Earnings call transcript: Norwegian Air Shuttle Q1 2025 sees stock dip

Norwegian Air Shuttle ASA reported its Q1 2025 earnings, revealing a mixed financial performance that led to a notable stock decline of 9.92%. The company reported group revenues of NOK 6.6 billion, marking a 7% increase year-over-year. However, its EBIT stood at NOK -611 million. According to InvestingPro data, the company maintains a strong financial health score of 3.38, labeled as "GREAT," despite the earnings miss. The stock’s reaction reflects investor concerns over the earnings miss and ongoing challenges in the airline industry.

Key Takeaways

• Group revenues increased by 7% year-over-year to NOK 6.6 billion.
• The stock fell by 9.92% following the earnings announcement.
• Norwegian Airlines launched the SPAN loyalty platform with 1.2 million customers.
• Capacity grew by 16%, with a load factor of 82.5%.

Company Performance

Norwegian Air Shuttle’s Q1 2025 results showed a revenue increase, driven by both the Norwegian and Vidro segments. The company reported a 16% increase in capacity and a 7% rise in passenger numbers. Despite these positive metrics, the unit revenue fell by 11% year-over-year, partly attributed to the Easter effect. The company also improved its on-time performance and reduced recurring aircraft costs by NOK 200 million annually.

Financial Highlights

• Group revenues: NOK 6.6 billion, up 7% YoY
• Norwegian segment revenue: NOK 4.8 billion
• Vidro segment revenue: NOK 1.7 billion
• EBIT: NOK -611 million
• Ancillary revenue per passenger: NOK 190, up 10% YoY

Market Reaction

Following the earnings release, Norwegian Air Shuttle’s stock fell by 9.92%, closing at NOK 13.03. The decline was significant, considering the stock’s 52-week high of NOK 15.49 and a low of NOK 9.70. InvestingPro analysis indicates the stock is currently trading above its Fair Value, with technical indicators suggesting overbought conditions. The company trades at a P/E ratio of 11.76 with a market capitalization of $654.67 million. The market’s reaction suggests concerns over the company’s negative EBIT and the broader challenges facing the airline industry. For deeper insights into Norwegian Air’s valuation and 10+ additional ProTips, consider exploring the comprehensive Pro Research Report available on InvestingPro.

Outlook & Guidance

Looking forward, Norwegian Airlines anticipates a capacity growth of 3% for 2025. The company is targeting a profit improvement of over NOK 1 billion by 2026 through its Program X initiative. InvestingPro data shows the company has been profitable over the last twelve months with a return on equity of 13%, suggesting strong operational efficiency. Additionally, it expects its CASK ex-fuel to increase by mid-single digits, aiming for a competitive EBIT margin compared to European airlines. Unlock complete financial analysis and 1,400+ detailed Pro Research Reports to make more informed investment decisions.

Executive Commentary

Geir Carsten, CEO, emphasized, "Why connect when you can fly direct?" highlighting the company’s focus on direct routes to strengthen its market position. He also noted, "Now it’s all about execution and to make sure this is going to be an even better summer than what we saw last year," reflecting optimism for the upcoming travel season.

Risks and Challenges

• Capacity constraints due to Boeing and Airbus production issues.
• Potential tariff discussions in the airline industry.
• Challenges in maintaining stable labor relations.
• The competitive landscape with Finnair’s challenges presenting both risks and opportunities.

Q&A

During the earnings call, analysts focused on the company’s capacity constraints and the potential impact of Boeing and Airbus production delays. They also inquired about the opportunities presented by Finnair’s challenges and the expansion of financial services through the SPAN loyalty platform. CEO Geir Carsten expressed confidence in overcoming these hurdles and highlighted the positive outlook for summer bookings.

Full transcript - Norwegian Air Shuttle ASA (NAS) Q1 2025:

Jesper Hartejt, VP of Investor Relations, Norwegian Group: Good morning, and welcome to the First Quarter twenty twenty five Presentation for The Norwegian Group. My name is Jesper Hartejt, and I’m the VP of Investor Relations here at Norwegian. Today’s presentation will be held by our CEO, Ger Carsten and our CFO, Arsene Genvi Staat. It will be followed by Q and A from the audience and the web. Please go ahead, Geir.

Geir Carsten, CEO, Norwegian Group: Thank you, Jesper. Good morning to all of you. Also good morning to everybody listening in to online. I know it’s quite a few of you. It’s a beautiful day.

It’s May. It’s nice weather outside. I just saw that we had 91% on time yesterday. So things are working. We’re well into the summer season.

But let’s talk a little bit about the first quarter. The first quarter is, as we all know, the weakest quarter in the year. It’s the low season. It’s always good to get out of the low season, and we are out of the low season. But it ended with a negative EBIT of NOK $611,000,000.

We spent the time wisely in the quarter and purchased 10 aircraft. That is 10 aircraft we are already flying. We have actually been flying these aircraft since they were new. And we are using our strong financial position to do these acquisitions, and we are booking a gain of $590,000,000 in the quarter. But more importantly, we are also reducing the cost on these aircraft on a recurring basis for the years to come with approximately NOK 200,000,000 a year.

Due to the purchase of these aircraft, the cost is also down 11% year on year. Vidro, which I will come back to in more detail, had a challenging quarter operationally, a lot of bad weather that has consequence on the cost side. We’ll come back to that. We’re continuing to have a strong financial position, 10,500,000,000.0 in liquidity, and that is after we have purchased the 10 aircraft. And we are in the final stages of raising financing for these aircraft at very attractive terms.

The demand when we have been asking the banks and the leasing community is for more than 80 aircraft. So we are an attractive counterpart when it comes to financing these days. We are continuing to do well on operational excellence. The on time performance, which is extremely important for us, has been improving over month by month during the year. And we had also a good year in a good month in April.

NPS score above 50, which is really, really good, very pleased about it. And it’s good regardless of who you are comparing ourselves to. We are continuing also to win prices. The Freddie Awards, we took four wins, one of them Best Customer Care, which is very nice to see. As we say in Norwegian, why connect when you could fly direct?

We are the Nordic airline with, by far, the most direct connections from The Nordics to Europe. We are continuing to win market share on the corporate side and very exciting also to finally be able to bring on Raitton Retail as a co owner and partner in Spend. I will get back to that. The 10 aircraft, as I had mentioned, Boeing is ramping up production. Finally, they are producing more aircraft than they have done in a while.

And we have already taken three aircraft this year, and we are about to take delivery of the fourth aircraft during the next days and couple of weeks. The forecast on growth is 3% for 2025, the same as we said last time. And we are coming out of two years and a quarter with massive growth. And now we are getting down to single low single digit growth for for the next couple of quarters, which I think is a good thing. Now we are well ahead well away into the summer season.

I’ll give you some more details on Program X today and with the targets that we have set coming out of 2026. And 2025 from now on will be to harvest from the investments that we have done previously, both in a new distribution platform, the acquisition of Wiederer and the capacity we have invested into during the last months and the winter season that we will take the full benefit out of now into the summer. We have used the macro environment in order to build on our hedges. But have in mind that both on FX and on fuel, the tailwind we have had is has really kicked into effect starting from March in reality. On FX now on fuel, sorry, I think the quarter ended with approximately the same fuel price as it started with some fluctuation during the quarter.

But the tailwind kicked in, first of all, from March and April. Passenger numbers, 5,100,000 passengers, 7% up year on year. Load factor, 82.5%. Well done, close to 70% load. And then again, capacity growth, 16% punctuality, 81.9% and regularity, 99.2%.

We would like the punctuality to be 85%. That’s the target. And we would like the regularity to be in the 99.5, 90 nine point six percent level. But all in all, quite well done in the quarter. So looking at the first quarter, we came into the quarter with 16% growth.

That’s quite significant into the low season period. January was 23% up compared to January 24 February, ’14 percent March, ’13 percent. Still, we carried 4,200,000 passengers, up 5% year on year. We have invested into new destinations. We have invested into what we call winter warm destinations like the Dubais, like the Egypts, and they have actually performing quite well.

That is also the main reason why the sector length is increasing during the quarter. But to be honest, I think when you look at the first quarter, both on load and on yield, it is it came out lower than what we anticipated and it came out lower than compared to what we hoped for. So it’s slower quarter. Part of the reason is, I would say, more than normal bad weather conditions. We have a little bit too many cancellations.

We have a little bit too many delays. And these issues is creating costs, increased costs, both on the crew side, on the handling side, etcetera. So the quarter, I think, to be fair, came out a little bit softer than what we hoped for. That said, as you can see, we are going we are including April here as well, 83.6% load. And the yields due to Easter, obviously, is coming pretty nicely up.

So Easter for us was a good Easter with an extremely high on time and extremely high regularity over the peak Easter with 99.9% regularity, which we are very happy about. So April unit revenue, 18% up year on year, obviously, mainly due to the Easter. But again, we are coming from quarter now first quarter into the second quarter where the growth compared to last year is coming down to very low single digits, meaning 1%. And we are well placed to go into the summer season as such. I’ll come back to the booking figures a little bit later.

Looking at Wiederre. Wiederre had an even more challenging winter weather wise than what we had in Norwegian. And I think it’s fair to say that it was worse than the normal as well even for Wiederer. Many cancellations due to weather, many delays. And this adds cost on the crew side.

It adds cost on the ground handling side. There is normally more overtime and not at least care and compensation costs are going up. So that is that has been a challenging quarter. The flip side of that is that the demand in the network that Weeder is flying is really looking promising. The demand there’s nothing wrong with the demand.

They carried over 900,000 passengers, 17% up year on year. Load factors increased to 70%. We did expect the load factor to increase on the PSO routes. Nicely to see, it also increases on the commercial side of Wiederer. The interliner traffic between Norwegian and Wiederer, up 46% year on year.

If you compare the figures from 2023 before we took over Wiederre. And today, the increase is close to 70%. So it’s no doubt about the fact that we are actually taking more or less all of the growth in passengers in Wiederre into the interlining flow between us and Wiederre. So that is really promising. When Wiederre came out of Q1 into April, things changed.

The operation is much more smoothly. Definitely less cancellations, less delays and also less technical issues because partly because of the weather situation and the fact that you’re into summer season. Load factors up eight percentage points and the passengers six percent up. We also saw that we either had a record two record days in April, where they had a record number of passengers during a single day, which also shows that there is nothing wrong with the demand, and this is something that we expect to continue as well into the next weeks and months. Looking at the revenues, ticket revenues in Wiederre into the summer, it’s 12% up compared to the same period last year.

And both load and yields are up compared to last year. So also for Wiederuh, the summer is looking very promising. On Norwegian, seven day rolling sales on the top left corner. As you can see in March and April, you see the Easter effect in 2023 and 2024. And as you can see, if you look very carefully, you can see that the Easter in 2025 performed better than in 2023.

You have the low point that is higher and the high point that is approximately on the same level. So Easter was a really good Easter for us this year. We liked Easter to be in April because then the summer program is up, is in its way. And it’s and normally, you increase the capacity quite massively when you head into April. The bookings we are seeing is very diversified across both destinations and travel months.

And as I said, now it’s all about harvesting on the investments we have done in the route network, into the fleet, the capacity increase, and we are all ready for what looks like a good summer. Looking at the booked revenue on the top right side, you can see that we bypassed 2024 a while ago, and we are moving really ahead or away from the 2019 curve. If we look at the bookings for the summer season, meaning May to, let’s say, August, September, we have approximately 2% more seats for sale this summer than last year, but we have sold 7% more seats than last year’s. This converts into approximately 300,000 seats that we have sold more this year compared to last year. We don’t really see any signs on the macro situation around us when it comes to bookings.

If you look at the specific months going forward into, let’s say, the summer and into the fall, all months are up on load today compared to last year. All months are up on RASK. And the yields for the period is flattish. I think that’s what we can say. What’s very nice to see that if you look at the specific months and you look at the relative performance, we are seeing that June, in particular, is performing well and actually the best of the months.

And that is nice to see because what we saw, as you remember last year, is that when we headed into the May and into June, you saw a softening in demand, and we would and we had to use price to stimulate bookings and load. We don’t see that picture as per today, and hopefully, that will also stay as it is through the next weeks. So all in all, I think the bookings are looking good for the summer, slightly better actually than last year. Spend, very exciting. We launched it in November, as you remember.

We have been fighting with write down retail now for, I think, close to two years. And finally, we were able to find an agreement with them when and they are now coming in as a co partner and a co owner in SPAN. Reiten retail with the brands mentioned here, Rema Thussen, Neuvevesten seven Eleven and Uniwex in Norway, is what I would call the dream partner for Splend. This is exactly the partner we need into this platform. And they have they are serving more than 2,000,000 customers every day.

And this is exactly the volume that we have been looking for. And I think it’s going to be very exciting to see how we can develop continue to develop this platform together with Write On and together with Strawberry. So far, 1,200,000 customers have been earning spend, close to 9,000,000 transactions and 1,600,000,000 SPAN has, as per today, been earned. SPAN has been working hard also to onboard other partners. This is, first of all, what you call earn partners.

And as per today, they have close to 100 partners already lined up. But again, the fact that we are now on board at Eitan is a game changer, as I see it, for the months and years to come. Hopefully, we can make sure that they get online live when all the IT functions have come in place by the end of this year. Hans Joergen.

Hans Joergen, CFO, Norwegian Group: Thank you, Guy. Good morning, everyone. I will go through the figures in somewhat more detail as normal, and we will do a deep dive into the first quarter for Norwegian. And as you already know, group revenues came in at 6,600,000,000.0, which is up a nice 7% from last year, with Vidro contributing with a strong growth at SEK 1,800,000,000.0. The capacity, the ASK was up 16 for Norwegian, which is a good figure and Guy mentioned that.

But the impact, the unit revenue was and the overall result for the quarter was heavily impacted by the Easter effect. Now I will come back to that quite a bit, as we move forward. So the unit revenue was down 11% year over year, due to partially due to the Easter effect and partially also due to 10% increase in stage length, which also obviously impacts the unit revenue. Ancillary, SEK 190 per pax, which is a nice increase of 10% year over year. The group EBIT came in at SEK $611,000,000, as mentioned before, with Norwegian coming in at SEK $568,000,000 and Widro coming in at SEK 43,000,000 negative.

The result is heavily impacted by two particular factors briefly mentioned earlier. One is the acquisition, really, really good acquisition of 10 new, two ten used aircraft. And we, as a consequence of that, we reversed previously recorded lease liabilities of $589,000,000. So it’s a nonrecurring effect. That’s one particular impact.

And also we saw the at the end of the month, in March, the strengthening of the Norwegian kroner versus the U. S. Dollar, which had an impact of SEK227 million, positive. And coincidentally, this is pretty much the same as we had a negative impact in the fourth quarter. So in some sense, it was a reversal of the negative impact in the fourth quarter of last year.

Unit cost, as mentioned earlier, was down 11%, versus last year year over year, at SEK 0.54, which is it’s nice to see the figure coming down, but it is important to note that SEK 8 or SEK 0.08 kroner out of that is due to the acquisition of the aircraft. So adjusting for that, the CASK level for first quarter twenty twenty five versus first quarter twenty twenty four is up one or 1.5%. So we’re quite happy in the overall scheme of things to limit the underlying increase to 1.51.5%. Balance sheet, as mentioned earlier, coming out with a solid and robust balance sheet, also taking into account that we, did finance the 10 aircraft with cash, and, we are well underway, in the process of securing the financing for those 10 aircraft, as we move into the summer. So no worries about that.

And we’re also happy to see that the net interest bearing debt has improved 0.7 or 700,000,000 versus the same period last year, reflecting that we are as a business is performing robust and that translates into our balance sheet. Taking a further deep dive into the revenue development, we can see that the revenue overall for Norwegian increased by 181,000,000, between the first quarter and the second, sorry, between the first quarter twenty twenty four and the first quarter twenty twenty five. And obviously, the Easter has a very material impact on that, which did, impact the yield, which has a negative deviation versus, the yield impact of that is four fifty eight million. The load factor also, somewhat decreased, 2,300,000,000 2.3 percentage points. And then, of course, with the increased volume, had a positive impact, which leaves us with a revenue for Norwegian at SEK 4,800,000,000.0 and then with a very solid and strong revenue increase from Beadra, ending at SEK 1,700,000,000.0, and then with a total revenue for Norwegian Group at 6,600,000,000.0.

Looking further into the EBIT, it’s important to kind of make a deep dive into that to understand the figure also reflecting on the Easter impact. And we have estimated the Easter impact in isolation to be about 400,000,000. So it is really important to look at the calendar. And I think you know, shareholders and analysts are well aware of that. So, on the revenue side is the Ruskin and yield, Ruskin load factor, which is €170,000,000 Although the fuel price dropped between the first quarter last year and this year in a good way, it did have we also had additional costs related to the ETS quotas and also additional costs on the fuel.

So it was really flattish overall despite sort of the underlying cost decrease. We also have, the inflation effect, and we did talk about that in the last quarter, that there are some particular, inflationary effects for the quarter, in particular relating to the airport and ATC charges, euro controlled and those sort of things. And also the fact, as mentioned earlier, that the impact of the improved or the weaker US dollar didn’t really have much of an impact in the first quarter except in March. So this is why this has a negative impact in the quarter of €332,000,000 But we’re very happy to see that the impact of the initiatives that we put aside put in place and also the scale effect has a positive impact in the quarter of $268,000,000 And we’re extremely happy to see these initiatives, and we’ll come back to ProgrammeX in a minute, seeing that in the numbers. The other impact on the EBIT, obviously, OL other lanes and losses and gains, relating to the translation effects.

Depreciation impacted heavily by the reversal of the, of the, costs relating to the leases on the aircraft that we acquired. So that’s an improvement of $418,000,000, which, which then leads to a q one result for Norwegian of $568,000,000. The results of IDA, as briefly mentioned earlier, came in at $443,000,000 on EBIT, slightly lower than we had kind of anticipated, but that is largely due to the, you know, always difficult challenging weather for Vidra in the winter, but this year, particularly challenging with all the add on costs on overtime, customer services, rebookings, etcetera, etcetera. So Widra came in at minus 43, slightly below last year. And then with the group EBIT at six eleven minuteus.

So I think we’ve been through largely the really big effects on the P and L. We recognize the operating revenues at $6500000000.06600000000.0 euros personnel expenses up as expected due to higher production, but also the union and salary increases that we talked about in previous quarters. Aviation fuel, up partially because of the lower ETS quotas and also the mix in on the SAF mandate, which also has an impact, total impact negative, and that is 80,000,000, but that is also as expected. And then we have the increase in ATC, euro control and airport charges from year end, impacting the increase in, of 35% in the aircraft ATC charges. You will see on the, OLG, as we call it, other losses and gains.

You will see the material impact of the strengthening of the Norwegian kroner towards the end of the quarter. And on the aircraft lease depreciation and amortization, material impact of this one off effect from the acquisition of the 10 aircraft. But as mentioned earlier, it is important. There it’s not only a one off effect. It’s also an impact on a recurring basis of about 200,000,000 per year as we move forward.

So it is a really, really good investment by Norwegian. Balance sheet, balance sheet as mentioned earlier, impacted by the acquisition of the aircraft as well as we’re taking delivery of three new aircraft from Boeing, on leasing, leased aircraft, increasing the total assets, or tangible assets to 21,100,000,000.0. And also, happy to see that the cash and the cash equivalent, despite us paying cash for these 10 aircraft, is at a very stable level. Financial investments also going from 1,000,000,000, at the outset in the autumn of last year to 1,035,000,000, reflecting the yield on those particular investments. Another thing to note, which is pretty important to watch is the air traffic settlement liabilities that is pre booked that what we have sold, going up 12% year over year, reflecting that we have a good, sales.

We have booked a good order book, so to say, on the backlog of orders, or sales, but also a small particular effect relating to the Easter. So the air traffic liabilities, is up by about 1,000,000,000 compared with last year, reflecting, as I said, more sold tickets. And net interest bearing debt flat versus the end of previous quarter. I think we’ve talked about the various components here, obviously impacted also by The US Dollar NOK translation effects. And as mentioned earlier, we are well underway in the financing of the 10 aircraft, and that will, go through during the summer.

And next week, we have the annual general meeting. We have already $860,000,000 set aside for the dividend fund. The board has proposed to the, shareholder meeting, another 60 oder to be added to the dividend fund to be used either either as dividend or as repurchase of shares or convertible bond. And, at the moment, as we all know, we are not allowed to distribute this dividend, but it’s something we are, as mentioned earlier, continuously, exploring opportunities, to do that. The latest, of course, will be next year, but we’re hoping and working towards whether we will also be able to distribute dividend this year.

Cash flow, just to finalize, ticket prepayment up, as mentioned coming up very nicely compared with last, same quarter last year, positive SEK 3,800,000,000.0 in the quarter. Operating activities negative with SEK 500,000,000 and of course significant investment activities SEK 3,000,000,000, reflecting the acquisition of the, 10 aircraft and of course that the majority of the SEK 3,000,000,000 being that. Ordinary financing activities, repayment of debt, which is effectively leasing debt for the most part, FX impact. And then we’re closing the quarter with 9,400,000,000.0 in cash plus the financial investments of 1,000,000,000. We’re placing the excess liquidity on bank deposits at good rates as well as money market funds as before, and then we have the 1,000,000,000 in fixed income fund.

And so far this year, we have yielded more than 5% of these on these investments. Happy to see that the we have prepaid as before, euros 3,300,000,000.0, of the Boeing order, and we have very limited, additional prepayments during 2025, ’1 hundred million. But then during this year, we also have the option to an option for another 30. So it will be that is excluding the potential exercise of the option to which there is no decision that has been taken. But on the existing orders, it’s limited to 100,000,000 for this year, and that’s a good situation to be in given that we have very significant prepayments already.

Okay?

Geir Carsten, CEO, Norwegian Group: Thank you. Okay. Let’s talk a little bit about the fleet. First of all, and most importantly, we have secured capacity we need for the upcoming summer. We are missing one aircraft, which is supposed to deliver, I think, next week.

So then we have the capacity we need. Boeing has been really ramping up the production. And we have, as I said, taken delivery of three aircraft so far. We do expect to get eight seven, eight, nine aircrafts more during the year. And most of them are then coming into the late summer and into the fall.

Today, we have 88 aircrafts heading into the end of twenty twenty five and into 2026. The fleet will consist of 95, 90 six aircraft as it looks today. The order that we have on 50 aircraft is also starting to deliver as it looks today by the end of this year. That is exciting. And we also have a big decision coming up.

We have to take that decision within September year on whether we are going to declare the options for another 30 aircraft or not. As it looks today, we will declare the option. The 10 aircraft has been covered. We have financed 25 of the 50 already. So at terms that we have never seen in Norwegian before, meaning very good attractive terms.

The OEMs, Boeing and Airbus, is still having their issues, still having their issues. Boeing, not at a production level as per today compared to what they would like to be. They are in the 20s on $7.37 a month. The target is high 30s, and they are on their way. At the same time, we still have the issues on the Airbus 320s and the Pratt and Whitney engines.

And there are hundreds of aircraft globally today grounded due to those issues. That means there is less capacity coming into the market compared to how it should be, meaning it will support the market and the yields that we have been seeing for a while. Those yields will most likely continue also for the next months and as I see it, the couple of next years probably. There are discussions around tariffs, potential tariff tariffs. As per today, there is no tariffs.

Do we have a risk of tariffs hitting the airline industry? Yes. It is a little bit early to say how it could affect us. And there are many kind of scenarios that we are considering, and we are very much on top of the situation. Obviously, the whole industry is discussing this these days, not at least OEMs.

And we will just have to see how this develops down the road. We feel that we are pretty well protected on the escalation clauses with Boeing. Obviously, we have mentioned that before. But it’s, again, a little bit early to say how this is going to turn out. Program X.

This time, I would like to give some information on targets that we have set. So what we are disclosing today that we have set the targets, which is going to be a run rate coming out of 2026, where the target is to deliver a profit improvement in excess of billion. That is on the basis of the profitability that we had in 2024, and it does not include the macro effects like the FX and the fuel. So this is improving the underlying operation, the running of the airline. This is, first of all, in Norwegian.

What effects can obtain on the targets they have set will come on top of this. This is going to take us, if we can deliver on it, into a sustainable EBIT margin that will be competitive towards the best airlines in Europe. That’s the target. It’s a difficult one, but we are putting a lot of resources throughout the whole organization in order to do it. What we have done so far, just a few examples.

On time performance is important on so many levels. It’s very important towards our customers, but it’s also very important on actually running the airline efficiently. It’s very costly to not be on time. On time is also by far the most important thing for our customers when we ask and thereby it’s massive. Sweden synergies is well underway.

We have already taken out quite a lot of synergies, some of them already mentioned. More will come into this summer season and into the fall when we are also going live with the new distribution platform in Norwegian, which also gives us the ability to do proper interlining. And the first company, obviously, we will interline properly with will be Wieder. I have still a goal that this can happen during the summer, and we are very close of going live with the whole platform as we speak. The 10 aircraft we bought is also part of this program MAX.

That is SEK 200,000,000 recurring cost savings for the years to come and just an example of how we are working. On the areas that we are focusing on, well, its new distribution platform help mention interlining a potential partnership with other airlines is also something that we are working on considering. Asset performance, the purchase of the 10 aircraft is an example. Could there be other potential transactions like that? Yes, which we will definitely act on if they occur.

It comes to the whole maintenance cycles when we have an asset, how we maintain it, when we maintain it. We have been successful during the last couple of years pushing the heavy maintenance more into the winter season compared to earlier. Fuel consumptions, one thing is the fuel we are actually buying. Another one is how much fuel we are actually burning when we are flying and not when we are flying. And how much do we pay to actually get the fuel from the tanks into the wings.

There are opportunities there for cost savings. Crew efficiency is a big one. We have been performing better over the last year on efficiency when it comes to the crew. There is more to gain also to the benefit of the crew with better quality of the rosters, less changes and a better work life balance in the crew, which also benefits in the end the crew and the customer service that we are able to offer. And then a general cost reduction is absolutely focused, and that is an ongoing battle on all items.

Very happy to see that even if we have cost increases on many of the P and L lines, we have been able to take out cost savings as well on other lines to try to mitigate on the costs that we are seeing increasing in the market. And then efficiency through digitalization, automation is definitely artificial intelligence. It’s also an area. I would also like to say that on the excess of SEK 1,000,000,000 number we are disclosing today, the majority of that is going to be covered by cost savings and not revenue increases. So this is going to be a battle on costs for 2025 and also for 2026.

And this is the run rate coming out of 2026 we are talking about. That was Programme X. Outlook, capacity growth 3%. That is the same as last time. And now we are getting into two, three quarters where we are not really growing.

And as you can see, we have a slight decrease in capacity in Q4 planned compared to last year. Last quarter, we guided on CASK ex fuel at single digit. Now we are narrowing it a little bit, saying it is going to be mid single digit percent increase in CASK. So just to wrap it up, we are sitting here now in a situation where we have ended a low season. We are way into the summer season.

The bookings, as mentioned, are looking quite promising. We have the aircraft that we need. We have the fantastic crew that we have in Norwegian all in place for the summer. And we are all ready. And now it’s all about execution and to make sure that this is going to be an even better summer than what we saw last year.

And remember the final words, why connect when you can fly direct? Thank you. Okay.

Jesper Hartejt, VP of Investor Relations, Norwegian Group: We’ll then move to some if you guys can go over here to the right. Okay. Yeah. Yeah. Move on to some questions.

We’ll start with questions from the audience. If there are any, please raise your hand. We’ll start with questions from the web then. We’ll start with Ola Maarten Vasko from DB Markets. Can you comment on the competitive landscape

Geir Carsten, CEO, Norwegian Group: in The Nordics?

Jesper Hartejt, VP of Investor Relations, Norwegian Group: How did the industry capacity growth for the summer?

Geir Carsten, CEO, Norwegian Group: I think that the competitive landscape has been stable for quite a while. I think the changes we have seen, let’s say, the last six to nine months is obviously all the capacity flying up north, not at least to 30 to 35 direct routes out of now internationally, 10 to 15 different airlines. That is a change. We have also seen a change in Denmark just recently where some at least one airline has pulled out of a couple of destinations. And other than that, I think the competitive landscape is stable, I would say, not much happening.

Jesper Hartejt, VP of Investor Relations, Norwegian Group: Okay. Moving on to another question from Willemarten. Status of future Boeing deliveries if we look beyond the one aircraft that is due to come in May?

Geir Carsten, CEO, Norwegian Group: As I mentioned, we do expect to get one more. That’s what we need for the summer. We believe we will get probably eight more during the year, which will take us up to 95 aircraft next year. And that and if something if we should say that something has happened recently with Boeing, it’s actually that the delivery schedule has moved slightly to the left, meaning that we will probably get aircraft a little bit earlier than what we thought just two, three months ago. Okay.

Jesper Hartejt, VP of Investor Relations, Norwegian Group: Moving on then to questions from Andrew Lobbenberg in Barclays. Looking at Norwegian, we had a very much very strong increase in stage length, in average sector length in the wintertime. What happens to that when we move into the summer now?

Geir Carsten, CEO, Norwegian Group: Well, we have it will stay more or less that as it was last year, where we are flying, let’s say, less domestic and even more down to the Mediterranean. So that it will be probably the same development as you have seen in the last couple of summers.

Jesper Hartejt, VP of Investor Relations, Norwegian Group: So basically going from what we had in the winter of around 10% stage length increase down to around low single digits?

Geir Carsten, CEO, Norwegian Group: Yes. Yes.

Jesper Hartejt, VP of Investor Relations, Norwegian Group: Okay. Moving on to a question about labor relations. Say that we had some labor tensions last year with the pilots on the technical side. How do you view labor relations now? And what is the status of potential pay talks going forward?

Geir Carsten, CEO, Norwegian Group: It is correct that we had some tensions, and we had a lot of CBA negotiations last year in throughout the whole network, not only here in Norway. This year, it’s very stable. We don’t see any risk of any issues for this summer season.

Jesper Hartejt, VP of Investor Relations, Norwegian Group: Okay. Moving on to another question on labor relations. There is a bit of tensions over in Finland and with Finnair. Do we see any gains in our trading from the problems they are having? Yes.

Okay. And then we go for a final question from the web, which is from Thomas Raffiol. Congratulations with the good Q1 results. Are there any plans on starting up Spendbank? As everyone remembers, it was a very Bank Norwegian was a very valuable and successful venture ship.

Geir Carsten, CEO, Norwegian Group: It’s 100% correct. Bank Norwegian was a huge success, and we have a good relationship with Bank Norwegian today. Are we going to kind of have a more like a financial services part of SPAN going forward? Yes, we are.

Jesper Hartejt, VP of Investor Relations, Norwegian Group: Okay. That concludes the sessions from the web. I’ll ask if there are any other questions from the audience. There seems not to be. So we’ll conclude the session there.

Thank you very much. Thank you. Thank you.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.