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Norwegian reports strong results in the second quarter 2023

With a robust operational performance, Norwegian reported a notable operating profit (EBIT) of NOK 651 million in the second quarter, a period that marked the beginning of the bustling summer travel season.

Norwegian and Strawberry’s newly formed loyalty company has chosen Avida as their favored financial partner.

This, coupled with Norwegian’s recent decision to acquire Widerøe, is set to enhance the travel experience, offering more seamless and enriching journeys. 

The second quarter of 2023 was a period of impressive growth for Norwegian, as it reported an operating profit (EBIT) of NOK 651 million and a pre-tax profit (EBT) of NOK 538 million. This represents a significant achievement in the company’s financial performance. 

Moreover, Norwegian experienced a positive trend in its liquidity position during the quarter. Its cash and cash equivalents exceeded NOK 9.3 billion, reflecting the company’s robust financial health. 

By the quarter’s end, the airline had expanded its fleet to include 81 aircraft, a testament to its ongoing commitment to broadening its capacity and reach.

Norwegian's Second Quarter is notable for its High Load Factor and Outstanding Operations
Source: Norwegian

Norwegian Q2: High Load Factor and Outstanding Operations

In the second quarter of 2023, Norwegian witnessed a significant increase in passenger numbers, rising to 5.6 million from 5.0 million in the same quarter the previous year. The production, measured in Available Seat Kilometers (ASK), reached 8.7 billion seat kilometers

Passenger traffic, also known as Revenue Passenger Kilometers (RPK), likewise showed a promising surge to 7.3 billion seat kilometers. This increase in production and traffic is largely credit to Norwegian’s strategic move to ramp up capacity by 44 percent from the previous quarter, anticipating the bustling summer travel season. 

Moreover, the quarterly load factor, a key industry metric, also saw a substantial rise. It climbed to 84.4 percent, a noticeable improvement from 81.2 percent in the same period last year. This growth signifies Norwegian’s successful navigation through the competitive aviation market, further strengthening its position in the industry.

“This quarter has demonstrated our ability to ramp up capacity and deliver a superb operational performance to become one of the top airlines in Europe. These results have been made possible thanks to over 4,700 of our colleagues working tirelessly to ensure our passengers arrive at their destinations as smoothly as possible. By solely flying with our own aircraft and crew, we can deliver “the Norwegian way” to all our customers. Our seamless customer experience has made us one of the most loved airlines in the Nordics,” said Geir Karlsen, CEO of Norwegian.

Norwegian has reported a significant improvement in its operational performance in the second quarter of 2023. The punctuality rate, which refers to the percentage of flights departing on schedule, rose to 81.5 percent, a substantial increase from the 78.8 percent recorded in the same quarter last year. 

Moreover, the regularity rate, or the proportion of flights executed as planned, reached 99.5 percent.

Recognizing these encouraging results, the respected global aviation consultancy Cirium honored Norwegian as the most punctual European airline in May. Furthermore, the airline secured a coveted spot among the top three European airlines for on-time performance in April, June, and July.

“The summer season of 2023 will be one of the best in our history, and I am happy that forward bookings remain strong with business travel returning and others planning their autumn holidays,” said Karlsen.

Thriving Sustainably Through Powerful Collaborations

Landmark E-Fuel Plant Partnership with Norsk e-Fuel 

In April, a milestone collaboration was revealed between Norwegian and Norsk e-Fuel. The objective is to construct the world’s first full-scale e-fuel plant in Mosjøen, Norway. This plant will generate Sustainable Aviation Fuels (SAF). This collaboration will cater to around 20% of Norwegian’s total SAF needs by 2030. Additionally, Norwegian is set to make a substantial investment exceeding NOK 50 million for a minority equity share in Norsk e-Fuel. 

New Loyalty Company Partnership with Strawberry 

In June, Norwegian confirmed its partnership with Strawberry, previously known as Nordic Choice Hotels. The goal is to create a shared ecosystem for loyalty programs by establishing a joint loyalty company. The company made another major stride with the announcement that KKR-owned Avida Finans AB will be the preferred financial partner. They aim to offer next-generation financial services to over 7 million members. After achieving certain closing conditions and receiving regulatory approval, Norwegian and Strawberry will have equal ownership of the loyalty company. Avida, in turn, will acquire a stake of nearly 2%. This deal is projected to culminate in Q4 of 2023, and Norwegian anticipates a one-time gain of NOK 800 million. 

Norwegian’s Contract Win with the Norwegian Armed Forces 

Norwegian recently scored an exclusive contract with the Norwegian Armed Forces, further validating the airline’s appealing offerings. Norwegian earned the contract because if the airline’s tangible steps towards reducing emissions and the ability to meet the Armed Forces’ high standards for more sustainable solutions.

Widerøe Joins Hands with Norwegian for an Enhanced Experience

Norwegian Moves to Acquire Widerøe 

In July, Norwegian made a noteworthy announcement: they have entered into an agreement to acquire the regional Norwegian carrier, Widerøe. This transaction, which involves a cash consideration of NOK 1,125 million, is contingent upon certain closing conditions. 

An improved customer offering is on the horizon due to this transaction. Customers can expect better connectivity and a seamless end-to-end experience. Furthermore, the acquisition promises to benefit shareholders by merging the complementary route networks and realizing significant operational synergies. 

The closing of this transaction, which awaits approval by the Norwegian Competition Authority, is projected to occur by the end of the fourth quarter of 2023.

Enhancing Customer Experience and Loyalty 

Norwegian’s operational performance and ever-growing route network have earned them a loyal customer base. Acquiring Widerøe and developing a shared ecosystem for loyalty programs, paired with attractive partners, will strengthen Norwegian’s position throughout the Nordics.

The Blueprint of Norwegian’s Finances

Norwegian’s Capital Structure Transformation 

For the Board of Directors of Norwegian, a pivotal priority is to ensure that the company has a fit-for-purpose capital structure. Since the airline’s successful reconstruction, Norwegian has morphed into a robust business, readily adaptable to the ever-changing trading landscape. The airline has kick-started a process to align the company’s capital structure with its current strength and future prospects.

An integral part of this process is potentially paving the way for dividend distribution. In keeping with this strategic plan, the Board has decided to exercise the call option for redeeming the NAS13 bond.

See the full Norwegian Q2 2023 Report.

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