Norwegian Air Shuttle ASA

Earnings Release • Oct 25, 2024

Presentation of third quarter 2024

25 October 2024

Q3 profit before tax (EBT) NOK 2,004 million

• group operating profit (EBIT) NOK 2,128 million
  • Norwegian EBIT NOK 1,936 million
  • Widerøe EBIT NOK 192 million
• unit cost impacted by wage inflation and costs for delayed aircraft
• cash position NOK 11.5 billion – up 2.1 billion YoY, despite all-cash acquisition of Widerøe

Record traffic in quarter

• Norwegian capacity (ASK) increase 10%
  • load factor up 1 p.p. YoY
  • record high unit revenue
• Widerøe record strong
  • load factor up 5 p.p. YoY, primarily driven by commercial operations
  • first quarter surpassing 1 million passengers

Preferred travel partner throughout Nordics

• 350 Norwegian routes on sale across attractive network
  • over 100 Widerøe routes
• operational excellence focus through Q3 – Norwegian regularity 99.5%
• strong customer satisfaction vs. peers – Net Promoter Score (NPS) 47
• capturing corporate market share
• Passenger traffic vs. 2019
  • Avinor down vs. Norwegian (ex. LH) and Widerøe increasing

Boeing delays impacting growth

• delivery delays worsening with Boeing strike
• 2025 growth forecasted to slow significantly – forecasting 90 aircraft for summer 2025 with significant uncertainty
• aircraft delays are industry-wide – potentially positive for demand/supply balance

Accelerating key profitability initiatives

• key revenue initiatives for 2025
  • New Distribution Platform roll-out
  • Spenn loyalty platform with partners
• cost initiatives
  • European top for on-time performance
  • base structure optimisation
• succeeding with Widerøe
  • aligning networks to capture commercial synergies

+10% (YoY) Norwegian capacity (ASK) Q3 2024 Q3 2023 11.5bn 10.4bn

Q3 operating performance (Norwegian)

• Regularity close to zero cancellations in peak season
  • Cirium top five (DY) on-time in Europe for Aug. & Sep.

Delivering on record strong summer

Norwegian Traffic – PAX per month, load factor and yield

50.0%

500

0

55.0%

1,000

60.0%

1,500

65.0%

70.0%

2,000

75.0%

2,500

80.0%

3,000

85.0%

90.0%

95.0%

100.0%

Strong traffic with increased capacity

• Q3 capacity +10% YoY, load factor improving
• improved performance on new routes launched in spring

Record strong unit revenue

• unit revenue +2% vs. record strong Q3 last year

Robust October performance

• solid demand for autumn holidays

Widerøe record traffic

50.0%

200

0

100

55.0%

60.0%

300

65.0%

70.0%

400

75.0%

500

80.0%

85.0%

90.0%

95.0%

100.0%

Widerøe Traffic – PAX per month and load factor

Record traffic with stable capacity

• Q3 capacity down 2% vs. last year
• historic first with quarterly passengers above 1 million

Unit revenue at historic high

• load factor up 4.6 p.p. vs. Q3 last year
  • mainly result of improved load on commercial network
• unit revenue +20% YoY

Seasonality well below Norwegian

• July "low-season" lifted significantly since 2019

Growth in connection with partners

• Norwegian connection traffic up 67% YoY
• launched code-share with Lufthansa

Satisfactory booking momentum into winter season

Norwegian 7-day rolling sales figures (PAX) –All markets1)

New winter destinations well received

• new winter warm routes including Dubai and winter holidays from Europe to Northern destinations
• diversified bookings across destinations and travel month

Nov.-Jan. – booked load ahead YoY

• cap. growth (ASK) 30% in Nov. and 19% in Dec. – Nov. yield expected down YoY with avg. sector up +15%, but improved underlying profitability
• 340,000 additional tickets sold vs. same time last year

Limited visibility from Q1 onwards

• initial bookings showing continued strong consumer confidence

Financial results for Q3 2024

Quarterly financial highlights

Revenue

• group revenue increasing to NOK 11.6 billion – up 32% vs. last year – Widerøe contribution NOK 1.9 billion
• Norwegian capacity up 10% and improved unit revenue – total unit revenue up 2% from Q3 last year
• Norwegian ancillary NOK 211 per pax – up from NOK 198 last year

Profits

• group operating profit (EBIT) NOK 2,128 million
  • Norwegian EBIT NOK 1,936 million
  • Widerøe EBIT NOK 192 million

• cost level impacted by inflation, currency and wet -lease – Norwegian unit cost excl. fuel up 8% vs. last year (ytd. up 5%)

• NOK 133 million for wet-lease, partially offset by delay compensation
• weak NOK against USD and EUR

Balance sheet

• strong cash position
  • robust cash position NOK 11.5 billion, unchanged from previous quarter
  • NIBD reduced by NOK 0.5 billion
• equity ratio 19.0% up 4.5 p.p. from previous quarter
• dividend fund for distribution from 2022/23 – NOK 836 million at quarter-end

Revenue development

Quarterly total operating revenue (NOK million)

Capacity, PAX and load increase in quarter

• Norwegian capacity (ASK) up 10% vs. Q3 2023
• load factor and yield marginally higher YoY with capacity increase and 2% longer avg. sector

Reduction in other revenue

• normalising level after Covid-19 CashPoint expiry
• other revenue for Norwegian NOK 140m, down from NOK 261m previous year

Widerøe contributing positively

• 16% share of group operating revenue in quarter

Operating profit (EBIT) development

Quarterly EBIT (NOK million)

Capacity increase and higher unit revenue

• Norwegian operating revenue +11% YoY

Costs impacted by inflation and ccy

• unit cost excl. fuel NOK 0.44 up 8% YoY
• weak NOK against USD impacting cost lines
• increased wage inflation with new CBA agreements

Depreciation up vs. last year

• Norwegian fleet 86 aircraft up 1 vs. last year
• NOK 133 million wet-lease costs for delayed aircraft – partly offset by delay compensation

Group P&L

NOK million	Q3 2024 (Group)	Q3 2023 (Norwegian)	Chng (YoY)
Passenger revenue	9 759 ,	7 229 ,
Ancillary passenger revenue	1 558 ,	1 285 ,
Other revenue	277	261
Total operating revenue	11 594 ,	8 776 ,	+32%	increased volumes and Widerøe inclusion
Personnel expenses	2 044 ,	1 001 ,		additional flying FTEs, wage inflation and Widerøe inclusion
Aviation fuel	2 938 ,	2 308 ,
Airport and ATC charges	1 086 ,	892
Handling charges	780	663
Technical maintenance expenses	334	170
Other operating expenses	830	591
EBITDAR excl other losses/(gains)	3 576 ,	3 150 ,	+426	Norwegian unit cost incl. fuel up 7% YoY
Other losses/(gains)	4	9
Share of loss/(profit) of net JV	5	0
EBITDAR	3 573 ,	3 141 ,
Aircraft lease depreciation and amortization ,	1 445 ,	971
Operating profit (EBIT)	2 128 ,	2 170 ,	-42	EBIT margin 18.4%
Net financial items	-124	-121
Profit before (EBT) tax	2 004 ,	2 050 ,		EBT in line with record strong Q3 last year
(income) Income tax expense	0	11		profit offset against non-booked tax carry forward losses
profit (loss) Net	2 004 ,	2 039 ,	-35

Robust balance sheet

NOK million	30 Sep. 2024	30 Jun. 2024	Chng. (QoQ)
Intangible assets	2,618	2,622
Tangible assets	18,452	18,951
Total non-current assets	21,503	22,031
Receivables	4,049	5,613
Cash and cash equivalents	11,457	11,498
Total current assets	16,012	17,628
Assets	37,515	39,659
Equity	7,111	5,732
Non-current debt	11,622	13,851	-2,229	RCB* maturity < 1 year
Other non-current liabilities	4,523	4,729
Total non-current liabilities	16,145	18,580
Air traffic settlement liabilities	5,233	7,758	-33%	bookings lower with season, but significantly up YoY
Current debt	3,719	2,051	1,668	RCB* maturity
Other current liabilities	5,307	5,538
Total current liabilities	14,260	15,347
Liabilities	30,404	33,927
Equity and liabilities	37,515	39,659
Equity ratio (%)	19.0	14.5	4.5 p.p.	down 0.6 p.p. YoY

Net interest-bearing debt
NOK million	30 Sep 2024	30 Jun 2024	Chng (QoQ)
Cash & equiv	11 457 ,	11 498 ,	-41
Aircraft financing Other IB debt Retained Claims Bonds	12 170 , 358 2 812 ,	12 853 , 301 2 747 ,	-683 57 65
NIBD	3 883 ,	4 404 ,	-521

• NIBD decrease mainly due to lease downpayments
• 86 aircraft in Norwegian at quarter-end – unchanged fleet compared to previous quarter
• dividend provision of NOK 0.85 per share for 2022/2023
  • distribution subject to approval from bond holders
  • dividend fund NOK 836 million included in cash position
  • investment return added to dividend fund

Neutral cash flow in quarter

Quarterly cash flow (NOK million)

Forward booking working capital effect

• lower forward bookings and normalised holdback

Excess liquidity

• placed on deposits and money-market funds
• rate-of-return 5.5%

Limited aircraft prepayments to Boeing in 2024 and first-half 2025

• prepayment to date NOK 3.2bn

Boeing aircraft delays impacting growth

Countering Boeing delivery delays Fleet estimate until 2026

• worsening aircraft delays following Boeing machinist strike – upcoming deliveries delayed more than one year
• Norwegian incurring short-term costs for wet-lease – receiving partial compensation
• evaluating additional 737 NG lease extensions for 2025 and 2026
• continued growth, sufficient to meet Nordic demand – less capacity for non-Nordic expansion

Aircraft delays are industry wide

• competitors also incurring Boeing delays
• persistent supply chain issues Airbus cuts A320neo-family production target
• P&W GTF engine issues – avg. up to 350 A320neo-family out-of-service at any one time until 2026*

Aircraft order delivery from 2025

• order for 50 737 MAX 8 aircraft delivery from 2025 – option for additional 30 aircraft
  • attractive pricing and inflation protection
• NOK 3.2bn PDP paid-in limited capex in 2024 and H1 2025
• significant share to be owned
  • financing secured for initial deliveries

Navigating through current environment

Macroeconomic factors

• consumer confidence with robust demand – real-wage growth and falling interest rates
• weak local currency against USD and EUR – increasing cost for key input factors including fuel
• fuel price

– Norwegian hedged 70% for current year and 45% for 2025, higher for Widerøe – hedge levels close to current market and significantly below high-season 2024

Aircraft delivery delays

• short-term costs incurred for sourcing external aircraft capacity
• required to operate aircraft with lower fuel-efficiency
• potentially positive for supply/demand balance and yield environment

Industry-wide cost pressure continues

• Norwegian unit cost performance low single-digit increase for full-year
• inflationary pressure across various cost groups
• environmental requirements increasing
  • phase out of free EU ETS allowance allocation from 2026
  • SAF blending mandate from 2025

Harvesting from investments and initiatives

– reduced 2025 growth enabling streamlining of organisation

Capturing revenue opportunities

• New Distribution Platform roll-out

– improved pricing functionality, targeted upselling and enhanced distribution – full interlining and distribution with Widerøe and potentially other airlines

• increasing corporate market share

• record number of travellers
• on-boarding new corporates and SMEs
• Reward Priority with status match

• Spenn launch

– loyalty programme platform with Strawberry

Accelerating cost initiatives

• European top on-time performance

– avoiding additional costs (crew, ATC, fuel) and driving customer loyalty

• base structure optimisation

– improving efficiency and seasonality

• customer service innovation

– modern automation and self-service capabilities

• robust financial platform
  • enabling reduced net financing costs
• including other key initiatives

Widerøe – succeeding with synergies

• increasing competitiveness – improved combined customer offering and service
• capturing commercial synergies
  • upcoming network alignment
  • Widerøe joining Norwegian Reward
• taking out key cost synergies

Outlook & summary

1) Available seat kilometres (ASK) vs. same period last year

2) Assuming average market rates for period of jet fuel 800 USD/mt, EUR/NOK 11.6, USD/NOK 10.7.

Company is projecting not to pay significant amount in taxes over the coming years due to deferred tax asset, currently amounting to NOK 1.9 billion.

Third quarter performance

• strong traffic performance amidst capacity growth
  • Norwegian improving significantly from Q2
  • Widerøe with record passenger performance
• unit cost impacted by aircraft delays and cost inflation
• cash position NOK 11.5 billion
  • NOK 836 million in dividend fund

Growth impacted by delivery delays

• summer 2025 fleet estimate ca. 90 aircraft
  • added uncertainty due to Boeing strike
  • partial compensation for incurred costs
• aircraft delays are industry-wide
  • potentially positive for overall supply/demand balance
• accelerating key cost and revenue initiatives
  • launch of new distribution platform with added opportunities
  • key cost initiatives to drive efficiencies

Positioning for a successful 2025

• winter capacity balanced to counter seasonality
• Widerøe performance solid
  • capturing key commercial synergies from 2025
• top European airline for operational performance – key to continue growing corporate market share
• strong ESG commitment – committed to reduce carbon emissions
• Spenn – loyalty platform with partners

Disclaimer

Certain statements included in this presentation contain forward-looking statements, such as statements of future expectations. Although the statements o ided a e based on t e best easonable assu tions of anage ent of No wegian i uttle "No wegian" t e state ents are based on a number of assumptions and forecasts that, by their nature, involve risks and uncertainties. No assurances can be given that the expectations provided in the forwardlooking statements will prove to be correct.

Various factors may cause the actual results of Norwegian to differ materially from those projected in forward-looking statements. These factors include, but are not limited to, (a) general economic conditions, (b) changes in the competitive climate, (c) fluctuations in the price of jet fuel, (d) fluctuations in currency exchange rates, (e) industrial actions, (f) contingencies and legal claims, and (g) legislative, regulatory and political factors.

Norwegian cautions readers of this presentation not to place undue reliance on the forward-looking statements in making an investment decision. Norwegian assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.