Norse Atlantic ASA

Earnings Release • Feb 28, 2023

Norse Atlantic Airways

Company presentation, 28 February 2023

Ready for take-off in 2023

Building a leading low-cost transatlantic airline in two years: summer 2023 first season with scale

Ready to go	• All regulatory approvals and airport slots secured to operate from EEA and UK to US • Ramping-up transatlantic operations from current 3 aircraft per day to 10 by mid-2023, as well as 5 on sub-lease
Key London market coming	• UK AOC to start operations end March 2023 and building up through S23 season • 5 aircraft based at London Gatwick by mid-2023
Strategy and business case validated	• Yield and OPEX estimates (excl fuel) intact • Subsequent lease transactions confirm attractiveness of Norse's leases (\$380 million NPV)
S23 bookings positive	• Average yields rising (~40% since September by booking date) • Taking steps to further accelerate sales
Fully financed	• Norse fully-financed ahead of 2023 ramp-up; no debt (other than long-term aircraft leases) • Target profitability from H2 2023

Investment Highlights

The leading low-cost long-haul transatlantic airline

Strong rebound in transatlantic travel expected to continue

Modern and fuel-efficient fleet at historically low costs

Strong operational performance and progress

Target profitability from H2-2023

Norse Atlantic Airways – The Explorers' Airline

A profitable low cost long haul transatlantic airline

• Established and founded in March 2021 by Bjørn Tore Larsen, CEO and major shareholder.
• Point-to-point transatlantic flights at affordable fares
• Headquartered in Arendal, Norway and publicly traded on the Euronext Growth Exchange in Oslo, Norway.
  • Offices in Arendal, London Gatwick, Fort Lauderdale, Paris
• 15 Boeing 787 Dreamliners on favourable long-term leases
• Two 'airlines':
  • Norse Norway: first flight June 2022; Paris base launches 2023; EEA-US
  • Norse UK: first flight March 2023; UK-US

We've been busy, but only just getting started…

Significant value created since inception

• Unique in the industry: a fully-fledged, low-cost long-haul operation
• Brand recognition is positive and spreading
• The organization is ready: IT, operations and marketing near fully scaled to a 15-aircraft operation

Early investments are paying off Established UK subsidiary is a game changer

• UK AOC and US DoT approval granted
• Secured valuable slots at LGW and JFK
• Allows Norse to serve large and highly attractive UK-US market
• On sale from 14th Feb 2023; first flight 26th Mar

~700 employees	15 aircraft	>11 years Avg. remaining lease period
12 destinations	15% lower opex	USD ~380m NPV of lease advantage

Significant value created through aircraft leases

• 15¹ modern 787 Dreamliners on long-term leases well below market creates a sustainable cost advantage

Norse available for sale seats has doubled

Norse UK on sale 14th Feb 2023

• Norse UK will serve 7 US destinations
• All from London Gatwick
• Norse becomes largest transatlantic operator at LGW

Forward bookings increase as network expands

Rolling seven days bookings in USDm and number of passengers by booking date

Fares increasing as summer network is launched

Gross ticket revenue per segment

Based on booking date

• Increasing selling windows allows for higher yields
  • S22 season on sale ~3 months in advance
  • W22 season on sale ~4 months in advance
  • S23 on sale ~5 months in advance
  • W24 expected on sale ~7 months in advance
• Increasing focus on higher yielding front cabin
• Improving revenue management capabilities

Market is approaching pre-COVID levels

World commercial flights (thousands of flights) Comments

• The market has rebounded, although later than originally expected, and remains below 2019 levels
  • New Delta/ Omicron COVID wave during winter 21/22
• Lagging recovery in Asia has led to some capacity being reallocated to Transatlantic market, creating some temporary overcapacity
• Increased economic uncertainty driven by interest rate increases and inflation indicates softer demand winter 22/23
• Longer-term, recovery expected to continue driven by pent-up demand and removal of remaining travel restrictions

UK market is key to transatlantic travel

London twice the size market as any other; Paris a clear second with twice the size of the next (Rome)

Modern and more environmentally friendly aircraft

Modern and homogenous fleet

• Homogenous fleet of modern 787-9s and -8s
• Freshly checked aircraft 3 years until next service

Superior environmental performance

• 25% lower CO2 emissions 50% quieter than the previous generation of aircraft still in operation with many major airlines globally
• Lowest carbon emissions per passenger

• Superior passenger comfort and experience
• More comfortable cabin altitude with cleaner air and better humidity
• The largest windows on any jet worldwide

Lease contracts increasing in value

Shortage of supply of Boeing Dreamliners

• Norse lease rates are capped at approximately 50% of historical cost
• Current lease rates for 787-9s USD 865 to 1,050¹
• The present value of the difference between Norse's lease cost and current market lease is estimated at USD ~380m
  • At 10% WACC and est. current rates of USD 900k/mo.
• The fleet will be fully employed in Norse's operations by 2024, and these numbers are thus to be seen as an indication of the additional earnings potential created by the timing of Norse's market entry

Timing is everything: NPV of remaining lease advantage

NPV at various rates and WACC = 10%, USDm

	WACC
Rate (USD/month)	7.5%	10.0%	12.5%
Current sublease margin	194	172	153
800 000	307	271	241
900 000	429	379	337
1 000 000	552	487	433
1 100 000	674	595	529

The 5 pillars of Norse commercial strategy

3

Best value economy fares

1

Unlocking new areas of demand through low-cost stimulation in high-density markets

Smart Business Travel

2

Targeting costconscious business travellers and premium leisure traffic

Ancillary services

Ambition to be industry-leading ancillary per passenger

Best-in-class cargo product

4

Wide-body aircraft flying direct to key cargo gateways

Revenue from leases and charter

5

Attractive lease-in rates and seasonal variations enable profits

Simplicity is key to cost control

Income statement

First flight 14 June; careful increase in production in H2 2022 ahead of full launch summer 2023

Income statement H2 2022

USD thousands	6 months H2 2022	12 months FY 2022	11 months¹ FY 2021
Revenue	101,296	104,269	-
Personnel expenses	(33,035)	(44,462)	(4,471)
Fuel	(59,993)	(61,793)	-
Other operating expenses	(51,123)	(58,336)	(3,160)
EBITDAR	(42,855)	(60,323)	(7,631)
Variable aircraft rentals	(26,413)	(27,263)	-
Depreciation & amortization	(37,019)	(58,517)	(315)
EBIT	(106,287)	(146,104)	(7,946)
Net financial items	(16,710)	(28,870)	949
EBT	(122,997)	(174,974)	(6,996)

• Revenue \$101.3m
  • \$75.6m passenger revenue
  • 289k passengers at average \$262 per passenger
  • \$14.0m sublease income
  • \$10.0m cargo revenue
  • \$1.2m charter revenue
  • \$0.4m other revenue
• Cost increase due to higher activity
• Lease accounting technicality results in higher lease cost during PBH period
  • \$78.4m lease accounting cost recognized, of which \$26.4m is cash cost

Balance sheet at 31 Dec

Statement of financial position

USD thousands	2022	2021
Non-current assets	958,394	119,550
Total current assets	131,846	134,960
Total assets	1,090,240	254,510
Total equity	10,535	156,585
Non-current liabilities	958,731	95,560
Current liabilities	120,973	2,365
Total equity & liabilities	1,090,240	254,510
Number of aircraft received	15	1

• Total cash \$70m
  • Aircraft lease deposits \$20m on account with lessors
• Aircraft lease right-to-use asset \$933m
  • Average remaining fleet lease length >11 years
  • Total lease liability \$961.7m
• Book equity \$11m
  • Net of accumulated non-cash lease accounting cost \$81m
  • Positive NPV ~\$380m of lease benefit not recognized
  • Value of slots (e.g. LGW, JFK) not recognized
  • Deferred tax asset not recognized

Cash flow statement

USD thousands	6 months H2 2022	12 months FY 2022	11 months¹ FY 2021
Operating CF before WC	(67,620)	(84,803)	(7,310)
Working capital movement	11,118	8,007	1,773
Operating cash flows	(56,503)	(76,796)	(5,537)
Investing cash flows	17,387	(10,734)	(24,411)
Financing cash flows	27,612	22,589	163,502
Forex	74	(4,602)	698
Net change in cash	(11,430)	(69,543)	134,252
Cash at period end	64,709	64,709	134,252
Restricted cash held	5,000	5,000	-
Total cash	69,709	69,709	134,252

H2 2022

• Operating cash outflow \$56.5m
• Working capital build-up due to ramp-up
• Investing cash inflow largely due to proceeds from sales of financial assets (inflation protected US securities)
• \$30m private placement completed during H2 2022
  • Norse is committed to a repair offering linked to the completed private placement
  • Expected to be done during H1 2023

Cash projections on-track

Cash flow actual versus projected in equity raise pitch presented Nov-22 (USDm)

• Base case key assumptions:
  • Average monthly load factor 74% in 1H23 and 78% full-year 2023
  • Average ticket price peaks in the June-August mid-summer season
  • Full capacity from summer 2024
  • Peak negative cash flow February 2023 with positive cash flow from June 2023
  • Using fuel costs USD 955/ton (monthly average) for 2023 and USD 855 for 2024

Summary and outlook

Once in a lifetime opportunity to build a profitable long haul low cost transatlantic airline

Strategy and business case validated	• Unit costs in line with target (excl. fuel) and will further improve with increased scale • Modern fuel-efficient fleet; lease contracts substantially in-the-money
Flexibility	• Sub-leasing of aircraft and seasonal charter work becomes part of the business model • Norse targets world-leading low cost base
Revenue growing	• Strong start to S23 sales • First Norse UK tickets available for sale from 14th February and final summer 2023 on sale 28th Feb
Ramping-up	• Travel demand continues post-COVID recovery • Scaling up from March 23 to 10 aircraft under own operation, and further to 15 by mid-24
Profitability	• Target profitability from H2-2023

www.flynorse.com

Key financials since first flight

14 June to 31 Jan 2023

	Jun22	Jul22	Aug22	Sep22	Oct22	Nov22	Dec22	Jan23
Number of aircraft in fleet	11	13	13	13	14	14	15	15
Aircraft subleased out	2	4	4	4	4	4	5	5
ASK (millions)	54	248	505	663	567	293	384	397
RPK (millions)	44	212	349	373	338	145	233	206
Load factor	82%	86%	69%	56%	60%	50%	61%	52%
Number of passengers	6,633	31,842	58,702	62,749	60,836	29,816	44,172	35,150
Number of flights	24	110	254	338	307	190	228	229