sold for a long period of time all the seats on six aircraft. That is an upside. You take away market risk and then you eliminate fuel risk, fuel navigational charges, handling charges, etc., etc. A lot of other charges are paid by the customer. We take away a lot of risk. There is an upside depending on how much they are going to utilize the aircraft. There is sort of a threshold, a floor, which we have communicated to the market. If they are using the minimum hours of the aircraft, it will be a profitable operation. There is a great upside in them flying more hours. We think they are going to utilize the aircraft because it's a very efficient aircraft to use. They have strong demand for the routes. We anticipate, and what we see so far is that from July onwards, their flying program exceeds what we have budgeted for. It's a great upside. The numbers you will see in Q2 are actually quite a bit below the budget, and that is because they have been using that one aircraft flying short haul in Asia between Delhi and Bangkok, and that takes away a lot of production capacity. They have been flying not that much in Q2. Going forward, it's going to be a lot more.
Okay, thanks. There's an operational question regarding winter. Since there's less frequency on some of the routes, such as one-weekly flights, will there be a lot of inefficiencies or deadheading positioning with crew?
That's a very good question too. Actually, no, because that would have been not a good thing. What we have, we have three routes we're flying one weekly. One is Oslo-Phuket, one is Stockholm-Phuket, and one is Manchester-Bangkok. Those tie in with our other production. The only deadheading we're talking about is domestic between Phuket and Bangkok, which is a very short flight and doesn't cost any production for us. Great question. No, it's not going to be inefficient. It's going to be very efficient. The Manchester aircraft ties in with the P&O Cruises production. There is, again, no deadheading. We can just utilize the aircraft better.
All right. No more questions here.
All right. Thank you very much for attending. We appreciate all the shareholder support, and we welcome on board new shareholders. We also welcome you on board our beautiful product, the Dreamliners. Thank you very much.