Welcome to the third quarter presentation for Norwegian Air Shuttle. My name is Jesper Hatletveit, and I am the VP of Investor Relations here at Norwegian. Today's presentation will be held by CEO Geir Karlsen and CFO Hans-Jørgen Wibstad. It will be followed by a Q&A from the audience and the web. Please go ahead, Geir. Thank you, Jesper, and good morning, everyone. Welcome to the third quarter 2022 financial release. I think, if you look at the highlights for the quarter, I mean, I think it's good to finally be able to have a summer that is closely at least back to normal. We were entering the summer with a hope that, you know, it would be normal and it turned out to be close to normal. We had a huge ramp up over the spring, meaning that we brought in a lot of new colleagues, and we had also a lot of new deliveries of aircraft coming in for the summer season. Unluckily, we saw that, you know, we had a few late deliveries of aircraft and we had some small ID issues also on the crew side. We had to take a decision back in June where we said that, you know, should we start taking in a few wet leases, or should we just start canceling routes? It was an easy decision because we had promised everyone that we will fly whatever we have for sale, and that's what we did throughout the summer as well. We had to take in a few wet leases, but I think it was a right decision at the time, and I think even in hindsight, it was definitely a right decision. That meant that we could go through the summer with close to 100% regularity. We had very few cancellations in a market where you had issues on airports throughout, you know, Scandinavia and the Nordics and even in Europe. We managed, I think, very well and during, let's say, July, August and September. We have seen a kind of a shift on the corporate traveler side, meaning that we are definitely taking market share over the last months, and this is one of the very high focus areas that we have going forward as well, where we are going to make it even more attractive for corporate travelers to choose Norwegian as their air carrier. We're coming out of the quarter with NOK 1 billion in EBIT, and that is despite the fact that we all know that we have some kind of headwind from the fuel side and now lately, I would say also on the currency side, where you have a relatively weak Norwegian krone. We have continued the relationship with Widerøe and you know, yesterday, Widerøe was starting to sell kind of a seamless trip between Widerøe and Norwegian on the domestic Norwegian market. We will follow up inter-Nordics and European flights as well during the current quarter. We are focusing still and will be into next year even on the cost side of the business. We are coming out with a CASK of NOK 0.39 for the quarter. I think it's okay. We had hoped for slightly better. If you take out wet lease costs that is also included here, you are in real terms down at approximately NOK 0.36. That is kind of the number we like to see. We will continue to push on the cost side, going into the, you know, the current quarter and into next year. We have been building liquidity over the quarter, so we're coming out with NOK 8.2 billion in cash, and that is also including that we have paid Boeing NOK 650 million during the quarter in PDPs on the 50 aircraft order. As per today, we have paid into Boeing approximately NOK 3.2 billion into that order of 50 aircraft. We are coming out with 88%, close to 89% load, which we are very happy with, 6.1 million passengers over the quarter. I think the load factors are starting to stabilize at a relatively high level. We are seeing 95.5% in July and then 85% for the two next months. Capacity-wise, we increased by 17% and we also are celebrating 20 years this year. We started up, as you remember, in 2002, and it's quite amazing that we have been carrying more than 300 million passengers over the last 20 years. Looking at the summer traffic, I mean, Q3 was a record historical high, record on load and definitely on unit revenue. We are coming out with, as I said, 6.1 million passengers and high load factors and high yields. Very happy with the quarter. As I said, punctuality, struggling a little bit, but on regularity, we are close to 100%, meaning we are flying what we have for sale. Very happy about that. We are also seeing kind of the same tendency holding up into October and November. We have, I would say, stabilized the load, which means that in October, we have also quite, you know, quite high loads. Even if we are kind of having low visibility when it comes to booking because the booking curve is relatively short still. Looking at October, you know, we as I said, stable load and let's see whether we can beat September on both yield and RASK. It's looking promising. With stable load, that will be with some kind of a reduced capacity. We have told you know, you guys that we are reducing the capacity into the winter with approximately 25%. That is the plan that we actually made back in 2021. This is nothing new as such, but I think it is the first time we are reducing capacity into the winter season of this size that we are now doing. This is absolutely necessary, and we are having the flexibility that we have been talking about so many times, where we can actually take out capacity and the cost associated with it into a season where the demand is decreasing. That is important for this winter, and we have already started the work to make sure that we have the same flexibility for the years to come. The first winter will be the next winter, 2023, 2024. For the summer season, we have 274 routes for sale as per today. As we all know, we are bringing in 15 new aircraft next year, all MAXes, and we have not launched the full summer program yet. We will do that before Christmas. The 15 new aircraft will be split, not evenly, but it will be split between the bases that we have in Scandinavia as well as in Spain. We have also said that we're opening up a new base next year in Riga, and that will, as it looks now, consist of two aircraft to start with, and this is the small little step we are doing in Norwegian to move out of the Nordics, again. It is a kind of some kind of a test and, so let's see how it develops. The new aircraft and the new routes we are going to put for sale shortly will be a split between, let's say, more frequencies on the routes we are already flying. It will be new routes that we used to fly, and it will also be new routes and new destinations, hopefully. Let's see what we are gonna disclose to the market in a few weeks time. On to the corporate travelers side of the business. We have seen over the last month a pretty drastic shift where we are definitely taking market share. We are seeing that you know the revenues from the corporate market has passed 2019 as per today. If you look at the main destinations typical corporate destinations we are flying, we have also passed 2019 when it comes to number of passengers. This is very encouraging and you know even if we have had a focus on the corporate travelers, it has not been our main focus because we have had the main focus on the leisure side of the market. Going forward, we will be much more focused on corporate travelers, and we are seeing now due to the fact, which I think is the fact that we have really delivered in 2022 on regularity. We have the frequencies, we have the network, and we are starting to have the right time schedule as well for the corporate travelers. When we have passed the revenue compared to 2019, that is despite the fact that the business market in general, as we believe it, is maybe only back with 70% compared to 2019. A part of the initiative into the corporate market is also the relationship with Widerøe. We know that the traffic flow between Widerøe and us/SAS as per today consists of a lot of corporate travelers. The aim is to take a share of that market, and I think we are definitely on the right track to do so. We have also been running some studies over the last months and especially towards the large corporations in Scandinavia, and we are seeing a shift where many of them are now saying that more than 50% of the traveling they're doing is with Norwegian. That is a nice development that we are focusing on also going forward. With that, Hans-Jørgen, I'll let you have the stage. Thank you, Geir, and good morning, everyone, and good morning also to those on the web. I would like to go through the quarterly results for the third quarter. Before I go into the details, I think from a financial point of view, I would say that the third quarter was a good quarter for Norwegian. We delivered strong revenue growth of about 50% compared with the second quarter. We deliver a solid EBIT result exceeding NOK 1 billion and also a earnings before tax of NOK 910 million. It's a strong overall result. It's a good performance, and also this is translating into the balance sheet where we're seeing that our net interest-bearing debt is actually coming down despite us adding aircraft to the business. We're seeing that our equity ratio is also approaching 20%, which is quite a big change from when we look back. Overall, I think the overall picture for Norwegian, looking at the third quarter from a pure financial point of view, is good. It's been a good and solid quarter. Looking a little bit on the deep diving into the figures. The reasons for the good revenue growth are several. Of course, we have record high unit revenue of NOK 0.78 in the quarter, up from NOK 0.62 in the second quarter. We have strong passenger growth to 7.9 million passengers, and also combined with also a good good revenue coming in from on the ancillary side. a good quarter overall on the revenue side. Looking at the cost side, we see, as Geir mentioned, a CASK level of 0.39. I will do a small deep dive into that later. We're seeing that it's improving from what we've seen earlier, of course, also because the activity level is picking up. That's really good, but we'll do a more deep dive into that a bit later. We also see that the earnings is very good at NOK 910 million, and the EBITDA is really changing from the second quarter where we had NOK -214 million, and now we're reporting an EBITDA of NOK 1.5 billion. It's also worth noting that in this quarter, there is no extraordinary kind of one large one-off events, which is impacting the numbers significantly, so it's kind of a good estimate of the underlying operating result. That's also worth noting. Of course, the results are also impacted by the high fuel price, like Geir said, and we have, although the fuel price is a little bit lower than the average for the second quarter, the fuel price is quite a bit higher than it was in the beginning of the year and also last year. That is, of course, impacting quite a bit. If we are comparing in isolation the fuel price, had it been at the level at the beginning of the year or late last year, our fuel cost had been. It's almost impacting us in the area of NOK 1 billion in terms of additional cost. It's really quite significant. As I said, this is translating into a balance sheet development, which is very positive. Of course, with the cash balance at NOK 8.2 billion, which gives us very good robustness going into the low season. This is despite us paying PDP or prepayment to Boeing of approximately NOK 650 million in the quarter. The cash balance is up from NOK 7.5 million in the second quarter. It's of course natural because we are at the end of the high season and the cash is translated into our balance sheet, but it is of course a very good development. As I mentioned earlier, the equity ratio is now approaching 19.6% or 20%. Looking at a little bit further deep dive into the figures, the passenger revenue, as I mentioned, is up 50%, strong increase, taking into account that our ASK is increasing just less than 20% in between the quarters. We have higher load, higher unit revenue, more passengers, and in total, this is translating into 50% increase in our revenue. That's a strong growth compared with the second quarter. Fuel price, I've said it's elevated, and it may continue. Who knows about the future? That's just something we can expect, and that's how it's kind of the macro environment we're living in at the moment. On the other cost lines, there is no really big impact other than the fact that we are ramping up the business. There is more activity level, and also there is a negative impact of the higher U.S. dollar on our numbers. Obviously, some of our costs, certain, for instance, airport and also on the euro. Obviously handling charges, airport charges, technical maintenance expenses, some of those expenses are U.S. dollar denominated are expenses in other currencies than NOK. This of course has an impact on the numbers. Going further down to the aircraft lease and depreciation amortization, like I said, we have had also in this quarter a small negative impact from wet leases, which has been a good decision by the company to actually take those wet leases in. At the same time, it has cost us some additional money, but that's in order to, you know, ensure that we're actually delivering to our customers and our customer promise when there have been delays in deliveries of the aircraft that we have had on, let's say, on order that we've been waiting for. Overall, this then goes into EBIT of NOK 1,032 million and a profit before tax of NOK 910 million. Doing a little bit more of a deep dive into the CASK figure, which is a key KPI for the business and how we measure it very tightly. We can see on the top there how the fuel price is really has increased from maybe around EUR 15 or NOK 0.15 in the beginning of the year and also last year, up to a level exceeding EUR 30 or NOK 0.30, and coming a little bit down in the second quarter, but still really impacting the business quite a bit. That's of course going for all the airlines that we have. What's worth mentioning on the fuel side that we have slowly started a hedging portfolio now, and so we have hedged about 5% of our expected volume for 2023. We're happy with that. The curve there has a downward slope, so we're actually hedging at significantly lower than the current spot price. That's good, and that's something we are considering to continue to hedge a little bit more going through the winter, depending on how the oil price and the fuel price of course fluctuates. Otherwise, it's reasonably stable. We can clearly see how the personnel expenses is coming down due to higher block hours, i.e., more flying of our crew. We had a lot of training, we have recruitment in the second quarter, so that's nice to see those costs coming down on a unit basis. Then, of course, on the other costs, we are not really. It's reasonably stable, but you can all read this really. Some are up, some are down, some have a deviation due to the dollar appreciation. So that's kind of under control, but this is something we're watching very carefully and it's of course something which we will have a lot of focus on going through the winter and how we can ensure in an inflationary environment that we're able to keep the CASK under control, as it really has a large impact on the profitability of the business. I mentioned earlier, also on the lease expenses coming down, a part of that line is of course the wet lease, which as I said earlier, had an impact both in the second quarter and the third quarter. We're slowly redelivering the last wet leases in the fourth quarter, so hopefully as we move into the winter, and for sure as we move into the winter and towards Christmas, we will not have any wet leases in our fleet and hopefully a very limited number of aircraft also in 2023. Right. A little bit more on the details on the balance sheet for those interested. Our tangible assets has come up naturally. We have two more aircraft now than we had at the end of the second quarter. There's also been an appreciation of the U.S. dollar that I mentioned, which is impacting the balance sheet. What's very, very positive is that the holdback from the acquirers has come down from about 65% at the end of second quarter to 56%. That's really improving our cash position, which relates to how early we get the cash after the customer has actually ordered their ticket. That's coming down, and that's really because our credit standing is improving. Our credit metrics with the acquirers is improving, enabling us to get the cash earlier. That's a really good news, and we will continue to drive that thing, hopefully coming further down as we move through the next quarter and our credit metrics further improves. As I said, the cash obviously talks for itself. It's the net of all the other factors, NOK 8.2 billion, so that gives us a robust position going into the winter season. Also it's good to have that kind of buffer, you know, with the kind of macro and macroeconomic uncertainty that we're all facing as a society. Right. I think, you know, all of this translates into an equity ratio, as I said, of 19.6%, which is up from 15.1%, and we're very happy to see that. Also with the net interest-bearing debt, which is very important in our credit metrics and something we measure clearly, and despite the fact that we've added two aircraft to the business, the net interest-bearing debt is coming down just a little bit, moderately, but it is a sign of a robust and solid balance sheet as we move into the winter season, also into 2023. A few more words finally on the cash balance and how that went from NOK 7.5 to NOK 8.2. I think I've touched upon that for the most part already. NOK 1.7 billion out of operating activities, out of which the holdback is contributing about NOK 300 million-NOK 400 million, and the remaining is from the pure operation of the business. We have done a prepayment of the 50 aircraft we ordered from Boeing of about NOK 650 million or NOK 646 million. All together, we have now paid in, including the previously paid in prepayments, NOK 3.2 billion, which means that we are very much in control of that order. The aircraft will come into the business in later years, and we are very confident about our ability to finance these aircraft as we move forward. We have a strong. We've already paid in a significant amount of the prepayments. There is limited further prepayments. There is a small prepayment at the end of 2023 and some further amounts in 2024, but it's lower than NOK 500 million over the next two years, which is in our kind of world, it's limited. We're working very hard, and we have a lot of good dialogues with financiers on how to finance these aircraft order. We're not worried at all about how we're able to finance these aircraft. Geir Karlsen will talk more about that later, when we're seeing how these 50 aircraft is actually only substituting the existing fleet that we have and that we're redelivering of older aircraft. I think that's really summarizes the cash position and how our balance sheet and giving us a robust and a good position as we move into the winter season and also as we maneuver into 2023 and the exciting opportunities that are ahead of us in that year. Thank you. Geir? Yes. Thank you. Let's do it again. Yep. Looking at, just have a short look at, the fleet plan going forward. For 2023, we have, that's kind of old news. We have signed up 15 new aircrafts, all MAXes that will come in, most of them during, let's say, into the summer season, next year. What we are trying to do is to have all new deliveries coming into the company in the spring, and then all the redeliveries will be redelivered then through the fall, for the years to come. We have also signed up 11 new MAXes for delivery in 2024. They're all coming in, as early as possible, as I said. Next year we are bringing the fleet net up to 82 at the end of the year. We have the redeliveries in 2024 and 2025. Net we will come out with 82, while we will fly a few more aircraft during the summer season next year, and the same in 2024. You could say that even if we are taking 15 plus 11, it's 26 aircraft into the fleet over the next 24 months, the net is less because we are redelivering as well. If you look at the peak here in 2025, we are looking at 90-91 aircraft. It's not like we are growing massively, but have in mind that since last year we have grown with 40%, going from 50 to 70 aircraft. Then we are throughout the next 24 months growing with approximately 25%. That is it. That is how it looks. I've also said many times that we would like to get up to 90,000-95,000 aircraft because I think, you know, that's when we can take out the scale effects on the organization that we have today. I think it's a good thing that we are then moving from two MAXes flying today to 28 MAXes within the next 24 months. These aircraft are burning, we are saying 14%. I think in real terms, with the network that we are flying is more like 16%, 17%, 18% less fuel burn than what we are flying today on the NGs. I have been flying the MAX as a passenger a little bit during the summer, and I have to say that it's more comfortable to fly a MAX with the we are saying a 40% lower noise level in the cabin, and that applies also in the cockpit. We are seeing that our own pilots are really enjoying flying the MAX. As Hans-Jørgen said, on these 50 new aircraft we have bought, we have already paid in NOK 3.2 billion. Looking a little bit forward, as I said earlier, you know, coming out of Q3 into Q4, October is looking good. I think we will be able to have comfortable load levels also for November and December. Visibility on yield are not 100% as per today, but you know it. Q4 we think is going to be okay. We are having headwinds, as Hans-Jørgen said, on fuel and on FX. I think, you know, if Q1 next year is a quarter that we are following very closely already these days, and we are ready if needed to do more actions. We are following the plan, as per now for Q4 and Q1, on the capacity reductions that we will do. It's all about ramping up again into next summer. We are hearing that other airlines in the market are struggling to find people both in the cockpit and in the cabin. We don't see that in Norwegian these days. We have been running a campaign in Denmark over the last weeks where we are going to take in, let's say 100 to 150 new colleagues, and we have had more than 1,300 applications for those positions. We are looked upon as an attractive company for sure. That applies also to Norway. We have to be a little bit careful throughout the winter, and then at the same time we are going to bring in more than 600 new colleagues into the company over the next six months to be ready for the summer season next year. Robust balance sheet that has been, you know, mentioned by Hans-Jørgen, that's a good thing. We will continue to strengthen the balance sheet going forward. That's the aim, because we think it is absolutely necessary in order to do well in this industry going forward. The business travels I've been through, the Widerøe cooperation, I'm really bullish on what that can give Norwegian and our passengers. We are doing well on the so-called NPS scores that we are following very closely these days. We are also continuing to win rewards. The latest one is the Best European Airline, Danish Travel Awards that we got a couple of weeks ago. The good thing with that reward is that it's actually voted on by the passengers as such. That's good. We are expecting a reduction now of course in demand. We will respond to that with a reduction in capacity. We will try to optimize the next five to six months, and then with you know, on the results side and then moving into the summer, with full speed again. I think that's it, Jesper. Okay. We will then open up for questions. We will start with the questions from the audience. If you could please raise your hand if you have a question. The microphone, please. Thank you. Peter from ABG. On the holdbacks, I think you mentioned that the reduction in holdback had a positive cash effect of NOK 300 million-NOK 400 million in the third quarter. Is it possible to give some estimate on how that will, let's say, boost the cash flow also in Q4? And is that the end of it, or do you expect that to continue to have a positive cash flow effect also in 2023? Thank you. We have excellent dialogues with the acquirers, which are credit institutions, and they have their credit metrics. That has been, you know, the level has been moved from more than 100% at the end of last year now to 56% this quarter. Our objective, and we think it will go further down. It's a process, and we cannot promise anything, but for sure our objective is to come below 50% and then gradually, hopefully even further down from there. It's, you know, the big chunk of the improvement has already been taken. But I think we hopefully we will get below 50% in the next couple of quarters. That is the objective. The improvement in cash flow is relative. When I say NOK 300 million, is what it had been had we had the previous percentage. It's kind of that's this is the kind of parallel how I measured NOK 300 million-NOK 400 million. Okay. Thank you. A final question from me, that goes on the competition situation. Can you shed some light on how you see your different markets? I mean, domestic Norway also, you know, flying out of Scandinavia down to Europe. Thank you. I think what we are seeing is that, you know, in, let's say domestic, in the domestic markets, we are flying domestically, as you know, in Norway, Sweden, Denmark and a very small portion in Finland. I would say that, you know, what we are seeing is that, you know, you have the Ryanair coming in a little bit more into Scandinavia. We believe that they will place maybe two aircraft in Copenhagen next year. We are seeing that other players, like Wizz, like Eurowings, are actually decreasing the capacity now in the Scandinavia. I think in the Nordic market, we are seeing, or let's say in the Norwegian market, we are seeing that our friends in Flyr are reducing their capacity domestically while they are keeping the international kind of routes. I think all in all, you know, we are fine with the competition. You know, we are also starting to see due to the kind of, you know, the high oil price that it is actually starting to feed into the ticket prices. We are quite comfortable with the situation as is. We don't see any major differences at least in Scandinavia over the next, let's say, six to nine months as it looks today. Okay. We will now move on to questions from the web. We will start with Achal Kumar from HSBC. Can you give some color on the winter trading environment and in terms of capacity guidance? Well, if you look at, you know, first of all, if you look at this month, current month, I think, you know, the ASK in Norwegian is actually, I think is up 3%-4% compared, actually compared to September. But then from November, we will then reduce it, as I, as we have mentioned, with, I would say at least 25%, which has been the plan, all the way. And we are continuing with that until the end of Q1, and then or at least led to Easter, approximately. You know, due to the relatively short booking curve, we are, I would say, comfortable with October and November. December is normally, you know, relatively okay month due to the Christmas traffic. The uncertainty here is really related to Q1, first of all, I would say. That's why we are looking into Q1 again to see if we should do some amendments, you know. It's not going to be anything drastic, as it look today. Q1 is kind of the question mark. We know that we have the headwind on fuel and FX as well. At the same time, we are seeing that if you look at the spot price on fuel today, it's probably close to NOK 1,100 a ton. We did some hedging yesterday at low 900s and I think if we can do. Yeah, I think we'll probably do a little bit more hedging in the short term. Okay. Next question. You speak a lot about corporate traffic. Are there going to be any upgrades or changes to your products offering? Yes. Okay. There is going to be changes. We have been working with this for a while. We do plan to launch some news on that prior or before Christmas, so within the next few weeks. Okay. Last question from Achal. Cost targets for the next year? Well, I think, as we mentioned in the report, our target is to come below the level of 2022. It's hard work from the organization. We will continue to drive that process downwards. Working against that is of course the inflationary pressure that is also hitting us in 2023, so we have to work very hard to reach that goal, but that is certainly the objective to end up lower than we've seen in 2022. Okay. We move on to questions from Jaakko Turunen from SEB. Looking towards 2023, do you expect the weakening household disposable income to have an impact on the leisure travel demand? Well, there is a chance of that, but you know, but again, I think you know, if you look at the kind of valleys that we have been through, meaning that you know, the macro economic factors is playing a role. I mean, people normally you know continues to travel and especially on the leisure side. Yes, we are prepared for something if this continues. You know, we have high interest rates, we have inflation, you know, we have the electricity crisis ongoing. Yes, it will most likely have an effect but at the same time, you know, as we say, we don't really see it in the bookings so far. But we are, you know, prepared if that should happen. Okay, next question from Jaakko. You are again looking at markets outside the Nordics. What are the lessons you have learned from the past, and how can you use this in a good way to make sure that you have profitability at your new bases going forward? I would say that, you know, we have a fleet today of 70 aircraft growing to 82 next year, and that is because we think that the demand is there. We will grow for the next years in line with the demand. We also said that we are moving outside the Nordics next year with a relatively small base in Riga. We see Riga as an opportunity to do steps outside of the Nordics, but at the same time, we feel we are seeing that Riga is actually, and the countries around, is just an extended part of the Nordics. This is also a way for us to. We have a quite huge office in Riga today as well. We see this actually as a kind of an extension of the Nordics where we can also use a base in Riga to fly into the Nordics. We will do both into the Nordics and then we will give it a try also to fly outside. It's in a small scale, at least for now. Okay. We move on to a question from Ole-Martin Westgaard at DNB Markets. How do you see the competitive landscape going into the winter given, let's say, the financial difficulties of Flyr and SAS? Well, what we are seeing from SAS these days is really that, you know, they are, you know, obviously in the market. Lately we are seeing that they are a little bit more aggressive on the pricing. They are getting kind of closer to us. They are, I would say, in general terms, moving towards us as well, also on the product offering. That is, I would say, as expected. We need to just push on and make sure that we can stay and improve the, you know, the way we are competitive going forward. On Flyr, yeah, as I said, they are reducing. They're more or less leaving Norway domestic, flying only, I think only to Bergen and to Trondheim for the winter. We look at them as just another competitor. That said, I think, you know, if you look at the Norwegian market, you have, let's say you have, you know, 70+ aircraft placed in Norway today, plus the Flyr with the 10-11. I think that is overcapacity. That's too many aircraft. Okay. I believe that was the final question, so we'll then conclude the session. Thank you very much. Thank you. Thank you.