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Mortyman
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Norwegian reports profit in Q2

Thu Jul 12, 2018 6:24 am

Norwegian reports solid profit in Q2


Norwegian (NAS) today reported its second quarter earnings for 2018 with a net profit of NOK 300 million, despite the highest growth in the company’s history. Going forward, the growth will slow down and ramp-up costs will decrease, in line with Norwegian’s strategy.

The net result was NOK 300 million compared to a loss of NOK 691 million the second quarter last year. The result is affected by a reduction in unit costs, which has decreased by nine percent this quarter, and with 19 per cent excluding fuel. One-offs have also this quarter contributed to the cost reduction. The costs are lower despite Norwegian’s highest ever production growth (ASK) of 48 per cent and increasing fuel prices. Norwegian’s traffic growth (RPK) this quarter was 46 per cent.


The airline carried ten million passengers during the second quarter quarter, an increase of 16 per cent. The load factor for the second quarter was 86.8 per cent, down 0.9 percentage points compared to the second quarter last year.


“Despite being at the peak of our growth phase, we have been able to present a profit and decreased unit costs during the second quarter. Going forward, the growth will slow down and we will reap what we have sown for the benefit of our customers, staff and shareholders,” said CEO of Norwegian, Bjørn Kjos.


“I’m also extremely happy and grateful that we during the past six months have received ten different awards. In June we were named Norway’s most innovative company and in July, we were awarded the “World Travel Award” for the best low-cost airline in Europe, and the “Ambassador’s Award” from the US Ambassador to Norway. The latter proves the importance Norwegian has had in terms of strengthening and building US – Norway relations and growing the countries’ economies. It shows that what we have achieved so far in the US is being appreciated and acknowledged by the US government,” Kjos continues.


During the second quarter, Norwegian has introduced three Boeing 787-9 Dreamliners and two Boeing 737 MAX 8 aircraft to its fleet. In total, this year Norwegian will take delivery of 11 Boeing 787-9 Dreamliners, 12 Boeing 737 MAX 8 and the two Boeing 737- 800 aircraft that have already been delivered. With an average age of only 3.7 years, Norwegian’s fleet is one of the “greenest” and most modern fleets in the world.


For detailed information, please see pdf Attached in article below:

http://media.uk.norwegian.com/pressrele ... q2-2580651



Not sure I would use the word solid on the profit, but considering that analyst had expected a loss of an average of 701 million before tax I guess it's OK. Hopefully the turn continues ...
 
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787Driver
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 6:49 am

Great news :-) Hopefully the profits will only increase from here
 
UAL777UK
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 6:52 am

Did I just read Norwegian and Profit in the same article!?. Fair play to them.
 
davidjohnson6
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 7:22 am

While it's a profit, 300 million NOK doesn't seem to me to be anything particularly amazing for the spring given the airline's size and the loss over the winter and a strong economy. Moving in the right direction but more improvement needed on the financials
 
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enilria
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 7:25 am

davidjohnson6 wrote:
While it's a profit, 300 million NOK doesn't seem to me to be anything particularly amazing for the spring given the airline's size and the loss over the winter and a strong economy. Moving in the right direction but more improvement needed on the financials

I guess the legacy fans will now promulgate the argument that it’s not *enough* profit. I’d argue the profits of the US3 are too high. Certainly, much higher than airlines have ever made in the USA.

Also, Norwegian made a profit in 2 of 4 quarters last year which people seem oblivious to.
 
Varsity1
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 7:53 am

enilria wrote:
davidjohnson6 wrote:
While it's a profit, 300 million NOK doesn't seem to me to be anything particularly amazing for the spring given the airline's size and the loss over the winter and a strong economy. Moving in the right direction but more improvement needed on the financials

I guess the legacy fans will now promulgate the argument that it’s not *enough* profit. I’d argue the profits of the US3 are too high. Certainly, much higher than airlines have ever made in the USA.

Also, Norwegian made a profit in 2 of 4 quarters last year which people seem oblivious to.


They only made those 'profits' on paper, by selling non-airline related holdings.

This 2q includes payments from rolls royce and accelerated depreciation that offset the 'one off' costs, again only on paper. They will never recapture it.
"PPRuNe will no longer allow discussions regarding Etihad Airlines, its employees, executives, agents, or other representatives. Such threads will be deleted." - ME3 thug airlines suing anyone who brings negative information public..
 
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787Driver
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 7:54 am

davidjohnson6 wrote:
While it's a profit, 300 million NOK doesn't seem to me to be anything particularly amazing for the spring given the airline's size and the loss over the winter and a strong economy. Moving in the right direction but more improvement needed on the financials


Well, as the pace of the expansion slows, there's a good chance that profits will increase
 
LupineChemist
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 9:06 am

Well, looks like they found enough furniture to burn to keep the house warm for awhile. The IAG saga will keep going.

To put it frankly, CASK is still greater than RASK so this isn't true operating profit. (and yes, this is even after adding in the ancillary revenue numbers they posted while normalizing for ASK.

From the report:
Cash flow from operating activities in the second quarter amounted to NOK 1,247 million compared to NOK 1,397 million in the second quarter last year.

Cash flow from investment activities in the second quarter was NOK -3,025 million, compared to NOK -321 million in the same quarter last year.

Cash flow from financing activities in the second quarter was NOK 2,311 million compared to NOK 0 million in the second quarter last year. Proceeds from new aircraft financing and PDP financing outweigh repayment of unsecured bond NAS06 of NOK 1,078 million and downpayments on aircraft financing in the quarter.
 
factsonly
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 9:39 am

A closer look at the numbers:

- Yield for Q2 2018 = 0.37 vs Q2 2017 = 0.41 -10%
- Yield for 1st half 2018 = 0.35 vs 1st half 2017 = 0.38 -6 %

- Unit Revenue for Q2 2018 = 0.32 vs Q2 for 2017 = 0.36 -11 %
- Unit Revenue for 1st half 2018 = 0.30 vs 1st half 2017 = 0.32 -6 %

- Unit Cost incl depreciation for Q2 2018 = 0.41 vs Q2 2017 = 0.45 -9 %
- Unit Cost incl depreciation for 1st half 2018 = 0.43 vs 1st half 2017 = 0.46 -6 %

- ASK (million) for Q2 2018 = 25,633 vs Q2 2017 = 17,330 48 %
- RPK (million) for Q2 2018 = 22,242 vs 2Q 2017 = 15,195 46 %

Conclusion for Q2:
- Production is growing faster than traffic !
- Loadfactor is falling.
- Yield / revenue per unit is below cost levels = Operational LOSS
- Yield and unit revenue are falling faster than costs are being reduced.
- Yield and unit revenue fell faster in Q2 than they did in Q1.
- Unit costs are falling, but not fast enough.
- Operational losses are therefore increasing.

Not healthy at all.
 
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AAR
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 9:56 am

IAG does not have the stake in Norwegian Air Shuttle anymore... Here is the list of biggest shareholders from NAS dated June 30 2018

12.3 MAJOR SHAREHOLDERS (AS PER 8 JUNE 2018) The 20 largest shareholders in Norwegian Air Shuttle ASA per 8 June 2018: # Shareholder Shareholding Share





1 Arctic Securities AS 5,436,134 12.31%

2 HBK Holding AS 4,587,175 10.39%

3 Folketrygdfondet 2,746,556 6.22%

4 J.P. Morgan Securities PLC 1,833,077 4.15%

5 Verdipapirfondet DNB Norge (IV) 1,786,677 4.04%

6 Ferd AS 1,629,032 3.69%

7 Danske Invest Norske Instit. II. 1,075,332 2.43%

8 Clearstream Banking S.A 684,041 1.54%

9 Verdipapirfondet Pareto Investment 682,752 1.54%

10 Sneisungen AS 645,161 1.46%

11 Danske Bank AS 577,925 1.30%

12 Danske Invest Norske Aksjer Inst. 570,797 1.29%

13 Verdipapirfondet DNB Norge Selekti 549,113 1.24%

14 Stenshagen Invest AS 500,395 1.13%
 
Someone83
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 10:29 am

AAR wrote:
IAG does not have the stake in Norwegian Air Shuttle anymore... Here is the list of biggest shareholders from NAS dated June 30 2018

12.3 MAJOR SHAREHOLDERS (AS PER 8 JUNE 2018) The 20 largest shareholders in Norwegian Air Shuttle ASA per 8 June 2018: # Shareholder Shareholding Share


That list is rather useless as it does not take into account borrowing of shares used by shorting investors, thus HBK Holding is showing ~10%, instead of their actual ~25%. Neither does it show whether investors or companies like IAG is "hiding" their shares at various investment banks or brokers.

According to this list, Arctic Securities is now the largest shareholder with ~12% of the shares. I can tell you one thing: Arctic Securites does't own any Norwegian shares by themself ;)

And I doubt number 4, 8 and 11 on that list own any shares themselves......
 
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AAR
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 10:35 am

The list of shareholders are from NAS website.... claim them to be wrong
 
Someone83
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 10:41 am

AAR wrote:
The list of shareholders are from NAS website.... claim them to be wrong


It is technically not wrong, it just doesn't show the real owners ;)
 
oldannyboy
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 10:56 am

Oh wow, someone here on A.net is going to be very pissed.... The hate against Norwegian on this forum is nothing short of mind boggling..
 
Lufthansa
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 11:12 am

Did IAG ever have a shareholding? To my knowledge no.... hence the defence set up against them in BCN and the reconfiguration at LGW of older BA772s. Feel free to correct me if I'm wrong but I don't believe they were ever involved.
 
mutu
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 11:29 am

IAG holds a 4.61% interest as announced to relevant stock exchanges. Curios that there isn't a 4.61% shareholder, but then this holding may in fact be held via nominee(s). JP Morgan plus 1 other?
 
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AAR
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 11:30 am

From IAG website...

Response to Press Speculation on Norwegian Air Shuttle ASA

International Airlines Group (IAG) notes the recent press speculation that it is considering making an offer for Norwegian Air Shuttle ASA (Norwegian).

IAG considers Norwegian to be an attractive investment and has acquired a 4.61 per cent ownership position in Norwegian (minority investment).

The minority investment is intended to establish a position from which to initiate discussions with Norwegian, including the possibility of a full offer for Norwegian.

IAG confirms that no such discussions have taken place to date, that it has taken no decision to make an offer at this time and that there is no certainty that any such decision will be made.

A further announcement will be made if appropriate.



Enrique Dupuy de Lôme

Chief Financial Officer
 
Alias1024
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 11:54 am

Just read the Q2 report and the numbers are still bad. If not for foreign currency translation and moves in forward contracts on fuel and currency they would have posted a loss.
It is a mistake to think you can solve any major problems with just potatoes.
 
mcdu
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 12:19 pm

Alias1024 wrote:
Just read the Q2 report and the numbers are still bad. If not for foreign currency translation and moves in forward contracts on fuel and currency they would have posted a loss.


So true. This was not a operational profit. The airline is cratering financially. They sold and leveraged every ounce of liquidity from the airline. They still lose money at a faster pace than they earn.

This is only a headline to get the suckers to think all is well. The truth is in the finances and they are brutally bad.
 
LHUSA
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 2:14 pm

enilria wrote:
davidjohnson6 wrote:


Also, Norwegian made a profit in 2 of 4 quarters last year which people seem oblivious to.


Was RASK above CASK in those quarters? Or were the profitable quarters a result of selling off their liquidity (among other tactics)?

It's obvious in these Q2 results that Norwegian is pushing PR spin (as all airlines do). A quick glance at the important operational figures shows it was not a good quarter.
 
a350lover
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 2:26 pm

When the finance reports were bad, some trusted on them, and some were skeptical about them. Thus, the same can be expected now.

Of course these results might have been possitively affected by the foreign currency translation and other external factors which don't mean 100% profits on the operation. But said that, it's a slightly improvement of their balance, and they definitely seem to be more aware than they are on a plan to cut down costs and make the operation profitable. It sounds more like the right path for Norwegian to me, although they surely need to go further on "this plan".

On the other hand, load factor and punctuality are still issues that the airline should work a lot on. They need to be reliable in order to be attractive and relevant for new customers. The fuel will keep rising, legacy carriers are every time more willing to make changes on their commercial strategies so that they can either directly compete with low-fares (i.e. fees on luggage, meals, etc.), or even creating their own low-cost brands/operators (i.e. Level, Joon, etc.). On top of that, new fierce competence coming in to the market, namely Primera.

It's time for Norwegian to be in super good shape if they want to be the leader.
 
mcdu
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 3:16 pm

a350lover wrote:
When the finance reports were bad, some trusted on them, and some were skeptical about them. Thus, the same can be expected now.

Of course these results might have been possitively affected by the foreign currency translation and other external factors which don't mean 100% profits on the operation. But said that, it's a slightly improvement of their balance, and they definitely seem to be more aware than they are on a plan to cut down costs and make the operation profitable. It sounds more like the right path for Norwegian to me, although they surely need to go further on "this plan".

On the other hand, load factor and punctuality are still issues that the airline should work a lot on. They need to be reliable in order to be attractive and relevant for new customers. The fuel will keep rising, legacy carriers are every time more willing to make changes on their commercial strategies so that they can either directly compete with low-fares (i.e. fees on luggage, meals, etc.), or even creating their own low-cost brands/operators (i.e. Level, Joon, etc.). On top of that, new fierce competence coming in to the market, namely Primera.

It's time for Norwegian to be in super good shape if they want to be the leader.



One of the highest travel times of the year and they are still losing money operationally. The winter is going to be dark. Maybe shut the lights off dark?
 
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AAR
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Re: Norwegian reports profit in Q2

Thu Jul 12, 2018 3:59 pm

I have looked on the expenses and who knows if they have moved bills into 3Q which will be with a profit... The leasing expenses look cheaper based on all the planes they received the last year.

We know Oct - Nov - Dec - Jan - Feb - Mar - Apr - May were in the reds based on the traffic figures. June made maybe a small profit.

How and where is it possible to read the expenses to the Airbus's coming ? Many were looking forward to 1H 2018 - the "profit" give 2 signals. 1) We don't go bankrupt 2) We are solid can we borrow more money

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