Earnings call transcript: Norse Atlantic’s Q2 2025 revenue rises 23%

Norse Atlantic ASA reported a significant rise in revenue for the second quarter of 2025, marking its first positive operational result. The company’s stock, however, saw a decline of 5.67% in market trading. According to InvestingPro data, the stock has shown remarkable resilience with a 265% return over the past year and a 177% gain in the last six months. The revenue growth was driven by increased passenger numbers and improved operational efficiency, despite softer fares in the transatlantic market.

Key Takeaways

• Norse Atlantic’s Q2 revenue increased by 23% year-over-year.
• The company achieved a positive operational result for the first time in Q2.
• The stock price fell by 5.67% following the earnings report.
• Norse Atlantic plans to increase aircraft utilization to 16 hours per day.
• The company secured a long-term charter contract with Indigo for six aircraft.

Company Performance

Norse Atlantic demonstrated robust performance in the second quarter of 2025, with a 23% increase in revenue to $200 million compared to the same period last year. The company’s trailing twelve-month revenue reached $635 million, with an impressive 33% year-over-year growth rate. This growth was bolstered by a 36% rise in passenger numbers and a load factor of 97%. The company also reported its first positive operational result for a second quarter, with an operational profit of $4.4 million. InvestingPro analysis indicates the company maintains a "GOOD" overall financial health score, despite not being profitable over the last twelve months.

Financial Highlights

• Revenue: $200 million, up 23% year-over-year.
• Operational profit: $4.4 million, marking the first positive result in Q2.
• 12-month revenue: $673 million, a 24% increase from the previous year.
• EBITDAR: Improved to $61 million from a loss of $12 million last year.
• Cash flow from operations: Positive $110 million compared to a previous deficit of $15 million.
• Available liquidity: $44 million, including $24 million in cash.

Market Reaction

Despite the positive financial results, Norse Atlantic’s stock price fell by 5.67% in the market. The stock closed at $10.06, down from its previous close. InvestingPro data reveals that the stock generally trades with high volatility and often moves in the opposite direction of the market, with a beta of -0.05. This decline may reflect investor concerns over softer fares in the transatlantic market and the company’s decision not to acquire additional aircraft due to high market prices. InvestingPro subscribers have access to 8 additional key insights about Norse Atlantic’s market behavior and valuation metrics.

Outlook & Guidance

Looking ahead, Norse Atlantic aims for a full-year profit of $20.25 million and expects load factors to remain above 90% monthly. The company plans to increase production capacity by 24% in the second quarter of the next year but has no plans to acquire additional aircraft, citing high market prices.

Executive Commentary

CEO Bjørn Tore Larsen expressed optimism about the company’s trajectory, stating, "We are definitely on the right track, and arrows are pointing in the right direction." He also highlighted the importance of the US market, saying, "We think America is going to be a great place for us to do business short and long term."

Risks and Challenges

• Softer fares in the transatlantic market could impact revenue growth.
• High aircraft market prices may limit fleet expansion.
• Economic uncertainties in key markets like the US and Europe.
• Potential operational disruptions due to Boeing/Airbus delivery delays.
• Increased competition in the long-haul travel sector.

Norse Atlantic’s strategic focus on operational efficiency and market adaptability positions it well for future growth, though it must navigate market challenges and investor concerns to maintain momentum.

Full transcript - Norse Atlantic ASA (NORSE) Q2 2025:

Bjørn Tore Larsen, CEO and Founder, Norse Atlantic: Very good morning, everyone. Welcome to Norse Atlantic Q2 Presentation twenty twenty five. My name is Larsen. I’m the CEO and Founder of Norse, and I’m also joined with our CFO, Alnus Jomos. And following the presentation, will have a Q and 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. So 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 whenever the time is right for that.

And 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. And 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. So we are now halfway through the transformation, and you will see that we already see massive results the efforts that we have done. Very quickly on numbers. The this is the first Q2 that we have ever presented a positive operational result of $4,400,000 So a good improvement from last year, an improvement of more than $26,000,000 We also have a good revenue uplift from 164,000,000 to $2.00 $2,000,000 So 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.

But 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 $24,000,000 In addition to that, we have $20,000,000 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 carrier, Vetleys, with our crew technical stuff, etcetera.

And we have renewed a contract with P and O Cruises, that is a very good contract for us in the winter months. So all in all, the commercial strategy has worked well, and we are very happy with what we have seen so far. And the forward bookings is also looking very good for the winter. It is quite a bit above where it was 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. And also the passenger growth has been good, up to 36% compared to same quarter last year. But 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 were fairly stable, slightly down.

And 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. And 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 carried luggage. And whilst the ancillary revenue has gone down per passenger a little bit, the total revenue has gone up. And we have done significant AB testing of it to ensure that we don’t leave any revenue behind.

Sorry? There you go. This picture, now we’re starting to get into the interesting stuff. So we see looking twelve months in the mirror, last twelve months, we see a great improvement from compared to last year. We see that the revenue went up by 24 to $673,000,000 versus $543,000,000 last year.

We also see that the EBITDAR went up to $61,000,000 versus a negative minus $12,000,000 last year. And even more impressively, the cash flow from operations went up to a positive $110,000,000 last twelve months versus minus $15,000,000 a year ago. So we can see that the changes we have made and that transformation process we are in the middle of actually has great effect. We are pursuing a more opportunistic strategy. Definitely, we are an airline.

We have a network. We have a lot of customers, more than 550,000 of them in Q2. And we will definitely take care of our customers in the future. But we also know that there is a strong demand right now for long haul aircraft in the charter market. And the reason for that strong demand right now is that the aircraft manufacturers, Boeing and Airbus, they are not able to deliver long haul aircraft.

They are far behind on delivery schedule. And many of the airlines that had planned more capacity into their production, they can’t find it. So 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, and we have done so with Indigo. Again, it’s a very reputable, strong airline and with an investment grade. We also made a deal with the P and O Cruises.

We have been flying cruise customers for them for one season, and they have now they were very happy with the product, and they have renewed the contract for an additional two years. So for us, it’s a testament to the product we have and to the great crew and people we have to deliver it. So whilst we are pursuing an opportunistic approach doing both charter and own network, We are obviously keeping the most lucrative routes, the most profitable routes. And 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 is twice as high on the routes we are keeping as the routes we are letting go. It’s a significant difference, and that generate strong results for the own network portion of our fleet.

And 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. So it’s 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 to do charter and all network, and why we do it in this proportion. And the last, but perhaps most exciting slide I have here is the extra production capacity we have. So when we started the Q2 this year, we were actually planning in our long term plans to have more aircraft on charter at that time. And for whatever reason, deliveries and negotiations took longer time, and it was a bit late for us to put aircraft into production and still make money of them.

So we had idle capacity through the quarter, but we still had the cost. We had all the aircraft, we had the crew, etcetera. And 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 sixteen hours a day, except when they are doing heavy maintenance, and that is a realistic target. In July, as an example, this year, we’ve been flying more than sixteen hours a day per aircraft.

So we 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 performance there. But 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. So 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 $40,000,000 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 and A and when it comes to other efficiencies. Where we still have a way to go is to ensure that we have optimal crew basis, because in order to be efficient, order to have a competitive cost, we need to have crew based at the same places that we are flying to and from. And 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. But it’s work in progress. And as I said, we have good results both when it comes to generating more revenue and reducing cost.

And then more to the Q2 numbers, Anush? Thank you.

Anders Jomos, CFO, Norse Atlantic: So looking more specifically at the Q2 numbers. This is almost the same graph as Bjorn Tore presented, but this is then related to Q2 this year alone. So we see exactly the same trend. PRASK, which means passenger revenue per available seat kilometer, is increasing. It’s increasing by 8%, and 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. So again, these are the important key metrics for us to keep improving PRASK, 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 $200,000,000 mark, very important. So this is up $37,800,000 compared to same quarter last year or as much as 23%. EBITDAR has increased by $20,000,000 up to 23.1%. The costs mostly follow the volume that we fly more, we carry more passengers. But it’s also worth noting that we have reduced the SG and A by $4,200,000.

And if you analyze that, you will see that we are already on a good way to materialize the $40,000,000 Berthouli just mentioned. So we’re not there yet, but we have come a long way, and you will see that gradually also being realized. Operational profit is a positive $4,400,000 also an improvement of $26,700,000 And that when it comes to net profit, negative $5,500,000 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.

And the improved performance that we saw of approximately $26,000,000 $27,000,000 that flows this quarter directly into the operating cash flow. That’s always a good sign, and that’s worth noting. Available liquidity is $44,000,000 This is then constituted by $24,000,000 in the bank and $20,000,000 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 $141,000,000 We have a good cooperation with these companies. We work closely with them.

And as we expect our financial results to improve, as we expect the balance sheet to improve, we can also work together with this. And 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 $30,000,000 that is fully underwritten. And the main purpose of that is to refinance existing shareholder loans by and 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 and 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.

So for those of you interested in learning more about that, we have issued a press release at five minutes past seven this morning. So all details are in there. So please follow that follow that release and the links therein if you are interested to learn more about that. So for that, Berthoris, some concluding remarks.

Bjørn Tore Larsen, CEO and Founder, Norse Atlantic: 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. But what we see in 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 successful exciting product for our customers every single day. And we’ve been able to execute on our strategy, which we have communicated in the past. So 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 are aiming for a full year profit of $20.25. So with that, I’ll open up for any questions that might have come in here.

And we have our moderator, Board here. Thanks.

Moderator/Q&A Facilitator, Norse Atlantic: Thanks, Bjorn Ture. We had a few questions. The first one is, with continuous load factor of high 90s, how will North Atlantic continue improve profitability going forward?

Bjørn Tore Larsen, CEO and Founder, Norse Atlantic: It’s a good question. Well, 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 a margin and make money on it. And we do make money on all the routes we are flying.

But in Q2, for example, and that is for quarter two, but in Q2, for example, we are seeing that we are not utilizing the entire production capacity we have. And again, the reason is that we were planning to have more aircraft into charter and for whatever reason, it took longer time than expected. So 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.

Moderator/Q&A Facilitator, Norse Atlantic: 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?

Bjørn Tore Larsen, CEO and Founder, Norse Atlantic: To buy more aircraft? That’s a very good question. And the answer is no. I mean, it’s way too expensive right now to to buy or charter aircraft. So we are we are only going to manage or not only.

We have 12 long haul wide body aircraft. That’s the biggest long haul player in Scandinavia. So it’s not, you know, 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 continue 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

There is a long line of customers waiting for their aircraft, long haul and short haul, and we think prices are going to stay high for quite a while.

Moderator/Q&A Facilitator, Norse Atlantic: Thank you. Then kind of a relevant question is, with some geopolitical issues and trade tariffs, do you expect North Atlantic to reduce the route focus on US? And what is your view on the Transatlantic market in general?

Bjørn Tore Larsen, CEO and Founder, Norse Atlantic: We are very optimistic. So 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 for whatever reason, and there might be a little drop in demand for Europeans going to America. We do see that Americans still will not go to Europe. Their dollar is strong, and they are eager to travel.

And America is expensive for for for them as well. So we think there’s going to be a strong demand across The Atlantic also in the future. But 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 in summer are American. We are flying Americans to Europe.

And in winter, are flying Europeans to Asia and South Africa and Florida. That’s sort of the big picture on the big the big spread. But America is gonna be very important for us also going forward.

Moderator/Q&A Facilitator, Norse Atlantic: Good. Alright. Then there’s a question here. Could you explain the upside or repeat the upside of the Indigo agreement in general?

Bjørn Tore Larsen, CEO and Founder, Norse Atlantic: Yeah. Well, the upside, there’s a couple of upsides. First of all, it’s secured revenue. So we know that we have sold for a long period of time all the seats on six aircraft. That is an upside.

So you take away market risk, and then you eliminate fuel risk. Fuel navigational charges, handling charges, etcetera, etcetera, a lot of other charges are paid by the customer. So we take away a lot of risk. And then there is an upside depending on how much they are going to utilize the aircraft. There is a sort of a threshold, a floor, which we have communicated to the market.

And if they are using the minimum hours of the aircraft, they it it will be a profitable operation. But there is a great upside in in in them flying more hours, and we think they’re gonna utilize the aircraft because it’s a very efficient aircraft to use. So they have strong demand for the routes. So we anticipate and what we see so far is that the the from July onwards, the their flying program exceeds what we have budgeted for. So it’s a great upside.

But the numbers you will see in q two is actually quite a bit below than 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 takes away a lot of production capacity. So they’ve been flying not that much in in q two. But going forward, it’s gonna be a lot more.

Moderator/Q&A Facilitator, Norse Atlantic: Okay. Thanks. Then there’s a 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?

Bjørn Tore Larsen, CEO and Founder, Norse Atlantic: Yes. Well, that’s a very good question too. And actually, no, because that would have been not a good thing. But what we are we have we have three routes we are flying one weekly. One is Oslo Phuket, one is Stockholm Phuket, and one is Manchester Bangkok.

But those tie in with our other production. So the only deadheading we are talking about is domestic between Puket and Bangkok, which is a very short flight and doesn’t cost any production for us. So great question. And no, it’s not gonna be inefficient. It’s gonna be very efficient.

The the Manchester aircraft ties in with the with the Carnival or the the P and O Cruises production, so there is, again, no deadheading. We can just utilize the aircraft better.

Moderator/Q&A Facilitator, Norse Atlantic: All right.

Bjørn Tore Larsen, CEO and Founder, Norse Atlantic: No more questions here. All right. Well, thank you very much for attending. We appreciate all the shareholder support, and we welcome onboard new shareholders. And we also welcome you onboard our beautiful product, the Dreamliners.

Thank you very much.

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