Release Date: July 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Norwegian Air Shuttle ASA (NWARF, Financial) reported a strong revenue growth of 36% to NOK9.3 billion for the second quarter, with Widerøe contributing NOK1.8 billion.
- The company achieved a reduction in CASK (Cost per Available Seat Kilometer) by 2% year-on-year, indicating improved cost efficiency.
- Norwegian Air Shuttle ASA (NWARF) maintained a high on-time performance, being rated the most punctual European airline in May by Cirium.
- The company has a robust cash balance of NOK11.5 billion, with a reduction in net interest-bearing debt by NOK1.4 billion.
- The integration with Widerøe is progressing well, with significant synergies expected to be realized in the coming winter and through 2025.
Negative Points
- The company experienced a softening in demand during the second quarter, impacting unit revenue which decreased by 5.6% compared to the previous year.
- Norwegian Air Shuttle ASA (NWARF) faced challenges with delayed aircraft deliveries from Boeing, leading to increased operational costs.
- The company had to engage in tough negotiations with pilot and cabin crew unions, resulting in higher-than-expected salary agreements.
- There was a negative impact from a weak local currency and slightly higher fuel prices than anticipated.
- The company had to reduce its guidance for 2024 due to the combination of market softening, increased costs, and operational challenges.
Q & A Highlights
Q: With many airlines increasing capacity to northern Norway, how important is the inbound market from Europe for Norwegian Air Shuttle?
A: Geir Karlsen, CEO, noted that inbound traffic to Norway, especially to Tromsø, is increasing, with 75% of traffic being inbound. Norwegian is well-positioned to handle this capacity with its existing routes and the support of Widerøe for further connections.
Q: Are there any expectations for compensation from Boeing due to delayed deliveries of the MAX aircraft?
A: Geir Karlsen, CEO, stated that Norwegian Air Shuttle has standard compensation agreements for late deliveries, which partially cover losses. Discussions with Boeing for further compensation are planned, given the high frustration over delivery delays.
Q: Why is Norwegian Air Shuttle planning a 60% capacity growth for Q4 despite lower yields in Q2?
A: Geir Karlsen, CEO, explained that the decision is based on learnings from the previous year and the introduction of new routes to warmer winter destinations. Current bookings support this growth strategy.
Q: How is the competitive landscape in the Nordics, and have there been any changes since Q1?
A: Geir Karlsen, CEO, mentioned that there have been no significant changes. Norwegian is increasing its presence in Sweden due to reduced competition, while Denmark sees more capacity from competitors like Ryanair and easyJet.
Q: How will the recent pilot negotiations affect Norwegian's operations and costs?
A: Geir Karlsen, CEO, acknowledged that the negotiations resulted in higher costs, but emphasized the importance of avoiding strikes. The company will continue to evaluate its network to place capacity where it is most profitable.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
