During the second half of 2022 Norse Atlantic reported an operating loss of $43
million before leases, depreciation and amortization (EBITDAR). Operating profit
was negative $106 million in the six month period, $52 million of which was non
-cash lease accounting costs. Total cash held at yearend was $70 million. The
Norse Atlantic Airways fleet consisted of 15 delivered Boeing 787 Dreamliner
aircraft at by year end, five of which have now been successfully subleased to
another operator.
"In the latter half of 2022 Norse Atlantic Airways successfully launched and
expanded operations from three European destinations, Oslo, Berlin and London to
the US. This marked a tremendous achievement and was a testament to the hard
work and dedication of every colleague across the business. Norse Atlantic
Airways has become a force to be reckoned across the Atlantic and to date we are
on track to deliver the business plan communicated during the Private Placement
in November 2022 and we continue to work towards being profitable by the end of
2023.
Our focus on cost control and swift action to reduce winter frequencies on
routes displaying lower than expected demand has shown the agility and speed at
which Norse Atlantic Airways can adapt to the current challenging global
economic environment. As our core routes between Europe and the US have become
more established, I am pleased to also see forward bookings and our cargo
operations continue to grow in line with our expanded summer 2023 schedule."
said Bjorn Tore Larsen, CEO Norse Atlantic Airways.
Following the Company's first commercial flight on 14 June 2022 - just 14 months
after Norse Atlantic ASA ("Norse", "Norse Atlantic Airways" or the "Company")
was formed and the IPO completed - the second half of 2022 marked a number of
milestones in Norse's short history as it launched several new routes from new
European and US cities as it gradually increased from one aircraft in operation
at the end of June to four at the yearend. Norse flew over 289,000 passengers
and operated 1,427 flights successfully during the Period.
The Company recorded an average load factor for the six months ended 31 December
2022 ("H2 2022" or the "Period") of 62%, with a monthly high during the peak
summer month of July at 86% and a monthly low of 50% during the normal
historically low demand month of November. Norse achieved a decent operational
performance, flying over 99% of scheduled flights, with the few cancellations
being due to adverse weather conditions outside the Company's control.
During the second half of 2022 Norse was awarded a UK AOC (Aircraft Operating
Certificate) and operating License by the UK Civil Aviation Authority, and
subsequent authorisation from the US Department of Transport to operate flights
between the UK and US, which will open up a key market for the Company.
Additionally, Norse secured further landing slots at London Gatwick and JFK New
York, which Norse will utilize from the summer 2023 season as it ramps-up
production. By mid-summer 2023 the Company expects to be utilizing its full
fleet of 15 aircraft, with 10 aircraft under own operations and five aircraft on
sublease to a third party.
Norse completed a private placement equity raise of gross NOK 300 million
(approximately USD 30 million) during H2 2022. The proceeds are used in relation
to maintaining a sufficient liquidity balance following a requirement from the
UK air authorities to ring fence an amount in relation only to Norse's wholly
owned UK subsidiary Norse Atlantic UK Ltd, as well as general corporate
purposes. In relation to the private placement, Norse is committed to carry out
a repair offering during the first half of 2023, which can raise up to an
additional NOK 150 million.
During the Period Norse launched partnerships with major European and US
airlines, easyJet, Norwegian and Spirit Airlines, that allows passengers to
connect in a virtual interline arrangement, powered by Dohop.
The Company took a careful approach to increasing production during H2 2022,
choosing to fly an average of four aircraft through the seasonally low winter
season, allowing Norse to focus on preparations for ramping-up production from
summer 2023 season, starting with adding Paris from 26 March 2023 and flying
with five tails based at London Gatwick by the middle of 2023.
Cargo revenues recorded in the Period totalled USD 10 million, an amount
equivalent to 10% of Norse's overall revenues. Norse completed its first charter
flights during the latter part of the Period, flying nine charters in November
and 21 in December 2022, with charter activity continuing into 2023. The
charters were mainly done for the Norwegian Government as well as one global
tour operator for winter holiday destinations in the Caribbean and the Far East.
Norse has a fleet of 15 modern, fuel-efficient and environmentally friendly
Boeing 787 Dreamliners at historically low pricing and favourable lease terms,
including power by the hour payments for a minimum period of the first 12 months
after respective aircraft deliveries. As of 31 December 2022, all aircraft are
delivered, with five subleased out to a third party for a duration of 18 months
each. The total revenue from the aircraft sublease component is expected to be
in excess of USD 50 million over the term of the subleases.
Looking ahead to a strong summer 2023 with a focused route network
Inflation is high in Europe and the US, impacting the spending power of
consumers, while jet fuel prices remain high and make-up a much higher
proportion of airlines' cost base than previously. Norse is a very young airline
and will only be operating on a scale that gives efficiencies from mid-2023,
while it continues to enjoy the benefits of flexible aircraft lease terms,
including power by the hour and low lease rates, during its ramp-up.
As expected, 2022 is a loss-making year as it is a start-up year, being Norse's
first full financial year since incorporation in 2021. Start-up costs, including
investment in systems, costs related to achieving regulatory approvals,
recruitment and initial training impacted the Company's bottom line, while the
first flight and, thus, first revenue-generating activity, was about halfway
through the year. The next financial year - 2023 - will be Norse's first full
year of operations, though Norse will be in a start-up / ramp-up phase during
the first half of 2023 and it will be the second half of 2023 that Norse is
fully operational.
As a start-up airline that was still in the process of obtaining all relevant
regulatory approvals, as well as airport slot times, performance in 2022 has
been negatively impacted by having short selling windows between launching
ticket sales for a route and flights. For example, there were six weeks between
Norse's first tickets on sale for its Oslo-New York route, while in comparison
established (ie. non-start-up) airlines typically have tickets on sale 330 days
in advance. Norse made its first summer 2023 routes available for sale on 9
November 2022, while due to regulatory approvals the final summer 2023 network
was only available for sale from 28 February 2023. As Norse is able to increase
its booking window it is expected to have a positive impact on ticket sales as
customers will have a longer period to make bookings.
Establishing a new airline takes time and investment and Norse is on-track to
becoming a profitable transatlantic low cost carrier. Building a reliable and
known brand is continuous and is not completed overnight. While tickets were
initially only available for sale on the Company's website, since mid-2022 Norse
fares have gradually become available on more and more platforms, including
finn.no, kayak.com, kiwi.com, skyscanner.net, and booking.com. During 2023 Norse
expects to have tickets for sale on Expedia and will look to add additional
selling platforms.
Norse is sufficiently financed and ready for ramp-up to fully operational fleet
in summer 2023, including 5 aircraft based at London Gatwick. Strong sales
momentum at the end of 2022 and post period end for summer season bookings give
preliminary indications that the second half of 2023 could be the Company's
first period of profitability since it commenced flying.
"Norse Atlantic Airways continues to build on the solid business plan laid out
in 2022. The year ahead will mark many milestones for the company and consumers
as we fully establish our presence in key markets and become the disruptor
airline of the transatlantic market by offering value, comfort and choice to a
wide customer base eager to travel.
As we enter into our first full summer season in 2023 the initial substantial
investments that were necessary to launch Norse Atlantic Airways operations, and
subsequently establish our UK based airline, will have created a strong and
sustainable company, ready to swiftly seize on new opportunities and navigate
through an unpredictable global economic environment," continued Bjorn Tore
Larsen, CEO Norse Atlantic Airways.
To date Norse Atlantic Airways is performing on track or above the business plan
communicated during the Private Placement in November 2022. As previously
communicated, the company will carry out a repair offering to those shareholders
eligible as at 24 November 2022. The repair offering is expected to be done
during the spring once the required prospectus is approved by the Norwegian
Financial Services Authority.
For further information please see attached H2 report and company presentation.
Contacts:
Investor contacts: Ben Boiling, CFO, ben.boiling@flynorse.com
Media contacts: Philip Allport, Senior Vice President Communications
media@flynorse.com
Norse Atlantic Airways is a new airline that offers affordable fares on long
-haul flights, primarily between Europe and the United States. The company was
founded by CEO and major shareholder Bjørn Tore Larsen in March 2021. Norse has
a fleet of 15 modern, fuel-efficient and more environmentally friendly Boeing
787 Dreamliners that serve destinations including New York, Los Angeles, Fort
Lauderdale, Orlando, Oslo, London, Berlin, Rome and Paris. The company's first
flight took off from Oslo to New York on June 14, 2022.
This information is subject to the disclosure requirements pursuant to Section 5
-12 the Norwegian Securities Trading Act and the Euronext Growth Rule Book part
II.