Norwegian Air Shuttle New

Good morning and welcome to the second quarter presentation for the Norwegian Group. My name is Jasper Hartlutveit and I am 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. As this is a very significant day for Norwegian, we will also hear some opening remarks from our Chair of the Board, Svein Harald Egal. The presentation will be followed by a Q&A from the audience and the web. Please go ahead, Svein Harald.

thank you good morning as you said this is a quite a special day and therefore i decided to join and present two pages first and even take on my red tie on the warmest day in oslo this year why is it a special day well it's because it's the end of the first leg of the post restructuring journey of norwegian and the start of the second leg There's an important number to note, which is 5.8 billion Norwegian kroner. First, a bit shortly on where we are. We have laid the basis basically for a sustainable, profitable airline. We are best in all the four Nordic countries. among the leading airlines measured by value for money, basically providing value to our customer at a low cost, which of course is the core of the vision of Norwegian. We are leading in Europe on on-time performance with close to zero cancellations. We are high on customer satisfaction and brand recognition across all four large Nordic countries. We capture market shares for corporate travel, which of course is an important value driver for the airline. And we have expanded Norwegian Reward into a very attractive loyalty program with attractive benefits. We are centred on the root profitability. No big moves, but a step by step approach that basically builds profitability in a sustainable manner. We will fill the market with necessary capacity, basically providing whatever capacity is needed across the four Nordic countries. And we add profitable roots one by one. We have, as Guy will talk through, numerous initiatives to lower cost and manage seasonality, which of course is a key driver for the Norwegian and an area of major differentiation compared to the situation in the past. We see that we are actually among the global leaders in aviation measured by EBITDA margins, basically the operating margins from our activity. But we have had way too much leakage in the high ownership cost of our airplanes, which basically leads to a high EBITDA margin, but not similarly high EBIT margin. This is something that we have addressed now through a number of initiatives. Those initiatives and their delivery is not by coincidence, but it is a result of a deliberate effort by the management to take charge and basically do whatever is possible to lower our ownership cost, basically the cost of the airplane, including the capital charges. And we see further initiatives working closely together with the leasing companies, of course, also leveraging the strength of the balance sheet that we now have in Norwegian. We have also grown through complementary business ventures. We acquired Vidre, the regional airline in the Nordics, in 2024 in 100% cash acquisition at the price-earning ratio of around two. It's a strong customer proposition with seamless interlining, And we see a lot of potential also using this as a way to drive increased inbound travel, which of course is incredibly important for Norway, for the tourism and for the regional part of Norway. This business combination only gets better on a day by day basis. So there's no doubt at all that this was an important move for Norwegian that really took us a big step forward. A bit surprising to some, but really something that has paid off in the big way and that will pay off further in the future. Similarly, with Spen, it was a big investment by Norwegian to spend the time on developing a completely innovative loyalty program close to Nordics. It was a big investment and also basically stepping a bit outside the normal remit of an airline. But again, we see a huge upside potential, more to come in the years that follow. We already have strong partners in the Nordic hotel chain, Strawberry, and of course, one of the largest Nordic retailers, Reitan Retail. Up on the right hand side, we see the group revenue with quite a remarkable growth since 2022. The second chart basically shows that this has been achieved in a profitable way. So basically modest profitability pre-pandemic, huge losses, of course, in the years of the pandemic, and then sustainable profitability the years thereafter. And based on consensus for 2025, the black box on the right will get much larger. The fleet has also grown, of course, grown through organic growth in the legacy Norwegian fleet and also through the Vidre acquisition. Then to the chart that indicates why this is a special day. We are, as I said, at the end of the first leg of the journey, starting on the second. In 2021, in the pandemic, we emerged from reconstruction. First, we paid 825 million NOK in claims to various creditors. In 2022, we paid down on what's called a retained claim bond, basically a bond that reflects the claim, again, of the creditors. We paid down another 35 in 23, and also we did a full repayment of a specific Norwegian bond called NAS13 for around 450 million NOK. Then in 24, we went on and did a new repayment. And then what we are now doing is a major step. First, we spend 90 million NOK to buy back the so-called hybrid bond, which then helped us to avoid a major dilution of the shareholder value. And we have also now announced and we will execute on that in August that we will set aside around 3.1 billion NOK in a deposit that basically reflects the remaining claims from the refinancing, which take us to my number of 5.8 billion, which is basically the money that Norwegian has earned over the last years, that has been used to repay the debt in Norwegian, Gamle Moro, from the pre-restructuring years. It's a debt of honor that we now have fully honored, and that, of course, by doing this, we are at the end of that journey. We will then start on our next journey, basically doing the payment of the inaugural dividend and also of course introduced a policy of annual dividends from Norwegian. The dividend today that will be paid out in August is the first ever in the history of the airline. This is quite remarkable. The airline industry of course has a tradition of Some airlines receiving a lot of support from governments. The Norwegian government did provide a crucial rescue loan to Norwegian in the pandemic. We did not get any subsidies or support as others. We got a debt instrument. We are very grateful for that. And of course, it helped to save Norwegian, to save the workplaces and to save the Norwegian aviation industry. This contribution from the government has actually yielded, which is extremely rare, a positive nominal return. Basically, the government got this money back. They were able to participate in the business upside efforts of management through the convertible loan mechanism. They realized a profit as this was then converted and furthermore, as they sold shares in the market. They have a remaining creditor position which is now secured with a deposit of 3.1 billion NOK where they are the largest holder that we will again pay into a closed account in August. This was the sole state funding ever received in the company history of Norwegian and it has now been repaid in full. And I would like to make that crystal clear with all the commentators that comment on government support to aviation. This marks a shift as dividend now can be delivered. We'll have a capital structure that's fit for purpose, basically through the call and the buyback of the convertible bond and the deposits of the outstanding amount, as I mentioned. We will then distribute the money that we set aside in the dividend fund around basically 90 euro, 0.9 NOK per share in dividend. This will of course be positive in addition to the gains for the shareholders by the reduced dilution as we brought back some of the hybrid loans. The payment of the dividend will happen as soon as possible. And it's targeted for August 2025. With that, I'll end my part of the session. And of course, give the word to Guy, who leads the effort. And of course, management of Norwegian has done a tremendous job in these years. So it's a good way to celebrate the effort. And I will give the word to you. Thank you, Guy.

Thank you for the kind words. Good morning to everybody. Also to the guys listening in online. So let's focus on the second quarter of 2025. And EBT of 1 billion and 55 million NOK. EBIT of 1.25 billion divided on 1 billion and 25 million for Norwegian and 225 million for Videre. This is a significant improvement from last year on EBT, which is up 577 million year on year. Operating margin this quarter at 12.2%, which is up Again, from 6.4% last year. We are impacted by cost increases on several areas, especially on ATC, air traffic control fees, as well as airport tariffs throughout the network where we are flying. Despite that, we are this quarter guiding the cost for the full year down a step. I will come back to the details on that. Record Q2 unit revenue capacity growth is coming down to only 1% in the quarter compared to the same quarter last year. And the low factor is up 3% year on year. Videre is delivering very well this quarter, load factor up 4% and an all time high quarter with regards to number of passengers, close to 1.1 million passengers. Dune especially delivered well with a record monthly revenue in the company's 92 years history. Operational excellence is very important, as we all know, and we are doing quite well on that area. On-time performance, 86%, up five percentage points year on year. Regularity, 99.7%, which means that we are not cancelling. We have said all the time, we have a network for sale, we will fly the network, and we will not cancel, and we will be, to a very large extent, on time. We are working on a daily basis with our customers, the passengers. We have a so-called MPS score, which is high. We are now at the 50 level, which is high regardless of who you compare us to. And we are very focused in it. And we are working very hard to even move even higher than the 50. We are the airline in the Nordics with most direct routes. And as we say in Norwegian, why? Connect when you can fly direct. Corporate market share, I will come back to in more detail. We are gaining market share. And as Svein Harald said, it's very promising to see how SPEN is developing, onboarding new partners as well as new members. And we are also on schedule when it comes to the Reitan Group getting on board. As it looks today, a couple of the brands within the Reitan Retail Group will come online and live during 2025. We are working on the fleet and the asset side. We have, during the quarter, acquired 11 spare engines. This is the latest technology from CFM, the LEAP-1B engine that will be used on a MAX 8 aircraft. Deliveries in 2027 and 2028. And this is for us to secure the capacity needed and to take down the costs on actually having spare capacity when we have to take engines off the wing for maintenance for years to come. We have also, as Harald said, purchased three additional aircraft. This is aircraft we are flying and this is aircraft where we have been flying since they were new. And we are going to book again on that acquisition of 260 million in the third quarter. If you add in the 10 aircraft that you bought in the first quarter, we are talking about the cost saving on an annual basis for years to come in the area of 225 million a year. Liquidity increased during the quarter close to 14 billion. We have financed the 10 aircraft we bought in Q1. It's all done. It's all finalized. It's all completed. And that reflects also the cash position of close to 14 billion. We have called and partly bought back and converted the convertible bond, as mentioned. And we are also then depositing the so-called outstanding amount on the retained claim bonds, 3.1 billion. That takes us into a position where we can pay dividend, which we will do. And we are today declaring 0.9 NOK per share in dividend that we plan to pay out to our dear shareholders. in August this year. Traffic figures, 7.6 million passengers, 4% up year on year. Load factor 85.2 in Norwegian, 3 percentage points up. Very good to see that Vidre is also delivering on load, 73.9%. That is four percentage points up from the same period last year. Functionality, 86%. We are happy with that. We are very happy with it, actually. We were beaten by Vidre, 89.3%. Very impressive. And then on regularity, as I said, 99.7%. And Vidre also at very high levels at 96.7%. Looking at the traffic figures, I think we have been planning the high season very well when it comes to the availability of aircraft as well as availability of crews. Now it's all about executing the high season. And so far it has gone very well, I have to say. As you can see on the red line there, we are still filling our aircraft with between 80 and 95%. Very happy to see the 88.4% in June, followed by one in yield, which is kind of showing the strength in the market. And I will come back to how it looks going forward. The yield is also up 6% year on year. Obviously, you have an effect on the Easter effect, as we call it. But we have the highest June load since the pandemic, which is really, really promising. Looking at the Videre figures, it's the same story, really, that we see in Norwegian. Closely 1.1 million passengers during the quarter, 8% up, and the highest ever. Very promising to see. Load factor up, increased to 74%. And as I mentioned, June, record high passenger numbers, as well as revenue. We are following very closely, obviously, between the two airlines, the interlining traffic or the connecting traffic, the traffic that touches both airlines. That is one of the reasons we actually acquired Videre, and we are seeing that on an annual basis, this traffic flow has increased by close to 40%. We have just been taking live our new distribution platform, the new booking engines, as you all can see when you book tickets with Norwegian Today. This is also giving us the ability to interline, meaning that we can connect to Videre, we can start selling Videre tickets on our own website, and we can offer a much better product to our passengers, where we can do a seamless travel and you can have one ticket and then travel between the two airlines. We think that this will give us an effect on traffic flows and it's actually a much better product as well for our customers. This is coming live during this quarter, meaning the third quarter of 2025. This is also a milestone and ends kind of the project where we are shifting out the distribution platform in Norwegian. EBIT of 229 million and up 27 million from the same period last year. Looking at the bookings going forward, as you can see on the top left side there, you can see the blue line that shows the softening that we saw in the market last year when we entered into the second half of May and into the rest of June before it started to pick up again. Looking at the red line, you can see that that didn't happen this year. We were kind of a little bit worried when we came into May whether we would see the same slowdown. which we definitely did not see. That's why we ended up with a very good June, both in Norwegian and in Videre. That level has actually continued through July and for the coming months as well. This applies to the whole network, really, both on travel months and on the different destinations. But again, we are coming from a quarter with 16% growth. Now in this quarter, we have only 1% growth. And now we can harvest on the investments that we have been doing, building up the capacity. And now we can take out the full effect of it during the high season of 2025. Looking at the right side, you can see the red line, which shows the book revenue for travel from July to October this year. You can see that we have surpassed 2024 and we have massively now surpassed what we saw in 2019. So as per today, we have sold close to 10% more tickets for travel during these months. which means that we are coming into July, August, September, October with a higher load than how it looked last year. And even more promising, we are also up on yields. If you remember the last quarter where we stood there a few months back, we guided a flat yield for the coming months. Now we are guiding a yield that is up. So the bookings heading into the rest of the summer season and into the fall is looking very promising, I have to say. Corporate travel. When we are reading the Avinu figures, they are telling us that the corporate travel domestically in Norway is 11% below what it was in 2019. International travel, 15% below. If you look at the graph here on the right-hand side, you can see that we have been growing the number of passengers in the corporate market with 22% since 2023. If we had shown the revenue increase for the same periods, the increase would have been even more. So we are for sure taking market share, we have been taking market share, and this graph shows that we are actually keeping the market share as well. We are talking to the travel agents all the time. They are telling us these days that the corporate market has been growing 4% ish during 2025 so far. But they're also telling us that Norwegian is growing more than double of that, which means again that we are taking market share. And more and more of these agents are saying that, you know, people are traveling more than 50%. with norwegian in the corporate market why well i think we have a an attractive product we are on time we have the necessary frequency in our network we have a high regularity and we actually have a pretty good product that that is attractive and is getting even more attractive as we as we go We have also been focusing a lot on the so-called small and mid-sized corporates. We have signed up more than 1,200 new contracts so far this year, and that applies to a growth in all sales channels. Also very happy to share that we have signed up a contract with the Swedish state, so-called Kammarkollegiet, which is a four-year contract and will cover domestic travel. for the next years in Sweden. Also on the interlining project, the distribution platform will be coming online Q3. It will for certain give an effect. And we have also launched a project called Fuel Choice, where corporates, typically large corporates, can invest into being more sustainable, where they're actually buying SAF, sustainable aviation fuel, and we have just the last month been signing up four contracts with huge large corporates that is investing into this product this comes on top of the contract that we have with the norwegian defense and i would urge other large corporates in scandinavia and the nordics to also invest in this and this is a small step in actually us being uh you know being a more sustainable airline and and And we are quite eager, as you all know, to be more sustainable for the months and years to come. With that, Hans-Jørgen.

Thank you, Geir. Thank you, Sven Harald. Good morning, everyone. Great to see you here. It's been a good quarter for Norwegian, for sure, and I will go through the quarterly result in somewhat more detail. I will also spend a little bit more time on the balance sheet, as a lot of things has been happening on our balance sheet in this quarter, given the buyback of the bonds and now that we're paying the dividend and a few other things that has happened. So very happy to report a top line increase of 10% to 10.3 billion, with Bidro contributing a very nice 2 billion on their strong traffic figures. The group EBIT, more than doubling from Q1 last year to 1 billion, 250 million. With Norwegian contributing just more than 1 billion, it's actually two and a half times the same figure of 2024. And Bidur also coming in very strongly at 229 million, which is up 30 million. They had a good second quarter also last year. but had a little bit of a struggle in the first quarter, given the weather situation, et cetera. So a very, very strong quarter for both Norwegian and Vidra, giving them an operating margin of 12.2%. Obviously, there is some benefit from the strengthening of the Norwegian corner versus the US dollars, both on the side, but also on the translation differences on our balance sheet, which with the contribution there of 194Million, which is kind of a little bit outside the ordinary core core business. uh also on the cost side i think we are in control of the cost the costs are coming in pretty much as planned with a unit cost of of our cask of 50 uh up seven percent and as as mentioned before uh the with the atc charges and airport charges giving being by far the largest contributor to that increase but it's on plan and we're overall though working extremely hard on the cost we're overall quite happy with the outcome The balance sheet, again, strong liquidity position, 13.8 billion, the highest ever in the history of the company, a function of we successfully completed the financing of the 10 aircraft that we took delivery of in the first quarter as planned. at very good terms. But also countering that, we did the buyback of the convertible bond, effectively buyback of the shares as these bonds had been converted into shares, spending 900 million, knock on that, in the quarter. And it's really, I think, a good thing, reducing, as has been mentioned before, significantly dilution had the convertible bond been actually converted into shares. So good thing for the shareholders, reducing that dilution. And finally, then paying a dividend of 90 euro, reflecting the dividend fund that has been set aside in 23 and 24 and 22 as well. uh with the 2024 dividend used to repurchase of bonds that is repurchase of effective repurchasing of shares and the remaining part uh being used to uh to distribute uh dividend including uh interest on that amount so a lot of things happening on the balance sheet a lot of positive things happening on the balance sheet both from the debtor's point of view but also i think from the shareholders point of view that as mentioned before it's it's a milestone a day for uh for norwegian uh diving a little bit more into the revenue side very happy to see that the uh we have a significant yield increase of about seven percent uh for the quarter um load factor up about three percent um adding 600 740 million on the top line just from that uh factor of course as mentioned before there is a level of seasonality since the easter in this quarter came In the second quarter, last quarter, it was in the first quarter, but overall a very solid development. And as mentioned before, in June was kind of in some ways the proof of the strength of the market with a total unit revenue increase of 14% in that month alone. So a strong development there. And that on the bridge gives revenue in the region at 8.4 billion, and then with a strong contribution from Vidra at 1.9 or 2 billion. And then we end up with a revenue of 10.3 billion for the quarter. Then on the EBIT side, a bit of the same picture, we will see the 730 million from this strength of the market, given the higher load factor and higher yields, which is a great figure. Then there are some other adjustments on the top line. Then we're seeing that, especially on the ATC charger, the general inflation is, of course, an underlying driver for the cost. kind of reducing the EBIT by nearly 300 million. We have cost OPEX initiatives, and then we have the OLG, which is the translation differences, and we're ending up with a very, very strong and more than doubling of the EBIT in Norwegian at 1 billion and 21, adding a robust result from Vidra at 229, and then we end up at 1 billion 250 as a Record operational result for the quarter. I will not repeat everything that has been said earlier. This is just showing all the figures in summary on the P&L, 10% increase driven by load factor and yields in particular. We're seeing personal expenses stable. We had just a comment, we had some catch up in the second quarter last year due to the pilot negotiations, but still a result as expected. We're seeing that the aviation fuel is pretty much on par, but we have these costs related to ETS allowances that have come down and also the SAF mandate impacting the figure somewhat. We talked a lot about the airport and ATC charges going up 23% from last year, a significant but not as expected increase, although we don't like it at all. And it's something we need to address together with other airlines. Other loss and gains, we talked about that translation differences, obviously a significant increase on the operating profit, more than doubling for the group as well. And finally, just a comment, we are now for the first quarter recording a tax expense. It's not a cash item, but we're starting due to the strong profitability in the business. We are recording a tax expense of estimated to be 12% this year. It's a non-cash item, and as many of you know, we have a significant tax loss carried forward in our balance sheet, 1.9 billion. So it'll take a little bit of time before we are in a cash tax payment position. So on the balance sheet, something's happening, as mentioned earlier, we're taking a net delivery of three leased aircraft in a quarter. We have the cash boost from the financing of the 10 aircraft, leaving us with a cash total liquidity of 13.8, including financial investments that are money market funds and highly liquid money market funds. Then I think it's also important to note on the air traffic liability side, and that's a really good kind of proof of the pudding that our bookings are good. They're 10% above same level last year. That is pre-bookings for the periods ahead. So we're also seeing that in our balance sheet with the high bookings and the strong loads going into the second half. We see that also in our balance sheet. Net interest bearing debt going down. I'm happy to see a number, that number coming down from 5.8 billion to 4.9 billion in the quarter. And there been this kind of, you know, added three aircraft. And then obviously with the net proceeds from the financing of the aircraft. And then of course, with the buyback of the convertible bond. um again and it's been said a few times already uh but the um uh you know we've spent uh the cash wisely i think in a better and shareholder friendly manner by exercising calling calling the bond um and then buying back in the 45 of the bond thereby dilution reducing dilution by by six percent and we actually then use the dividend from from 2024 topping that up with another 300 million uh to enable us to buy back and reduce that dilution in a good exercise together with the norwegian government um that we did in in may and june and then very very happy and proud to announce that we are finally in a dividend position and that we're able to uh pay a dividend of 0.9 kroner or or 90 euro to be paid in the middle of August. On a direct yield basis, it's 7% of the VBAP weighted average share price this year. So it's actually a pretty good yield also for those that are shareholders in Norwegian. So happy to see that. As mentioned earlier, we have triggered a mechanism in the loan agreement, technically, that has enabled us to pay this dividend, where we're depositing 3.1 billion in a bank account. But just keep in mind that half of that will be repaid, that bond will be repaid according to its ordinary schedule in September. So it's just half of it, it's just a very short interim period. So it's very manageable, given our very strong balance sheet going into the quarter and also strong balance sheet. So, just finalizing on the, on the cash flow, we don't need to spend a lot of time on this, but we have a strong cash flow operating activities. 3.1. Billion, we have limited investment activities. Most of that investment activity is actually taking place in. As planned, we have the net of all the financing activities, including the drawdown of the loans, reduced by loan repayments and the buyback of the convertible bond. And we're coming out with 12.7 billion of cash plus the financial investments, giving a net liquidity position of 13.8. It's also good to note that we have with the Boeing prepayment for the deliveries, we have already paid 3.1 billion, so it's very manageable for these aircraft that will be delivered over the next few years. happy with that so i think with that overall a very good uh quarter for norwegian strong operational performance strong financial performance uh optimizing the balance sheet and ultimately uh paying dividends so so quite a milestone quarter for for norwegian uh this time thank you very much

So the way forward, let's talk a little bit about the fleet in in Norwegian. We have taken delivery of three aircraft this quarter. That takes us up to six aircraft delivered during so far this year. What we are seeing with Boeing is that they have significantly ramped up their production. They are now in the 30s aircraft a month. which is very promising. The last two aircraft we took delivery of actually came earlier than what we thought, which shows that the visibility when it comes to deliveries from Boeing is increasing massively. Very nice to see and a big compliment actually to Boeing. We have our own order of 50 aircraft that is starting to deliver by the end of this year as it looks today. We also have a big upcoming decision during the next few months where we have to decide whether we declare the options for an additional 30 aircraft. We have very attractive terms on both the fixed 50 aircraft order and even more attractive terms on the options. As we see it, the pricing for these aircraft is probably somewhere between 10 and 15% below the markets. We have also spent some time acquiring spare engines, as mentioned, 11, and adding the two that we have already purchased earlier. We have 13 spare engines. This is to make sure that we have available engines when we need them. When we need spare engines is when we take engines off wing for maintenance. We think there is going to be a limitation on shop capacity during the next years. And looking at the leasing market for leasing engines, that's red hot. That means that it's very expensive. So by acquiring our own engines, we have much more flexibility and it's going to be cost saving measures for the years to come. When having a certain ratio of spare engines compared to the total engines you're flying, you also have some benefits towards CFM when it comes to availability of engines when you need them. is a move, as Sven Harald mentioned, to lower the ownership cost, and in addition, then getting more flexibility when we need it. That also applies to the acquisition of the three aircrafts, 260 million, but even more importantly, together with the 10 aircraft we bought in the first quarter, reducing the ownership cost between 200 and 250 million a year for the years to come. We have also been financing quite a few aircraft during the last months at terms we have never seen in Norwegian before. And this reflects the financial position and the operational performance that we have been having over the last years. When it comes to the 50 aircraft order, as we plan today, we will own a significant portion of that order ourselves. And we are talking about somewhere between 40 and 60% ownership, and then we will use the leasing market on the other part. The market is still affected by late deliveries from the OEMs, meaning Boeing and Airbus. Even if Boeing is now ramping up the production, there is a huge backlog that it will take quite some time to to get sold. And we also have the Airbus situation where you have a massive number of 320s today on ground due to the issues with the patent mitten engines. And this would probably take at least two to three years before all this is sorted out. And that capacity is coming into the market again, which again, supports the yields that we are seeing today, probably longer than how it could be if we didn't have those issues. As we all know, we have trade tensions between the US and the rest of the world, I would say. It's very difficult to get the visibility, high visibility on that situation. We are obviously following it closely, monitoring whatever is happening, and then we will see how this could affect the airline industry, including Norwegian. A couple of words on program X. This quarter we are just reconfirming the target of obtaining a recurring profit improvement on the bottom line of more than 1 billion coming out of 2026. This is excluding the effects, the stronger Norwegian krona as we are seeing today. So this is going to improve the underlying running of the aircraft. And the baseline is then the results in Norwegian in 2024. This is going to take us up to a sustainable EBIT margin and at the area where we have just disclosed today. uh that's the target what have we done so far in 2025 well as discussed we have done quite a lot on the asset side we are continuing to improve on on-time performance which is very important for the customer but it's also very important when it when it comes to the cost side of the business we have as mentioned rolled out a new distribution platform which will give us an effect on the top line We have continued to take our synergies between us in Norwegian and Vidre. We have done quite a lot on the network side. We have merged certain support functions. Customer care is one of them, which is now run by Norwegian for both airlines. We are in the process of merging IT functions. We have done quite a lot on the technical side. We have done quite a lot on the procurement side already. The facility side, we are also in the process of seeing what we can do even more on the seasonality side, both in Norwegian and between the two airlines. That is already giving us an effect in the numbers in Q2, and it will give us an effect also towards the end of the year. Other processes that we are in the middle of is more asset performance, fuel consumption savings. The crew and aircraft efficiency is an area where we are working on. There is room there, even if we are quite good today. We are going to do a right sizing in Videre and in Norwegian and between the airlines. We are going to invest into AI to do more automation and it will give us effects. The interlining parts I have already mentioned. I'd also like to share the news that Videre is also running a similar program called Focus 500. And you can all guess what the 500 means. And it is exactly what you think it is. So we will also have effects in Videre as a standalone for the months and in the years to come. We have some headwind on the cost side, as mentioned earlier, especially on the ATC and the airport tariffs. But despite that, we are guiding this quarter the COSC ex-fuel for 2025 as a whole one step down. Last quarter we said mid single digit increase now we are saying low to mid single increase on the cost for 2025 and then we all hope and let's see how it ends and if we can bring it even further down so all in all the summer season is we are in the middle of the summer season we are executing well We are up on load, up on yield for the next coming months. We are guiding the cask down for the full year. And we will pay dividend in August of 0.9 NOK. I think that ends the presentation.

Okay. I'm open for questions if I ask you gentlemen to stand here. We also have Sain Harval join us. We can start with some questions from the audience.

First of all, congratulations to Norwegian and all the team, management and the staff. Great result to see you going in the right direction. Two questions from me. First, airlines in Europe report changes in booking and travel patterns. More bookings closer to travel date. and demand in the shoulder season is increasing. The Norwegian in the same development. Secondly, last week news on Air France KLM to become majority owner 60.5% of SIS and the order of 45 Embraer E195, E2 midsize aircrafts. What are your thoughts on how this can impact the competitive landscape in Scandinavia?

Let's take the first one first. As mentioned, Hans-Jürgen, we are coming into the rest of July, August, September and October. a higher load and actually now also a higher yield that applies to all months if you look at the booking curve maybe it's coming down marginally but it's it's not really very different when it comes to when you book the ticket compared to when you're traveling if you if you go and say back to last summer actually maybe a little bit meaning you are you're booking later but not not significant The second one, SAS. We are very used to competing with SAS. We actually like to compete with SAS, and we are competing very hard every single day. We are seeing that in certain markets, SAS lately have been very aggressive on pricing, but that is just an ordinary business, I would say, and then it's part of the competition. We have also seen that they have ordered 45 new aircrafts, which is nice. So we don't really know as for today, you know, where these aircraft is going to be placed. We don't know how much this is fleet renewals and how much is the growth. We do know that they are flying today. Vetlis is from two Vetlis companies. I think it's close to 30 aircraft. In addition to the aircraft, they're flying, let's say, with the Bra aircraft just recently done. So So that adds up, that counts up to 35 to 40 aircraft actually. So whether this is a fleet renewal or whether they're going to own their own aircraft, we don't know. We have some time to consider it. This is starting to deliver, as I understand, late 2027. And that's how we see it.

So we have three years to get even better. Exactly.

Okay, we'll then move on to some questions from the web. We'll start with Ole Martin Vestgaard from D&B Markets, D&B Carnegie actually. What is an appropriate payout ratio for Norwegian Air Shuttle going forward?

Yeah, we haven't concluded on the dividend policy that we will apply. We will start now and then we will take it as we go. But yeah, I guess you can, whoever can think what could be reasonable. It is a relatively cash generated business in the sense that the cash for fleet renewal and so on is quite modest and a lot has already been paid, which then could indicate a higher payout ratio.

Second question from him. How do you see the competitive landscape in the Nordics?

I think it's probably the same story as I told last quarter. It's relatively unchanged, I would say. Meaning it's relatively stable. What we do see is that, you know, if you look at the winter behind us, we saw a lot of capacity flying to Tromsø. It looks like that capacity is going to be more or less the same. Maybe it's a slight reduction. But all in all, looking at the Nordics, quite stable competitive landscape. Okay.

Last question from him. Has there been any wet lease cost in Q2? And what do you expect there for Q3?

The wet lease cost has been 57 million for the quarter. These are planned wet leases, so there is no kind of sudden unexpected events. So this has been planned for a while. We will have a couple of wet leases just through the summer and then we will let them go. So no surprises in that.

Then we move on to questions from Andrew Lobenberg from Barclays. First question in terms of aircraft deliveries. How do you see the risk of tariffs for the upcoming deliveries?

I think the visibility on potential tariffs is very difficult. We are following it, as mentioned, very closely. you have a situation where you have the Boeing producing aircraft in the US, you have Airbus producing also aircraft in the US. So we just have to follow the situation and then see how it turns out.

Okay. And the next question from Mim. With the current strength in the NOC, are you utilizing the strength to kind of add on to your hedges as this, call it the NOC strengthens further?

We have spent this first half doing some hedges, so we are reasonably well hedged into the second half and we are continuously monitoring that as we're also doing the fuel hedges. We have a very balanced fuel hedge combined with FX hedging position at the moment. So we have a significant exposure, but still our exposure on the NOC US dollar portion is between 40 and 50% hedged and the remaining part unhedged, which we find to be in a very balanced manner.

Final question from Lovenberg. When are your next labor talks? Talking about pilots, cabin, maintenance. What color can you share on the current labor talks?

For the peak season that we are in the middle of, there is no risk of any strikes, if that's the question. We have two negotiations that we will enter into and continue during the fall of this year.

Okay. I'll ask if there's any other questions from the audience. There does not seem to be any, so we'll conclude the session. Thank you very much.