Norwegian Air Shuttle New

Good morning and welcome to the third quarter 2024 presentation for the Norwegian Group. My name is Jens Bartletvedt and I'm the VP of Investor Relations here at Norwegian. Today's presentation will be held by our CEO, Geir Karlsson, and our CFO, Hans-Jürgen Wibstad. It will be followed by a Q&A from the audience and the web. Please go ahead, Geir. Thank you.

Good morning, everyone. Welcome. Also, good morning to all of you that are following us online. The third quarter delivered an earnings before tax of 2 billion, the EBIT of 2.128 billion, divided on 1.9 billion for Norwegian and 192 million for Videre. Units cost is affected by the cost increases that we are seeing in general. And also some costs associated with the fact that we have late deliveries from Boeing. And we had to take in more capacity from the market, i.e. vet lease capacity, which is a generating cost. We think even if we had to take on that cost, it makes sense because We were able to fly all the good passengers and in a peak season that is in any way profitable for the company. We also saw some increases in maintenance costs. We had, I would say, some extraordinary items during the quarter in the peak season on some of our aircraft. We are also seeing as a factor of the fact that we are actually gaining market share and doing quite well in the corporate markets. We are seeing the distribution costs. are going up. We are doing whatever we can to compensate that on the top line, and I think we are actually doing quite well in doing that. Cash position, 11.5 billion. It's up 2.1 billion in the quarter, and that is after we have done an all-cash acquisition of Videre. Capacity-wise, increase of 10% year on year. Even doing that, the load factor is up compared to 2023, and 2023 third quarter was a very good quarter, record quarter for the company. And now we are as such on the record, and we are doing another record now on the unit revenue. Also, Vidre is performing well, load factor up 5.5 percentage points. Very happy to see that the commercial part of Vidre is performing well. That has been an issue over the last years in Vidre, where they have been actually loss-making. Now they are profitable. And it's also the first quarter ever where Vidre has been flying more than 1 million passengers. 450 routes divided on 350 in Norwegian and 100 in Vidre. Quite significant network. We are focusing on the operation of excellence, as we call it. I think we're doing well. We have seen a dip on on-time performance that is normal in the peak season. And we are seeing a good trend now going into the fall, where we are getting close to the levels that we would like to be. On regularity, however, we are doing fine. We are not cancelling much, close to zero. And that has also continued into the fall. We are talking to our customers all the time, so the net promoter scores is at high levels, and we are doing whatever we can to increase it. And even if we are looking at the traffic numbers in Norway actually being lower today compared to 2019 on short haul, we are seeing that both Norwegian and Vidra is now carrying more passengers than what we did in 2019. We are very much affected by the delays from Boeing. And Boeing is, as many of you know, on strike in the organization. I think they are into the seventh week of strike now. Before the strike happened, Boeing were, let's say, 11 to 13 months late on deliveries. Now, I think we can add at least three months, depending on when this strike is coming to an end. That means that we have had to kind of take down the growth into 2025. So coming from two years with a pretty decent growth, we are now going into a year where Norwegian is not growing that much due to the situation with Boeing. This is an industry wide situation, of course. And it means that there's going to be less capacity coming into the market in 2025, especially, but I think it's been lost into 2026 as well. We are doing whatever we can to work on all initiatives, both on the revenue side and definitely on the cost side to stay competitive. We have done some investments over the last year, year and a half, which we are now going to harvest from into 2025. I'll come back to the details. Also, the base structure kind of optimization is something we have been looking at in 2024 and into 2025. In addition to... number of cost reduction initiatives. Vidre is also a project that we have been working on since January when we joined forces with Vidre. We have already taken out quite a lot of synergies, but the majority of the synergies will come into effect throughout the next year and through 2025. Looking at the number of passengers, 8.2 million passengers in the quarter, 88% load in Norwegian. Very happy to see again that Vidre is increasing the load factors. 10% growth. Punctuality 74.2. Not happy with that. It has improved into the fall as expected. And then again, regularity we are doing fine. So... This is a graph that we use every quarter. It shows how we are kind of ramping up into the peak season, which we have done as well. Interesting to see that we are flying two and a half million passengers in July compared to 1.1. So it shows that the seasonality that we are exposed to and the fact that we are now going into a low season. But I have to say that September and also October is performing well. October, in my opinion, a little bit better than expectations. So even if we are increasing the capacity with 10%, the load factor is improving. Coming into the second quarter and third quarter, we have invested in quite many new routes. And it's very comforting to see that these routes are now performing better through the peak season and also into into the fall. To invest into new routes, it takes some time for the new routes to mature. And I'm happy to see that that is moving in the right direction. So unit revenue is up 2% and quite good unit revenue, I would say, in the third quarter. And again, October numbers is looking comforting. Looking at Videre, Also shows the steady increase in passengers through the year. Also interesting to see the counter seasonality that we have in Vidre compared to Norwegian, where Vidre is actually reducing the capacity in the summer, but this year keeping up a very high load and up close to 5% compared to last year's third quarter. Also very, again, comforting to see that A lot of this improvement is also on the commercial side of Vidre, meaning not only on the PSO route as such. And unit revenue up 20% year on year. And Vidre has one fifth of the seasonality that we have in Norwegian. So in that sense, it's good to see that even in a kind of low season for Vidre, they're performing well. One reason for acquiring Vidra was that we would like to have more of the internet or the connecting traffic in combination between the two airlines. And very happy to see that that has increased with 67% since we took them over. And that is in a situation where we expect the majority of that synergy actually to come when we can integrate even more the networks that will happen through 2025. And also in a situation where Norwegian will start to sell tickets on our own platform, which we are not doing today. Also good to see that the co-chair agreement with Lufthansa is starting to take effect, even if it's coming from low levels. The traffic has quadrupled since they started up that cooperation. Looking at the bookings forward, as you can see on the red line there, we are keeping the spread between 24 and 23. I think the new winter destination that we have put for sale is actually working and performing quite well, not at least through Dubai, and also the routes that we have put in place then from Europe to northern destinations. Very exciting to see what's happening in Tromsø. where Tromsø is now going this winter to have 37 international flights, direct flights out of Tromsø. I think it's 14, 15 airlines flying there. Let's see if that is potentially an overcapacity into this winter, but hopefully it's not. Looking at the bookings forward, it's also diversified both across different destinations and also on travel month. We are putting more capacity into the market this winter compared to last winter, as much as 30% in November, 19% in December. But be aware of the fact that if you count that as number of seats, it's only 11 to 12%. So due to the fact that the sector lengths are much longer, the number of seats are not increasing with those figures. Due to the fact that we are increasing the sector length at 15%, we are expecting a decline in yield, especially in November. But you have to look at those in combination. But it should improve the underlying profitability. So the additional capacity we are putting in, approximately 600,000 seats. As for today, we have sold close to 60% of those already. That is for the next three months. which counts for the 340,000 seats. Looking at, you know, we have, you know, less visibility, let's say, from January, February, compared to the closest months, but looking at the bookings that we currently have, it's looking like it's, you know, the good trend that we have seen in September, October is also continuing in then into the first quarter or next year. So, if you looked at the capacity reduction that we have last winter meaning the winter 23 24 where we reduced the capacity with as much as 25 to 40 depending on which month which weeks you look you looked at now we are reducing with 25 to 35 so you're flying more uh because we think it's uh it's more profitable as such with that answer again

Thank you, Guy. Good morning, everyone. Those here and those on the web. As usual, I will go through the quarterly results in some more detail. First, taking a look at the revenue and the revenue for the group increased to 11.6 billion for the quarter, which is up 32% for the group, taking into account that Vidra was not part of in Q3 of 23. The revenue increase on the Norwegian part is 11%. and with with NVIDIA contributing 1.9 billion NOx. As mentioned, capacity increases is quite a healthy 10% for Norwegian and we're very happy to see that that given also the significant capacity increase that has been absorbed in the market, And as mentioned, the unit revenue is up 2% and also with the load factor at the same time coming up, which is a bit different from the picture we saw in the second quarter, when we saw kind of a slower pickup on the loads and yields. But the third quarter, as mentioned, we've seen a good performance in the market, actually absorbing the capacity increase. Exterior revenues, a healthy increase from from 198 kronor to 211 kronor. That will be an important part as we move forward to improve that further. Operating profit or EBIT is 2.1 billion, as mentioned, with Norwegian contributing 1.9 billion and with Vidro contributing 192 million. It's also worth noting that this is the third quarter of Vidra and for the first nine months of 2024, actually Vidra is contributing with an EBIT of 371 million and on the back of an acquisition of about 1 billion. It's a very, very strong performance by Vidra and their team. As mentioned, the cost is a factor for us this quarter. It has been impacted by several factors, inflation, inflationary pressure, currency and wet lease on top, of course, of the of additional costs related to our salary and crew level. So which means that the unit cost excluding fuel is up 8% for the quarter or 3 EUR, which is quite significant, but it can largely be explained by these three factors, which is crew, It is a wet lease, it is technical and some additional maintenance cost. And on top of that, the foreign exchange rate, the weakening of the Norwegian kroner has had an impact in the quarter, which is quite significant. As mentioned also, the wet lease cost is 133 million for the quarter. On the back of the delays with Boeing, we had to have these kind of adjustments to enable us to service the important customers during the summer and delivering a strong operational performance for the third quarter. Strong cash position. We're coming out of the quarter with a good balance sheet, 11.5 billion in cash. We've been able to reduce the net interest paying debt by 0.5 billion or 500 million on the back of a flat cash balance and also reduced debt related to our leases. Equity ratio is on the rise at 19%, 4.5% higher than the previous quarter. And just to mention again, we've set aside money from the earnings from 2022 and 2023, and that dividend fund is now at 836 million. Initially it was 819 million, so it has yielded about 2% in the four month period, which is quite good. Taking a closer look at the revenue, bridged from Q3 23 to Q3 24. Comparing those quarters, the volume impact is 10% up. As mentioned, the yield impact of the improved yields and the loads is up 137 and 62 million respectively. And then we have a reduction on the expiry of cash points from the COVID, which has an impact of 121 million, which ends up then with an increase on the revenue side of Norwegian of 11% to 9.7 billion. On top of that is the healthy increase in contribution from Vidra, of 1.9 billion approximately, which ends up with a total revenue of 11.6 billion. Slightly more mixed picture sort of on the EBIT side. You can see the contribution from the just increased volume is 294 million. We call it the EBITR column. Then we have the combined yield and load impact of 198 million. We have the impact of the expiry of the cash points from the COVID, 121 million. We have a negative impact on the fuel combination of foreign exchange impact and other ETS and also fuel cost combination. 137 million. Then we have the CUSC, which is the combined impact of the higher crew cost and salary level, as well as some additional technical cost on the maintenance side, which is the negative 174 million. Other losses and gains is pretty neutral. And then on top of that, we have an increase on the depreciation and aircraft side. with 300 million, and that is largely, mostly explained by wet leases, but also, again, going back to some maintenance reserves and also a bigger fleet. So that brings us to EBIT contribution from the region of 1.9 billion, and a very healthy contribution from Vidra of 192 million, and that, which brings us for a total EBIT for the quarter of 2.1. 1 billion. This is just putting up the P&L in a traditional table. No big things to mention that other than that we're comparing Norwegian in the third quarter 2023, which without Widera and it's with Widera in the third quarter 2024. And so it's very hard to to compare those directly. But obviously, the impact of these kind of additional cost items is quite significant on the personnel expenses. Also, of course, on the aircraft lease and depreciation line, we see the impact of that. And also just a healthy comment on the net financial items. It is at the same level as last year, despite the growth, and that's partially due to good yields on our deposits and also money market instruments. So I'll come back to that in a minute. And then we're ending up with a net profit for the quarter of 2 billion and 4 million, which is very, very close to where we were in the same quarter last year. As mentioned, we're coming out of the quarter with a robust balance sheet where actually the total assets is down moderately by about 2 billion for the quarter. Cash balance, as mentioned, is at the same level and the equity ratio is at 19%, which is up from 14.5% previously. What's worth mentioning is that, of course, due to seasonality, the air traffic settlement liabilities is down from previous quarter and that has to do with the summer season. That number, by the way, last year was 3.9 billion. Out of the, this becomes a little bit technical, but out of the 5.2 billion, Vidra is half a billion of that. So that leaves 4.7 billion for Norwegian. And the comparable figure last year was 3.9. And that's kind of reflecting that we have good forward bookings for the fourth quarter and into 2025. So that's looking quite good, and that's kind of natural fluctuations, but it's good to see that we are kind of evidencing that we have good forward bookings, as mentioned by Geir in this particular line item. Looking at the net interest-bearing debt, very nice to see that our net interest-bearing debt is down by half a billion. And it's all purely explained by the reduction in aircraft financing, which are the leases on our books. And we're having 86 aircraft at the end of the quarter, which is unchanged from the previous quarter. I mentioned the dividend fund. We've set aside 0.85 kroner, which relates to the 2022 earnings and 2023 earnings. It cannot be distributed still, as has been the case in the previous quarters, because of restrictions in the bond agreements. And we are also investing the dividend fund in money market low risk investments that has been yielding about 2% over the last four months, which is quite good. That should be beneficial for the shareholder. at such time as we expect to pay dividend, which, as mentioned earlier, is at the latest in September 2026, when the last of these legacy bonds from the reconstruction matures. Last few comments on the balance sheet. We talked about the balance sheet quite a bit, I think, already. But seasonally reduction in the prepayments for tickets, of course, going through the low season. 2.2 billion cash flow from traditional operations of 3.3 billion positive. Investment activities of 385 million, out of which Vidra accounts for about half of that. And that will also be expected to be part of their investment programme going forward. Financing activities just as planned, 766 million, and then coming out with the same cash position as we were at the end of the second quarter. Excess liquidity, average return about 5.5%, which is the combined return from the bank deposits as well as money market instruments. We're quite pleased with that and kind of having a balanced portfolio on this side. And again, we have prepayments to date of the future deliveries of 3.2 billion on the balance sheet. And we will not be having any significant installments on the future deliveries from Boeing in 2025. Thank you.

So let's look a little bit forward. First, let's take a little bit more on the Boeing situation. As I said, there is an ongoing strike that is lasting. and we do expect it will last for at least a few more weeks and hopefully they can find a solution so they can get back on the floor to produce our beautiful aircraft. Due to the fact that we have delays, we have also been forced to take on extra costs during this summer, taking in wet leases and the delays will for sure also continue into 2025. For 2025 and the fleet, we have been planning that relatively conservatively and thereby we are kind of in the network that we have for sale today, assuming only three to four new aircraft from Boeing prior to the summer season of 2025. So we are not planning with taking in a lot of wet leases for next summer. And then we will see how many aircraft they can deliver. That said, I think we have enough capacity in order to take care of our Nordic production. So what will happen here with the few deliveries is that we are not going to do the planned extensions outside of the Nordic in 2025. This is an industry-wide issue, of course. We have not a similar issue, but we have also issues on the Airbus side where they have engine issues. And based on Cerium's numbers, there are currently 350 320s on ground. And that is expected to continue at least throughout the next couple of years. I think that number actually will go up So on the fleet, 90 aircraft next year, that's the plan and that's the network that we have as well for sale currently. Looking at the environment that we are in, and this is an environment that we have been in for quite a while, at least for 2024. where we have an underlying cost pressure on most of the operations that we are running. But at the same time, we have a local weak currency that is continuing, that is hitting us. We are exposed, especially on the net side, to US dollars. And of course, it includes fuel and it includes the maintenance side of our aircraft. On the demand, however, we see it continue to be relatively strong. And why is that? Well, might be that we think that we have reached the peak on the interest rates and that the interest rates are probably coming down in 2025. And the fact that we would probably see a real wage growth in the markets we are flying in 2025. So it seems like the willingness to travel is still there with the visibility that we currently are having. On the fuel side, we are 70% hedged. I think we have been in a good position in 2024. We are also 45% hedged now for 2025. The fuel price has come down a bit. It's in between 7, I guess, 7.20, 7.30 as per today on the fuel price. And Vidra is even higher hedged, both in 2024 and in 2025. Again, we have had to take on costs on that lease. We have been flying our aircraft, the current aircraft, longer than planned, meaning that we are also burning more fuel. than we would have had done if we had taken more deliveries on Maxis. So that is an effect. But again, on the positive side of that, there is less capacity coming into the market, which might defend the high yields we are seeing longer. But don't misunderstand, the focus into 2025 will be on the cost side of the business. We have done quite a lot in 2024. That process will continue. Also like to mention that we have ETS allowances coming to an end in 2026. The blending requirements is increasing already from 2025. That will increase the cost for the whole industry. And we are part of that. And that's why we are pushing so hard with everything we can in order to work towards the stakeholders, including the governments, to find incentives to get going on production of SAF. But even if we are seeing a cost increase in the Q3 as a standalone, and remember in Q2, we had a reduction in COSC compared to last year. We are still guiding a single digit cost increase for the 2024 as a whole. 2025 for Norwegian. Looking at the last two years, we have been growing 18% in 2022. We grew 13% in 2024 in capacity. 2025 will be the first year since the reconstruction or the pandemic that we are growing massively less than what we have been doing the last couple of years. That gives us also the ability to even focus more on streamlining the operation, work on the cost side of the business, but also to harvest on the investments that we have been doing over the last couple of years. I would like to mention a few of them. The new distribution platform is about to be rolled out. It is already live in the two, three markets where we are flying today as a test that was already live early summer in June. That gives us features that we haven't had ever in Norwegian on pricing functionality, the targeting, upselling, and many more features that we will now get. It will also give us the ability to do what I call a proper interlining. And the first thing we will focus on is to do a proper interlining with Vidra, where we will integrate kind of in a better way the systems. We will, from the Norwegian side, be able to sell Vidra tickets. And that's when we are expecting to get the full synergies out. It will also give us the ability to do interlining with other airlines, should we wish. And time will then show whether we are going to do it. continuing to work on the corporate markets. We are gaining market share there. We have been improving the product. We will probably even improve that product even more into 2025. They've also invested into the reward platform with Strawberry and other partners that will be invited, which is coming live in November. And we have over the year, last year, been signing up many big corporates, Nordic corporates, as well as a massive number of signups from smaller companies. On the cost initiatives, on time is extremely important to make sure that we run the airline very efficient being on time. On time is of course very important for the passengers. it's also extremely important to be able to run the airline as competitive on the cost side as possible base structure has been mentioned customer services we have increased the efficiency of customer service with in the area of 30 to 35 percent over the last couple of years that work is continuing we now have the ability to invest into systems that we have not had before and that is starting to really really give good results um towards the customers, but also on the cost side of their business. We have a robust financial position, as you know, that gives us better terms overall. It also gives us better terms on the credit card acquirers. We have a holdback that is historically low and is close to zero as per today. And looking at the offerings that we have on financing our aircraft, we are having offers today that we have never seen in the region before. And again, we have to streamline the airline in 2025 on all parts of the company, including the support functions that we have at Fornebu, in Riga, Latvia, and as well in Barcelona. Vidre, I think we can do cost measures in Vidre as well on a standalone basis. I know Tore has already started that process in Vidre. But then we can also take out synergies in Vidre and in Norwegian by combining, you know, typical then support functions and also in general, when we are talking about the commercial side of the two airlines. Vidre will also then join Norwegian Reward and leave Arobonis. That will happen very soon. And then again, the majority of the synergies will actually kick in and have a full effect through 2025, when we have done kind of the tweak and bends on the two networks between the two companies. So 2025, much lower growth, higher focus on streamlining the business in both airlines, work on the cost side, and then stay competitive, stay as competitive as absolutely possible. So with that, the outlook, we are growing on capacity 18% in Q4, but remember, if you count the number of seats, it is a lower figure due to the fact that we have a higher sector length. We are flying more long than what we did last year. The EBIT, 2.1 to 2.4, slightly down on the upper side of it compared to last quarter, but we are keeping the CUSC guidance at the low single digit increase compared to 2023. Just to summarise, Q3, I think it came out quite well. We had some issues, but quite well. The growth plan into 2025, as mentioned, slow growth, more focus on running the airline efficiently. And then we will work on the fleet plan going forward. Not so much for 2025 because we are pretty comfortable on the situation that we are now seeing and the network that we have for sale. And then we will take out the synergies on the investments that we have done throughout the last couple of years. That's all Jesper.

Okay. We then open up for questions. If you guys can go over there as well. We then open up for questions from the audience on the web. We can start with some questions from the audience if we have any. Please state your name, where you're from before, and then we'll take questions.

Everything is crystal clear.

Everything is very clear. We have no questions from the audience. We'll start with questions from the web. We'll start with one from Steve Furlong from Davie. How does Norwegian avoid a situation of cost overruns into summer 2025 with the uncertainty of Boeing deliveries? Do you plan for a smaller fleet than planned or a wet lease?

We are not planning for a wet lease. We have, as I said, planning 2025 conservatively, I would say. We are assuming three to four aircraft from Boeing. Um, two of them are already more or less done, um, in, in, in, on the production line. Um, so that's the plan, uh, have in mind that in 2024, uh, we employed, uh, between six and 700 new colleagues into Norwegian that has an investment cost because we have to take them in already prior to Christmas, take them in, train them. make them ready to fly, that investment will be massively smaller into 2025, meaning that the cost on investing into new colleagues is coming down. But again, just to repeat myself, we will streamline the airlines, both airlines, as much as we can going into 2025.

Then to a question from Andrew Loebenberg, Barclays. How would you characterize the competitive environment at the moment? How is that developing? In specific, SAS emerging from Chapter 11 and right now coming back with more capacity into Sweden after the aviation tax cuts?

Well, I would say that The landscape in general today compared to, let's say, three to six to nine months ago is pretty similar. What we have been seeing now lately is that the fact that the Swedish government has taken away the passenger tax down to zero from June 1, I think it's June 1 next year, that will have an effect that will make it more attractive to go into the Swedish markets. On the relative, we are actually doing quite well in Sweden today. And we will increase the capacity in Sweden as well next year. In Denmark, the Danish government is going the opposite way. They're actually implementing a passenger tax. It's going to be low on short haul, 30 danske kronor for short haul. But on the long haul side, it's up to 300. So that's quite massive, actually. But I would say that it's pretty equal to what we have seen over the last six to nine months, actually.

Another question from Andrew. How are the Norwegian unions responding to your plans to expand on your offshore bases?

Expand on the offshore bases? Yes. Well, we are expanding in the Canary Islands with a base starting up actually next week. So we haven't had any really comments from the unions on that. As you know, we are in the process of closing down two of the bases here in Norway. That was a really tough decision. But again, it is a consequence of what we are seeing around us. I think with unions, we had, as we always have, a good dialogue. But again, it is a very tough decision to take. It is a decision that we felt that we had to take, and then we will Hopefully, we will keep all those employees. They're not losing their jobs. But we have to streamline, you know, the basis that we have even here in Norway.

Moving on to questions from Ole Martin Vasco from D&B Markets. What's your current share of corporate travel? Are you able to estimate that well? And where do you see, where do you set a realistic target for that for the next year?

As I said earlier, we are increasing the market share on the corporate side. It's difficult to be very precise on how many corporate travelers that we have, but we are assuming that we have somewhere between 20 and 25 percent of all the passengers that are corporates, and that is increasing.

Another question from Ole Martin. How should we think about Kask for 2025? considering now we are looking at low capacity growth and the persistent high underlying inflation.

The lower capacity growth, that will make us doing less investments into growing capacity. So that in itself should be cost savings. But again, the focus now is to make sure that we run both the airlines the absolute, the most efficient way that we can. I think we can do measures both in Norwegian and in Vida as a standalone to reduce the costs and KOSK. But again, also when we are talking about synergies between the companies, there is absolutely room that will have a full effect in 2025. We are not guiding on KOSK in 2025 for 2025 today. We will have to come back to that.

Move on to a question from Achal Kumar at HSBC. How would you characterize the trading environment? for the coming winter versus what we saw last year?

Well, as I said, I think, you know, looking at September, which is behind us, October, which is very soon behind us, it's promising. We have said today that we are expecting a reduction in yield in November. But looking at the next three months, we are quite comfortable. The reason for the yield reduction in November is also partly because we are increasing the sector length. So the visibility that we have today on the demand side is actually okay, also into the first quarter.

Okay. I'll then ask again if there's any questions from the audience.

Nils? I see that the Boeing situation is very challenging, and that goes on, you're expecting, in relation to the pride. I'm sorry, I don't want any pictures. No, that's okay. So it is a question about... the strike and how long it continues, right? But it's also very challenging in relation to how they're financing Boeing. So what is your thought about their ability to actually fund the business going forward? And if they do not achieve that, what would the consequences be of a Chapter 11 for Norwegian? What's your thoughts about that?

Good question, Nils. Now they are into the seventh week of strike. They have told us that when they're coming out of the strike, it will probably take them two to three months to come back to the level that they were before the strike. So that's why we are saying that you probably have to add two to three months to the 11 to 12 months that they were late before the strike. as you have probably seen, they have raised raised money, you know, or credits lately. And and I do think that because they have a pretty large defense side of of Boeing and I don't have you know, I'm not the expert here on Boeing, but I think I think they are too big to fail, to be honest. And looking at the offer that we're on the table, that the members voted down this week. Let's just hope that they can find a solution. But I think it's going to probably take weeks before they are finding a solution. The latest we have from Boeing is that they are now assuming a few more weeks. What we are also seeing is that subcontractors are now, because they're not delivering to Boeing, is also starting to furlough. That applies to Boeing, but it also applies to the suppliers delivering to Airbus, because it could be the same supplier. And because even Airbus is not getting all the subcontractors to deliver, they are also now starting to cancel the order, which again feeds to the contractors starting to furlough. So the longer this situation occurs, the longer it will take before you get back to a production. I think Boeing is too big to fail. But I'm not the expert here.

I agree with you. But it's different. You know, Norwegian was in Chapter 11. You really didn't fail, right? So it's a question of how exposed are you, for instance, on the pre-claimants? Are they secured in any way? Or are they, if they did go into Chapter 11, would you lose that money? Would you become a creditor the same way the leasing companies became a creditor for you? Could you explain a bit about that?

Just to comment on Boeing's situation, I fully support the view that was shared by Gary. Right now they're in the process of what they've announced, raising $25 billion. And they have engaged serious large investment bankers to do that. So the assumption is that we have faith and we believe that Boeing will figure it out. It is challenging, but they will be able to figure it out. Having said that, should they end in Chapter 11, our prepayments are unsecured. So that's the simple answer to that. It's like any other creditor, and it's unsecured. I think it's purely speculative.

Understand, because sometimes you can have it as a secure account, right? But it's not. It's unsecured. That was my question. The second question I just wondered is concerning the prices that you are paying for the order. Have they increased since you ordered?

Yes, that's the so-called escalation clauses. But I think we have negotiated a very good escalation clause with a cap at certain levels. And I think if you look at the prices we are paying on, let's say, $24, it's still very competitive, I would say. But the prices will increase year by year. That's the normal thing.

But if you were to do a new order today, you would pay a substantial higher amount. So what happens in, potentially, a Chapter 11? Would also the agreements that are entered into, would they be subject to modifications?

Just to understand how this would work, in case that... I think that, you know, is up for negotiations and exactly like you saw when we did the reconstruction. Exactly, you're experts. Yeah, so that will be, I mean, that will be, yeah.

Thank you. Hans-Jørgen. One question on Avinor and the expected increase in aviation charges from 2025 and onwards.

think that will have some effect on your uh on your capacity plans in in norway that's a good question again uh we have uh you know as you as you i'm sure you know we have a very tight dialogue with avino we are concerned about uh you know the the you know, how Avinor is underfunded. They have a deficit carried forward of more than 2 billion NOK. We are extremely concerned on how – on whether that amount will end up with the airlines, including Norwegian. So we are doing whatever we can to make sure that even Avinor have to – you know, they have to align with the market. We have told Avinor many times that if they're increasing their fees too much, it will lead to less capacity flying on all the airports belonging to Ovinor. That will happen. So let's see. I think, you know, we had probably a bigger concern a couple of months ago than what we have today for 2025 especially, but that there will come increases, absolutely. So our take on Avinor is that they're building two new airports, one in... They're moving an airport in Bodø, they're building another one in Mo. That is going to be financed over the state budget, but our concern is that when those airports are done, they have to be run, and we will be part of paying that expense. So they have to find a balance where they have to align themselves with the market in a much better way, in our opinion, than what they have been doing so far. And then we will see. But if they are pushing it too hard, it will lead to less capacity, not only for Norwegian, but also for other airlines.

When it comes to the decision of closing the two bases. I've been just out flying, actually on time both times, so very positive. So, when you speak to the cabin attendants, you get the impression that, of course, they weren't very positive. You say you have good dialogues with the unions, but is it correct that there was kind of a massive Lots of people having sick leave and closing, and that four flights were closed that day, or is that just rumours?

No, I think – first of all, Nils, to take a decision like that is a tough one. We spent a lot of time with the unions. We spent time at the two bases where I myself was standing in front of them telling the rationale for us doing it, why we had to do it, the math behind it, to support and to try to explain that that we are forced to do it and to take such a difficult decision. And there's nothing to do with sick leave. But I think, you know, we had a reaction the first day where we had some cancellations. That's just a fact. Was that because we took that decision? Yes, it was. But it was mostly the first day after we took the decision. And then things got very quickly back to normal.

Because we have to get the cost down.

Okay. There are no further questions, so we'll conclude the session. Thank you very much. Thank you, guys. Thank you.