NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
ANNUAL REPORT 2015
NORWEGIAN AIR SHUTTLE ASA
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NORWEGIAN ANNUAL REPORT 2015
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
CONTENTS
HIGHLIGHTS
Highlights 2015
Key figures – financials
Key figures – operation
LETTER FROM CEO
BOARD OF DIRECTORS' REPORT
FINANCIAL STATEMENTS
Group financial statements
Notes to the consolidated financial statements
Financial statements for the parent company
Notes to financial statements of the parent company
Auditor's report
CORPORATE GOVERNANCE
BOARD AND MANAGEMENT
The Board of Directors
The Management team
DEFINITIONS
CONTACT
FINANCIAL CALENDAR
2016
Interim report 1Q 2016: April 21
General shareholder meeting: May 10
Interim report 2Q 2016: July 14
Interim report 3Q 2016: October 20
Norwegian Air Shuttle reserves the right to revise the dates.
NORWEGIAN ANNUAL REPORT 2015
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
HIGHLIGHTS
2015
Ä Awarded the title “World’s Best Low-Cost
Long Haul Airline” and the “Best Low-Cost
Airline in Europe” for the third year in a
row, also by SkyTrax
Ä Launched winter routes in domestic
Spain and to the Caribbean
Ä Eleven new aircraft delivered during 2015
Ä New order of 19 additional Dreamliners
Ä Leasing agreement with HK Express for
12 A320 Neo aircraft
Ä New unsecured bond issues
Ä Norwegian and OSM Aviation join forces
to increase global presence
For detailed information, see Board of
Directors' report on page 10.
New routes
Passengers (million) . +%
Aircraft utilization (BLH) . +.
New aircraft (737 and 787)
Average spot fuel price USD -%
USD/NOK . +%
New routes
Passengers (million) . +%
Aircraft utilization (BLH) . +.
New aircraft (737 and 787)
Average spot fuel price USD -%
USD/NOK . +%
New routes
Passengers (million) . +%
Aircraft utilization (BLH) . -.
New aircraft (737 and 787)
Average spot fuel price USD +%
USD/NOK . +%
New routes -
Passengers (million) . +%
Aircraft utilization (BLH) . +.
New aircraft (737 and 787)
Average spot fuel price USD -%
USD/NOK . +%
Q
Q
Q
Q
NORWEGIAN ANNUAL REPORT 2015
HIGHLIGHTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
KEY FIGURES – FINANCIALS
(Amounts in NOK million) 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
Operating revenue (MNOK)
EBITDAR (MNOK)
EBITDA (MNOK) () ()
EBIT/operating result (MNOK) () () ()
EBT (MNOK) () ()
Net profit/loss (-) () ()
Basic earnings per share (NOK) . (.) . . . . . . . (.) .
Diluted earnings per share (NOK) . (.) . . . . . . . (.) .
Equity ratio % % % % % % % % % % %
Cash and cash equivalents (MNOK)
Unit cost (CASK) . . . . . . . . . . .
Unit cost (CASK) excluding fuel . . . . . . . . . . .
ASK (million)
RPK (million)
Load factor .% .% .% .% .% .% .% .% .% .% .%
Passengers (million) . . . . . . . . . . .
Internet sales % % % % % % % % % % %
Number of routes (operated during the year)
Number of destinations (at year end)
Number of aircraft (at year end)
NORWEGIAN ANNUAL REPORT 2015
HIGHLIGHTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
KEY FIGURES – OPERATION
UNIT COSTS
■
■ Unit cost excluding fuel in NOK
■
■ Fuel per unit in NOK
0.00
0.06
0.12
0.18
0.24
0.30
0.36
0.42
0.48
0.54
0.60
'15'14'13'12'11'10'09'08'07'06'05
UNIT COSTS PER QUARTER
Unit cost excluding fuel in NOK
■ 2014 ■
2015
Fuel per unit in NOK
■ 2014 ■ 2015
.
.
.
.
.
.
.
.
.
.
.
QQQQ
BLOCK HOURS PER QUARTER
Hours per day
■
2014 ■ 2015
.
.
.
.
.
.
.
.
.
.
.
QQQQ
BLOCK HOURS
Hours per day
7.0
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
'15'14'13'12'11'10'09'08'07'06'05
ASK PER QUARTER
ASK
in million (left axis) ■ 2014 ■ 2015
Load factor %
(right axis) ■ 2014 ■ 2015
Q4Q3Q2Q1
%
%
%
%
%
%
%
%
%
%
%
ASK
■
■ ASK in million (left axis)
■
Load factor % (right axis)
'15'14'13'12'11'10'09'08'07'06'05
%
%
%
%
%
%
%
%
%
%
%
RASK PER QUARTER
Rask in NOK
(left axis) ■ 2014 ■ 2015
Stage length in km
(right axis) ■ 2014 ■ 2015
.
.
.
.
.
.
.
.
.
.
.
QQQQ
RASK
■
■ Rask in NOK (left axis)
■
Stage length in km (right axis)
.
.
.
.
.
.
.
.
.
.
.
'15'14'13'12'11'10'09'08'07'06'05
NORWEGIAN ANNUAL REPORT 2015
HIGHLIGHTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
DEAR SHAREHOLDERS
2015 was yet another year of international growth for Norwegian with new
aircraft entering service, new route launches, a record-high number of
passengers choosing to fly with us and hundreds of new colleagues joining
the Norwegian family. It was also a year of strong passenger recognition, as
Norwegian received seven awards including the renowned Skytrax for “Best
Low-Cost Airline Europe” for the third consecutive year as well as the “Best
Low-Cost Long haul Airline”. This would not have been possible without
our loyal passengers and our hard-working colleagues in the air and on the
ground. Our strong commitment to reducing emissions was recognized in 2015
by the International Council of Clean Transportation voting us to the most
environmentally friendly transatlantic airline.
Strong demand for our domestic routes
in the Nordics and new Europeans routes
drove passenger traffic in 2015, while our
intercontinental operation reached critical
mass and contributed to Group profit. Our
results for 2015 were influenced by lower
fuel price offset by a weaker Norwegian
currency and impact of hedging.
Our operational fleet increased to 99
aircraft at year end – whereof eight 787-8
Dreamliners and 91 Boeing 737-800s. We
launched 37 new routes, including domestic
service in Spain and seasonal service be-
tween the French Caribbean islands of
Martinique and Guadeloupe to Boston,
New York and Baltimore/Washington.
We signed a new agreement to acquire
19 Boeing 787-9s, expanding our fleet of
Dreamliners to 38 by 2020.
Norwegian offers 447 routes to 138 des-
tinations. In 2015 our capacity (ASK) in-
creased by a moderate five per cent com-
pared to 2014 while revenue grew by 15
per cent. The revenue growth was driven
by a solid load factor improvement to 86
per cent (+ five p.p.), higher ancillary reve-
nue and strong demand for flights between
Europe and the U.S and Scandinavia and
Thailand. Our strongest growth occurred
on long haul operations between Europe
and the U.S. By year-end, Norwegian oper-
ated flights between Scandinavia/UK and
New York, Fort Lauderdale, Orlando, Los
Angeles, San Francisco, Las Vegas, Puerto
Rico (Caribbean) and Bangkok. In the con-
tinental European market, growth was pri-
marily a result of increased operations from
UK and Spain.
CONTINUED GLOBAL GROWTH
AHEAD
Continuous fleet renewal has become an
integral part of our business. In 2012,
Norwegian placed the largest aircraft or-
der in European aviation history, compris-
ing 222 short haul aircraft and 150 purchase
rights. Since then Norwegian has ordered a
total 38 Boeing 787 Dreamliners of which 30
787-9s, the longer and bigger version of the
787. By year-end 2015, the Group had a total
"Looking into 2016, we expect continued growth,
several new route launches and the delivery
of more than 20 brand new aircraft"
NORWEGIAN ANNUAL REPORT 2015
LETTER FROM CEO
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
of 266 undelivered aircraft on firm order:
36 Boeing 737-800s, 100 Boeing 737 MAX8s,
100 Airbus A320neos and 30 Boeing 787-9
Dreamliners (included eleven to be leased).
The performance of our 787-8 Dream-
liners has improved considerably since the
aircraft first entered service. The aircraft
are now performing on par with the 737,
confirming Norwegian’s confidence in the
Dreamliner as a true game changer. Pas-
senger comfort is unparalleled, with low
noise levels, high humidity and ambient
mood lighting, which reduces jet lag. Fuel
consumption is even lower than expected,
making fuel savings per seat higher than
twenty per cent compared to the most mod-
ern similar-sized aircraft types. In 2016, we
will take delivery of four 787-9 Dreamliners
to a total of twelve Dreamliners.
Following the slower growth in 2015, ca-
pacity growth will be significantly higher
in 2016. We are about to launch several
new routes and bases. We have already
announced the opening of a new base in
CURRENT COMMITTED FLEET PLAN
Number of planes at year-end
'''''''''''''''''
■BOwned
■B/BLeased
■Aneo
■BMAX
■Bowned
■BS&LB
■Bleased
■Bowned
■Bleased
■Mleased
1
30
29
85
13
5
5
2
25
10
23
5
5
68
21
57
7
2
22
5
23
62
8
15
11
5
40
5
23
7
5
16
2
46
5
23
22
20
2
32
8
22
2
13
13
11
11
8
8
95
2
13
5
5
41
29
3
5
13
99
27
51
3
9
13
117
23
4
68
12
15
12
22
87
13
16
177
7
19
5
12
85
13
14
155
NORWEGIAN ANNUAL REPORT 2015
LETTER FROM CEO
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Rome, Italy as well as new routes between
Paris, France and the U.S. We will continue
to retire the oldest leased 737-800s from the
fleet, contributing to reduce unit costs and
capacity growth in low season.
For the five-year period 2015-2020 we
plan for an average annual growth rate of
20 per cent in ASK with a strong 40 per cent
annual growth for long haul and ten per
cent annual growth for short haul.
THE ENVIRONMENT
New aircraft supercharge our cost effi-
ciency and significantly enhance the pas-
senger experience. However, it also consid-
erably benefits the environment. In 2015,
CO
2
emissions per passenger per kilometre
were only 76 grams, a nine per cent reduc-
tion compared to previous year. Norwegian
is one of the most environmentally-friendly
airlines in Europe. Since 2008, Norwegian’s
fuel consumption per seat kilometre has
decreased by nine per cent. Today, emis-
sions per airline passenger are approaching
those per train passenger in many coun-
tries. Entering 2016, we boast one of the
world’s most efficient and greenest fleets
with an average age of 3.6 years. Our strong
commitment to reducing emissions was
also recognized in 2015, when the Inter-
national Council of Clean Transportation
voted us the most environmentally friendly
transatlantic airline.
Looking into 2016, we expect continued
growth, several new route launches and
the delivery of more than 20 brand new air-
craft. The entry of the bigger edition of the
Dreamliner, the 787-9, will be an important
milestone in strengthening the Company's
foothold in the low-cost long haul market.
2016 will also see the establishing of new
bases and more great people joining the
Norwegian family.
Bjørn Kjos
Chief Executive Officer
GRAMS CO2 PER PASSENGER
Per kilometer
'15'14'13'12'11'10'09'08'07
109
104
103
97
92
88
87
83
76
PASSENGERS PER QUARTER
In million
■ 2014 ■ 2015
Q4Q3Q2Q1
PASSENGERS
In million
0
3
6
9
12
15
18
21
24
27
30
'15'14'13'12'11'10'09'08'07'06'05
NORWEGIAN ANNUAL REPORT 2015
LETTER FROM CEO
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
BUILDING COMPETITIVE ADVANTAGE
Norwegian Air Shuttle ASA reported a solid revenue growth in 2015, enabled
by new aircraft entering the fleet and new routes launched. The production
growth (ASK) came in at a moderate five per cent. The load factor increased
to 86 per cent and the unit cost was reduced by one per cent to NOK 0.42.
Norwegian confirmed its competitive ability and attractiveness with almost
two million new passengers in 2015.
The Group’s results for 2015 were affected
by strong expansion of the network, con-
tinued revenue growth and efficiency im-
provements. The figures were also strongly
affected by the weaker Norwegian currency
(NOK) and unrealized losses on fuel hedges
for 2016 and 2017.
The consolidated operating revenue
grew by 15 per cent to NOK 22491 million,
with a net profit of NOK 246 million, com-
pared to a loss of NOK 1070 million in 2014.
The revenue growth is mainly a result of the
strong load factor, supported by new air-
craft delivered in 2015 and the strengthen-
ing of the international route network. Rev-
enues from international traffic increased
by 18 per cent in 2015 and amounted to NOK
17704 million.
The long haul operation developed well
and in line with the Group’s plans. The reg-
ularity of the long haul fleet of Dreamlin-
ers was on par with the 737 operation. The
intercontinental operation’s increased suc-
cess was reflected in the Group’s traffic
growth (RPK) of twelve per cent. This was
driven by a strong improvement in load fac-
tor by five p.p. to 86 per cent, in addition to
a five per cent increase in average distance
travelled per passenger. In total, eleven new
aircraft were delivered in 2015, and at the
end of 2015 the fleet comprized 99 aircraft,
including aircraft on maintenance, exclud-
ing wet-lease and aircraft for redelivery.
The ticket revenue per available seat
kilometer (RASK) for 2015 was NOK 0.38
(NOK 0.35), up eight per cent from previous
year related to increased yield and higher
load. Ancillary revenues rose by twenty per
cent to NOK 3275 million (2727). Per pas-
senger ancillary revenue grew by eleven per
cent to NOK 129 (116) driven by bundling
and the passengers’ freedom to choose.
The Group’s financial position at the end
of 2015 was solid, although affected by the
asset acquisitions, lower fuel prices and
currency fluctuations. Net interest bear-
ing debt increased to NOK 17131 million, up
from NOK 11273 million at the end of 2014
driven by financing of new aircraft and cur-
rency effects. Cash and cash equivalents
was NOK 2454 million as of December 31,
2015, a net increase of NOK 443 million.
The equity ratio was unchanged at nine per
cent.
The Board of Directors expects 2016 to
be a year of continued growth. Production
growth is expected to be around 18 per cent
in 2016, driven by 40 per cent growth in
long haul production. The level of advance
bookings at year end was good. Norwegian
will continue its efforts to improve cost effi-
ciency and expects the unit cost for 2016 to
NORWEGIAN ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
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be further reduced by twelve per cent to ap-
proximately NOK 0.37 (0.42). The reduction
is driven by new aircraft with lower operat-
ing and fuel cost.
KEY EVENTS 2015
●
Awarded the title “World’s Best Low-
Cost Long Haul Airline”.
The renowned
Sky Trax World Airline Awards awarded
Norwegian the “World’s Best Low-Cost
Long Haul Airline” after slightly more
than two years in operation. In addition,
Norwegian won the title as the “Best
Low-Cost Airline in Europe” for the third
year in a row, also by SkyTrax.
●
Launched winter routes in Spain and to
the Caribbean.
Norwegian took our first
steps into the Spanish domestic market
by announcing a series of new routes
between mainland Spain and the Canary
Islands. In December, Norwegian
started routes between the French
islands Guadeloupe and Martinique
and North America. The seasonal offer
is targeting the cities New York, Boston
and Baltimore.
●
Eleven new aircraft delivered during
2015.
Ten new 737 800s and one Boeing
787-8 Dreamliner have been delivered
in 2015. Currently Norwegian has
eight Boeing 787-8 in operation and 91
Boeing 737 800s. During 2015 Norwegian
redelivered two older leased 737 800s
and retired five 737 300 classics.
●
New order of 19 additional
Dreamliners.
In October, Norwegian
agreed to buy 19 new 787-9s from Boeing
scheduled for delivery from 2017 to
2020 through Norwegians fully owned
subsidiary, Arctic Aviation Assets Ltd.
The agreement is the largest single
order of 787-9s in Europe and includes
purchase options for additional ten
aircraft of the same type. By 2020 the
Group will have 38 Dreamliners in
operation.
●
Leasing agreement with HK Express for
12 A320 Neo aircraft.
Arctic Aviation
Assets Ltd (AAA) – a fully owned
subsidiary of Norwegian Air Shuttle –
has agreed to lease out twelve Airbus
320neo aircraft to airline HK Express.
The twelve aircraft are scheduled to
delivery between 2016 and 2018 with
four each year.
●
New bond issues in Euro and local
currency.
During 2015 Norwegian issued
two new unsecured bonds (NAS 06 and
NAS 07) and tapped NOK 425 million on
an existing bond (NAS04). For the first
time Norwegian successfully issued a
bond in Euro with a four year tenor. The
net proceeds from the new bonds will be
used for general corporate purposes in
support of the growth of the Group.
●
Norwegian and OSM Aviation join
forces to increase global presence.
Norwegian Air Resources Holding
(NARH) and OSM Aviation have signed
an agreement to form a stronger
global partnership in employment and
management of aviation crew. NARH
acquires 50 per cent of OSM Aviation.
The new partnership will build on the
NORWEGIAN ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
experiences of Norwegian's and OSM
Aviation's established relationship
offering professional employment
and good career opportunities. This is
subject to approval by the EU Merger
Regulation. The transaction is expected
to be completed by the end of first half
2016.
COMPANY OVERVIEW
Norwegian Air Shuttle ASA (“Norwegian”
or “the Company”) is the parent company
of the Norwegian Group (“the Group”).
Norwegian is headquartered at Fornebu
outside Oslo, Norway.
Norwegian is one of Europe’s fastest
growing and most innovative airlines. The
parent company Norwegian Air Shuttle
ASA and its subsidiaries form the Norwe-
gian group with 4576 employees, at 19 loca-
tions in nine countries on three continents.
The Group operates both scheduled ser-
vices and charter services.
At the end of 2015, Norwegian operated
447 routes to 138 destinations. Norwegian’s
vision is “Affordable fares for all”. The busi-
ness idea is to attract customers by offering
a high-quality travel experience based on
operational excellence and helpful, friendly
service at a low fare. Operationally, safety
always comes first.
CORPORATE STRUCTURE
The Norwegian Group consists of the par-
ent company Norwegian Air Shuttle ASA
and it’s directly or indirectly fully owned
subsidiaries in Norway, Sweden, Denmark,
Finland, Ireland, Spain, United Kingdom
and Singapore. The Group has reorganized
its operations into several new entities to
ensure international growth and necessary
traffic rights, in line with the strategy. The
goal is to build a structure that maintains
Norwegian’s flexibility and adaptability
when growing and entering into new mar-
kets. Norwegian’s operations are separated
into a commercial airline group with vari-
ous AOC’s (Air Operator’s Certificate), an as-
set group, a resource and service group and
other activities including brand.
AIRLINE GROUP
The Group´s commercial airline activities are
organized in the parent company Norwegian
Air Shuttle ASA (NAS), the fully owned sub
-
sidiaries Norwegian Air International Ltd.
(NAI) based in Dublin, Ireland, Norwegian
UK (NUK) based in London, UK and Norwe
-
gian Air Norway AS (NAN) based at Fornebu,
Norway. Norwegian's commercial airline ac
-
tivities are operated through twenty bases
globally in the following geographical loca
-
tions: Norway, Sweden, Denmark, Finland,
United Kingdom, Spain, Thailand, United
States and French Caribbean.
ASSET GROUP
The Group´s asset companies are organized
in a group of subsidiaries, based in Dublin,
Ireland. Arctic Aviation Asset Ltd. (previ-
ously September Aviation Assets Ltd) is the
parent company. Aircraft leases and own-
ership have been transferred to the Asset
group.
RESOURCE GROUP
In line with legal requirements in Europe,
fully owned country-specific resource com-
panies are being established, with the in-
tention of offering permanent local employ-
ment.
OTHER BUSINESS AREAS
●
Norwegian Brand Ltd (Dublin, Ireland)
was established in 2013, with the
intention of maintaining the Group’s
brand and marketing activities across
business areas.
●
Norwegian Cargo AS (Fornebu, Norway)
was established in April 2013, and is
carrying out the Group’s commercial
cargo activities.
●
Norwegian Holidays AS (Fornebu,
Norway) was established in 2013 and
provides the new business area of
holiday packages to customers in the
end market through the Group’s web
booking.
The parent company also owns 20 per cent
of the shares in the online bank, Bank Nor
-
wegian AS, through the associated company
Norwegian Finans Holding ASA. The air
-
line’s loyalty program, Norwegian Reward
with its more than three million members,
is run in cooperation with the bank.
MARKET CONDITIONS
Norwegian is the third largest low-cost car-
rier in Europe and seventh largest in the
world. The route portfolio stretches across
Europe into North Africa, the Middle East,
North America, The Caribbean and South-
east Asia. Norwegian has a vast domestic
route network in Norway, Sweden, Den-
mark, Finland and Spain, as well as a wide
range of routes between Scandinavia and
the European continent, Thailand, the Mid-
dle East and the USA.
Norwegian has strengthened its offering
further in 2015, with the launch of new do-
mestic services in Spain and seasonal ser-
vices between the French Caribbean is-
ASSE T/
FINANCING
AIRCRAFT
OPERATIONS
RESOURCES
& SERVICES
NORWEGIAN GROUP
BRANDS
OTHER
BUSINESS AREAS
Dry lease R&S
NORWEGIAN ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
lands of Martinique and Guadelope to Bos-
ton, New York and Baltimore. Norwegian’s
fleet of more than 100 aircraft is one of
Europe’s most modern and environmen-
tally friendly. The Group also wait for 266
aircraft on firm order for delivery over the
coming years, which is a strong confirma-
tion of the Group’s strategy to become a
global airline. In addition, the Group has
160 purchase rights for potential deliveries
from 2022.
The global airline industry is character-
ized by strong competition. Norwegian in-
tends to be a competitive player in this mar-
ket and believes that the ability to grow the
business internationally is key to remain
profitable in the future.
This is the reason behind the establish-
ment of the Group’s crew bases in New York,
Fort Lauderdale, Bangkok and London –
not in Oslo, Stockholm or Copenhagen for
its long haul operation. With crew placed at
these big catchment areas, you can operate
flights into smaller and less populated ar-
eas and maximize both crew and aircraft
utilization.
In 2015 the strongest growth in number
of passengers was in UK, Spain and the US
market. The growth rate was strongest in
USA with 46 per cent, followed by Poland
(31 per cent), UK (27 per cent) and Spain (17
per cent). The growth in Scandinavia was a
moderate 2.6 per cent from 2014.
Establishing new bases in Europe not
only allows Norwegian to tap into new mar-
kets, such as non-stop routes from Barce-
lona and Las Palmas to smaller cities in the
Nordics, or routes from London Gatwick to
destinations on the European Continent.
It also enables Norwegian to compete with
the most cost-efficient airlines. Recruit-
ment to new bases takes places locally, at
competitive local wages and benefits.
Norwegian continued its global expan-
sion in 2015 by taking delivery of ten brand
new Boeing 737-800s and one 787-8 Dream-
liner, launching scores of new routes and
welcoming hundreds of new coworkers to
the Norwegian family. It also launched new
long haul services to Las Vegas, San Juan
and St Croix. The international expansion
strategy will continue in 2016 where new
routes to Boston and San Francisco Oak-
land are already established.
Revenues from International flights
grew by 18 per cent in 2015 and represented
79 per cent of group revenues, up from 76
per cent in 2014. The company expect this
trend to continue in 2016, as most of the
growth will be in long haul.
SAFETY AND COMPLIANCE
The safety of customers and employees is a
prerequisite for Norwegian’s business. Safe
operations in the air and on the ground are
therefore Norwegian’s paramount priori-
ties. We have not experienced any serious
accidents since Norwegian was established
in 1993, neither to passengers nor to crew
involving aircraft operations.
In 2015, Norwegian's commercial airline
business is built around four separate air-
lines, Norwegian Air Shuttle and Norwe-
gian Air Norway based in Norway, Norwe-
gian Air International based in Ireland and
Norwegian United Kingdom based in U.K.
As Norwegian is expanding across the
globe this brings new people from different
cultures to our team. The Norwegian cor-
porate Safety Culture is the “engine” of our
PASSENGERS BY COUNTRY OF ORIGIN
In million ■ 2014 ■ 2015
. . . . . . . . . . . .
Other
Poland
Italy
France
USA
Germany
Finland
UK
Spain
Denmark
Sweden
Norway
GROWTH IN PASSENGERS BY COUNTRY 2015
In percent
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60%
USA
Poland
UK
Spain
Germany
Italy
Finland
Denmark
France
Sweden
Norway
MARKET SHARE
■
2011 ■ 2012 ■ 2013 ■ 2014 ■ 2015
%
%
%
%
%
%
%
%
%
%
%
Market share
Int’l Spanish bases
(AGP, LPA, ALC, TFS)
Market share
Int’l Gatwick Airport
(LGW)
Market share
Helsinki Airport
(HEL)
Market share
Copenhagen Airport
(CPH)
Market share
Stockholm Airport
(ARN)
Market share
Oslo Airport
(OSL)
NORWEGIAN ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Safety Management Systems. An important
goal is to create one corporate “safety cul-
ture” across all different parts of the Group
to avoid inefficiencies and a different ap-
proach to core safety goals. Initiatives that
develop the Company’s airlines into cohe-
sive, informed and cooperative units with a
common goal and operating procedures are
essential elements in creating an enduring
safety culture. Safe operations is core to all
airlines. Hence, Norwegian continuously
strive to improve inter airline communica-
tions, harmonized airlines management
systems and joint efforts in creating an en-
during safety culture.
The Norwegian airlines have separate
safety departments, which all are integrated
parts of the Airlines Safety Management
Systems. The Safety and Compliance de
-
partments are independent and report di-
rectly to the Airlines Accountable Manager.
As with all management systems, the
Safety Management System provides for
goal setting, planning, and performance
measuring. The Safety Management Sys-
tem is fully integrated across the organi-
zation. As it develops, it becomes part of
the company culture, nurturing safety at-
titudes and beliefs, encouraging a “Safety
Culture”, influencing how personnel go
about their work.
Norwegian focus on safety and encour-
age internal reporting of errors. The Group
is actively promoting an atmosphere where
any employee can openly discuss errors of
commission or omission, process improve-
ments, and/or systems corrections without
the fear of reprisal. The safety departments
approach safety in a holistic manner in-
volving all employees. Such activity is es-
sential to an effective Safety Management
System, where each department considers
not alone its own risks, but also the risk that
its plans and/or activities will have on other
departments.
In order to achieve Norwegians goal of
obtain best practices, the Group move be-
yond just authority compliance. The com-
pany engage actively in international safety
research projects, exchange data with the
aviation industry and strive to follow indus-
try best practices.
In Norwegian all employees play a vital
role in the continuous work to achieve excel
-
lence in safety. Through the Safety Manage-
ment System, Norwegian manage risk and
as a result achieve cost reduction through
efficiencies, whilst reducing financial loss
associated with accidents and incidents.
OPERATIONAL AND MARKET
DEVELOPMENT
In 2015 Norwegian expanded its network
extensively with 37 new routes: Two in Nor-
way, two in Finland, three in Sweden, four
in Denmark, six in the French Caribbean,
six in the UK and 14 in Spain. By year-end,
the Group operated 447 scheduled routes to
138 destinations. Norwegian took delivery
of ten environmentally friendly Boeing 737-
800 aircraft and one 787-8 during the year.
Net fleet growth was four aircraft, with the
year-end fleet comprising 99 aircraft, in-
cluding aircraft on maintenance, excluding
wet-lease and aircraft for redelivery.
NETWORK
The Group’s route portfolio spans across
Europe as well as into North Africa, the
Middle East, North America, The Carib-
bean and Southeast Asia, serving both busi-
ness and leisure markets. Norwegian’s net-
work development objectives are to iden-
tify major point-to-point markets that have
been excessively priced or underserved,
while simultaneously maximizing aircraft
and crew utilization.
In 2015, Norwegian launched two new
seasonal bases on the French Caribbean is-
lands of Martinique and Guadeloupe. The
short haul flights operate exclusively to
the Northeastern USA, from both islands
to New York (JFK), Boston and Baltimore/
Washington (BWI). The operation consti-
tutes the first scheduled Norwegian flights
never to enter neither Scandinavian nor
Continental European airspace. The ratio-
nale is to counter the seasonally weak win-
ter season in Europe where short haul air-
craft are grounded mid-winter. The Carib-
bean – USA short haul market has a count-
er-seasonal pattern with a demand peak in
mid-winter.
In total Norwegian operates 16 short
haul bases, six in Spain, four in Norway,
two in the French Caribbean and one in
Sweden, Denmark, Finland and the UK. All
mainland European bases serve a pan-Eu-
ropean international route network. Do-
mestic operations commenced in Spain in
2015 in addition to existing domestic routes
in Norway, Sweden, Denmark and Finland.
NORWEGIAN ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Norwegian launched its long haul oper-
ations at the end of May 2013. In 2014, new
long haul crew bases were established in
Bangkok, New York and Fort Lauderdale
with London being added in 2015. By year-
end 2015, the long haul network covered 32
routes between four European cities to nine
destinations in the US and one in Asia. The
four crew bases in Europe, North America
and Asia corresponds well to the operating
pattern of the Group.
In 2015, eight Boeing 787-8 Dreamliners
ran the long haul operation. Norwegian is
taking delivery of the first four Boeing 787-9
Dreamliners in 2016, a higher capacity lon-
ger-range version of the 787-8s. Norwegian
has firm orders for 30 long haul aircraft in-
cluding eleven to be leased, and with pur-
chase rights for another ten.
Optimization of return on investment is
to be achieved by:
●
Operating high-RASK business routes
during peak hours, and focusing
production on low-RASK leisure routes
during midday off-peak hours.
●
Focusing on leisure destinations with
year-round interest in the Nordic
market. The Canary Islands is one
example.
●
Replacing Mediterranean routes with
routes to the Alps and the Middle East
during the winter season.
●
Replacing business routes with leisure
routes during the mid-summer period
operating flights at nighttime during
peak seasons.
Domestic, intra-Scandinavian and typi-
cal European business destinations have
the highest frequencies, which attracts
business travelers. The Oslo-Bergen and
Oslo-Trondheim routes have the high-
est frequencies with 13 daily rotations on
weekdays. Typical leisure destinations in
Southern Europe, Northern Africa and the
Middle East are typically served once a day
or less.
OPERATIONS INTERNATIONAL
Norwegian Air International Ltd. (NAI)
NAI was granted its own ticket code “D8” in
2015 and took over the fleet of 737-800 op-
erations at bases in UK, Spain and Finland
from Norwegian Air Shuttle (NAS).
During the process of transitioning
bases from NAS, NAI continues to use NAS
as wet-lease operator on certain D8 routes.
In February 2014, NAI applied to the US
Department of Transportations (DoT) for
the approval to operate to the USA. As of
year-end 2015 the application is still wait-
ing for the approval.
Norwegian Air UK Ltd. (NUK)
Norwegian Air UK Ltd (NUK) was estab-
lished in the United Kingdom January 2015,
and NUK got its Operational License and
Air Operating Certificate in October 2015.
NUK applied for operational approval for
operations between Europe and the USA in
December 2015, and the decision from the
Department of Transportation (DoT) is still
pending.
NUK has one Boeing 737-800 registered
on the operational specifications and plan
to start wet-lease operations for Norwegian
Air Shuttle ASA and Norwegian Air Inter-
national Ltd. from March or April 2016.
Aircraft maintenance
The Boeing 737 fleet is operated by the par-
ent company (NAS) and it is fully owned
PUNCTUALITY
■
Punctuality (12 months rolling) ■ Target (90%)
JAN
APR
AUG
DEC
JAN
APR
AUG
DEC
JAN
APR
AUG
DEC
JAN
APR
AUG
DEC
JAN
APR
AUG
DEC
JAN
APR
AUG
DEC
JAN
APR
AUG
DEC
JAN
APR
AUG
DEC
%
%
%
%
%
%
%
%
NORWEGIAN ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
subsidiary Norwegian Air Norway (NAN)
and Norwegian Air International (NAI).
Each individual operator has its own Air
Operator Certificate (AOC), each with in-
dividual civil aviation authority oversight
and approval. Each AOC must have a civil
aviation authority approved maintenance
organization and maintenance program.
NAS and NAN manages their mainte-
nance operations from their technical bases
at Oslo Airport Gardermoen. NAI manages
its maintenance operations from its techni-
cal base at Dublin, Ireland.
Line maintenance for the B737 fleet
is performed by NAS Part 145 organiza-
tion and it is at Oslo Airport Gardermoen,
Stavanger Airport Sola, Bergen Airport
Flesland, Trondheim Airport Værnes,
Stockholm Arlanda Airport and Copenha-
gen Airport Kastrup. We do line mainte-
nance on the Caribbean bases Martinique
and Guadeloupe. Line Maintenance for the
of B737 fleet are contracted to other exter-
nal suppliers outside Scandinavia.
Continuing Airworthiness activities
for B787 fleet are sub-contracted to Boeing
Fleet Technical Management (Boeing FTM).
Control and oversight of the activities are
performed by Norwegian Air Shuttle Main-
tenance operations in addition to civil avia-
tion authorities.
Major airframe maintenance as well as
workshop maintenance are performed by
external sources subject to approval by the
European Aviation Safety Agency (EASA)
and by the national aviation authorities.
Airframe (base) maintenance for
our B737 fleet currently carried out by
Lufthansa Technik in Budapest, Hungary.
Lufthansa Technik, MTU and Boeing are
undertaking engine and component work-
shop maintenance.
Airframe maintenance for our fleet of
B787 is currently carried out by BA, NAS
and Monarch.
Rolls Royce UK currently carries out en-
gine maintenance.
All maintenance, planning and fol-
low-up activities, both internal and exter-
nal, are performed in accordance with both
the manufacturers’ requirements and ad-
ditional internal requirements, and are in
full compliance with international author-
ity regulations. The Group carries out ini-
tial quality approval, and also continuously
monitors all maintenance suppliers.
All supplier contracts are subject to
approval and monitoring by the national
aviation authorities.
FINANCIAL REVIEW
Norwegian reports consolidated financial
information compliant to the International
Financial Reporting Standards (IFRS).
The preparation of the accounts and
application of the chosen accounting prin-
ciples involve using assessments and esti-
mates and necessitate the application of
assumptions that affect the carrying
amount of assets and liabilities, income
and expenses. The estimates and the per-
taining assumptions are based on expe-
rience and other factors. The uncertainty
associated with this implies that the actual
figures may deviate from the estimates.
It is especially the maintenance reserves
liabilities that are associated with this type
of uncertainty.
Consolidated statement of
profit and loss
The Group’s total operating revenues and
income for 2015 grew by 15 per cent and
came to NOK 22491 million (NOK 19540
million), of which ticket revenues ac-
counted for NOK 18506 million (NOK 16255
million). Ancillary passenger revenues
were NOK 3275 million (NOK 2727 million)
and NOK 710 million (NOK 558 million)
was related to freight, third-party prod-
ucts and other income. The revenue growth
is mainly a result of increased number of
passengers and increased average sector
length. The load factor increased by five per
cent compared to the same period last year.
The ticket revenue per available seat kilo-
meter (RASK) for 2015 was NOK 0.38 (NOK
0. 35), up eight per cent from previous year.
Ancillary revenues rose by eleven per cent
to NOK 129 per PAX (116).
Operating costs (including leasing and
excluding depreciation and write-downs)
amounted to NOK 21010 million (NOK
20202 million), with a unit cost of NOK
0.42 (NOK 0. 42). The unit cost excluding
fuel was up by nine per cent to NOK 0.31
(NOK 0.29). The increase in unit cost is
mainly a consequence of depreciation of
NOK, offset by lower fuel price. Earnings
before interest, depreciation and amorti-
zations (EBITDA) were NOK 1481 million,
compared to a loss of NOK 662 million last
year.
Financial items in 2015 resulted in a loss
of NOK 376 million, compared to a loss of
NOK 274 million in 2014. Included in finan-
cial items is NOK 27 million in net foreign
exchange gains, compared to a loss of NOK
37 million previous year. With regards to
accounting for the prepayments on pur-
chase contracts with aircraft manufactur-
ers, NOK 269 million (NOK 145 million) in
interest costs were capitalized in 2015.
In 2007, the Group established Bank
Norwegian, a wholly-owned subsidiary of
Norwegian Finans Holding ASA, in which
the Group has a 20 per cent stake. The
Group’s share of Bank Norwegian’s net
profit resulted in a net gain of NOK 103 mil-
lion (NOK 57.6 million) in the consolidated
profit and loss.
Earnings before tax in 2015 amounted to
a gain of NOK 75 million (negative of NOK
1627 million) and net profit after tax was a
gain of NOK 246 million (negative of NOK
OPEX BREAKDOWN
Percent ■ 2014 ■ 2015
% % % % % % % % % % %
Sales and distribution
Technical maintenance expenses
General and administrative expenses
Other ight operation expenses
Aircraft leasing
Handling Charges
Airport & ATC charges
Personell expenses
Aviation Fuel
NORWEGIAN ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
1070 million). Earnings per share was
positive NOK 6.99 per share (negative of
NOK 30.42).
Consolidated statement of financial
position
The Group’s total debt and assets are im-
pacted by the asset acquisitions, depreci-
ation of NOK against USD and the capac-
ity increase that have taken place during
the year. Total assets at December 31, 2015
were NOK 31634 million (NOK 22706 mil-
lion). The book value of aircraft increased
by NOK 5980 million during the year. Pre-
payments to aircraft manufacturers were
NOK 5939 million at the end of 2015, an in-
crease of NOK 1837 million from December
31, 2014. Trade and other receivables were
NOK 2551 million (NOK 2174 million).
At the balance sheet date, the Group had
a cash balance of NOK 2454 million (NOK
2011 million). Total borrowings increased
by NOK 6310 million to NOK 19594 million
(NOK 13284 million), mainly related to new
unsecured bonds, the purchase of new air-
craft and financing of prepayments to air-
craft manufacturers.
Capital structure
The Group’s total equity was NOK 2965
million (NOK 2108 million) at December 31,
2015 with an equity ratio of nine per cent
(nine per cent). Total equity increased by
NOK 857 million following net profit for the
period of NOK 246 million, exchange rate
gains on equity in Group companies of NOK
421 million and actuarial gains on pension
plans of NOK 45 million. Equity changes
from employee options amounted to NOK
145 million, whereof NOK 138 million re-
lated to share issue.
All issued shares in the parent company
are fully paid with a par value of NOK 0.1
per share. There is only one class of shares,
and all shares have equal rights. The
Group’s articles of association have
no limitations regarding the trading of
Norwegian Air Shuttle ASA’s shares on the
stock exchange.
The Group’s aggregated net inter-
est-bearing debt was NOK 17131 mil-
lion (NOK 11273 million) at year end. The
Group’s gross interest-bearing liabilities of
NOK 19594 million (NOK 13284 million)
mainly consisted of financing for aircraft
amounting to NOK 14899 million, bond
loans with a net book value of NOK 3222
million, and Pre-Delivery Payment syn-
dicated credit facilities of NOK 1473 mil-
lion. In 2015, the Group successfully issued
two new bonds, and a tap issue on existing
bond. The new bonds will mature in 2018
and 2019. NOK 3041 million of the inter-
est-bearing loans mature in 2016. NOK 1473
million is related to financing of prepay-
ments to aircraft manufacturers and will be
replaced by long term financing at the time
of delivery of the aircraft.
Consolidated statement of cash flow
The Group’s cash flow from operations was
NOK 2357 million (NOK 287 million) in
2015. The net cash flow from operating
activities consists of the profit before tax of
NOK 75 million; add back of depreciation
and other expenses without cash effects of
NOK 2001 million and interests on borrow-
ings of NOK 582 million included in finan-
cial activities. Changes in working capital
mainly due to traffic growth amounted to
NOK 868 million. During 2015 the Group
paid NOK 44 million in taxes.
The net cash flow used for investment
activities was negative NOK 5189 million
(negative of NOK 4931 million), of which
the prepayments to aircraft manufactur-
ers constituted negative NOK 3139 million.
The purchases of ten new Boeing 737-800s,
a 787-8 Dreamliner and intangible assets
amounted to NOK 2069 million.
The net cash flow from financial activ-
ities in 2015 was NOK 3282 million (NOK
4478 million). New loans, including draw
downs on facilities for aircraft prepayments
and bond issues were NOK 5554 million,
while repayments on long term debt were
NOK 1828 million. Interest paid on borrow-
ings was NOK 582 million (NOK 323 mil-
lion). The Group has a strong focus on
liquidity planning and the Board is confi-
dent in the Group’s financial position at the
beginning of 2016.
FINANCIAL RISK AND RISK
MANAGEMENT
Risk management in the Norwegian Group
is based on the principle that risk evaluation
is an integral part of all business activities.
Policies and procedures have been estab
-
lished to manage risks. The Group’s Board of
Directors reviews and evaluates the overall
risk management systems and environment
in the Group on a regular basis.
The Group faces many risks and uncer-
tainties in a marketplace that has become
NORWEGIAN ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
increasingly global. The variety of eco-
nomic environments and market condi-
tions can be challenging, with the risk that
Norwegian may not succeed in reducing
the unit cost sufficiently to compensate
in case of weaker consumer and business
confidence in its key markets. Price vola-
tility may have a significant impact on the
Group’s results. Higher leverage as well as
changes in borrowing costs may increase
Norwegians borrowing cost and cost of cap-
ital. Norwegian is continuously exposed
to the risk of counterparty default. The
Group’s reported results and net assets de-
nominated in foreign currencies are influ-
enced by fluctuations in currency exchange
rates and in particular the US dollar.
The Group’s main strategy for mitigat-
ing risks related volatility in cash flows is
to maintain a solid financial position and
a strong credit rating. Financial risk man-
agement is carried out by a central treasury
department (Group treasury), under pol-
icies approved by the Board of Directors.
Group treasury identifies, evaluates and
hedges financial risk in close cooperation
with the Group’s operating units. The Board
provides principles for overall risk manage-
ment such as foreign currency risk, jet fuel
risk, interest rate risk, and credit risk, use
of derivative financial instruments and in-
vestment of excess liquidity.
Interest risk
The Group is exposed to changes in the
interest rate level, following the substan-
tial amount of interest bearing debt. The
Group’s cash flow interest rate risk arises
from cash and cash equivalents and float-
ing interest rate. Floating interest rate
borrowings consist of unsecured bonds, air-
craft and prepayment financing, loan facil-
ity and financial lease liabilities. Borrow-
ings issued at fixed rates expose the Group
to fair value interest rate risk. Fixed interest
rate borrowings consist of aircraft financ-
ing guaranteed by the Ex-Im Bank of the
United States and unsecured bond. Bor-
rowings are denominated in USD, EUR and
NOK. Hence, there is an operational hedge
in the composition of the debt.
Foreign currency risk
A substantial part of the Group’s revenues
and expenses are denominated in foreign
currencies. Revenues are increasingly
exposed to changes in foreign currencies
against NOK as the Group expands globally
with more customers travelling from the US
and between European destinations. The
Group’s leases, aircraft borrowings, main-
tenance, jet-fuel and related expenses are
mainly denominated in USD, and airplane
operation expenses are partly denomi-
nated in EUR. Foreign exchange risk arises
from future commercial transactions, rec-
ognized assets and liabilities and net in-
vestments in foreign operations. In order
to reduce currency risk, the Group has a
mandate to hedge up to 100 per cent of its
currency exposure for the following twelve
months. The hedging consists of forward
currency contracts and flexible forwards.
Price risk
Expenses for jet-fuel represents a substan-
tial part of the Group’s operating costs, and
fluctuations in the jet-fuel prices influence
the projected cash flows. The objective of
the jet-fuel price risk management policy is
to safeguard against significant and sudden
increases in jet-fuel prices whilst retain-
ing access to price reductions. The Group
manages jet-fuel price risk using fuel de-
rivatives. The Management has a mandate
to hedge up to 100 per cent of its expected
consumption over the next 24 months with
forward commodity contracts.
Liquidity risk
The Group monitors rolling forecasts of the
liquidity reserves, cash and cash equiva-
lents, on the basis of expected cash flows.
In addition, the Group’s liquidity manage-
ment policy involves projecting cash flows
in major currencies and evaluating the level
of liquid assets required. Furthermore,
these analyses are used to monitor bal-
ance sheet liquidity ratios against internal
and external regulatory requirements and
maintaining debt financing plans.
Following the acquisition of aircraft
with future deliveries, Norwegian will have
ongoing financing activities. The Group’s
strategy is to diversify the financing of air-
craft through sale-and- leaseback transac-
tions and term loan financing supported
by the export credit agencies in the United
States and EU.
Credit Risk
Credit risks are managed on a group level.
Credit risks arise from cash and cash equiv-
alents, derivative financial instruments
and deposits with banks and financial in-
stitutions, as well as credit exposure to
commercial customers. The Group’s policy
is to maintain credit sales at a minimum
level and sales to consumers are settled by
using credit card companies. The risks aris-
ing from receivables on credit card compa-
nies or credit card acquirers are monitored
closely. At December 31, 2015, 45 per cent
of total trade receivables are with counter-
parties with an external credit rating of A
or better, and 87 per cent of total cash and
cash equivalents are placed with A+ or bet-
ter rated counterparties.
THE SHARE
The company’s shares are listed on Oslo
Børs (Oslo Stock Exchange) with the ticker
symbol NAS and is included in the bench-
mark index OBX, which comprizes the 25
most liquid shares on Oslo Børs.
Norwegian aims at generating competi-
tive returns to its shareholders. The Board
has recommended not to distribute divi
-
dends but to retain earnings for investment
in expansion and other investment opportu
-
nities as stated in the articles of association,
thereby enhancing profitability and returns
to shareholders. The company has not paid
dividends during the last three years.
The share had a closing price of NOK
323.7 at December 31, 2015 and yielded a
return of 17 per cent from the beginning of
the year.
Norwegian had 11183 shareholders at
December 31, 2015 and the 20 largest share-
holders accounted for 62.4 per cent of the
share capital.
HBK Invest AS is the largest shareholder,
currently holding 24.6 per cent of the
"The Group’s main
strategy for mitigating
risks related to cash flow
volatility is to maintain
a solid financial position
and strong credit rating"
NORWEGIAN ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
shares. Its majority owner is Mr. Bjørn Kjos,
CEO of Norwegian. HBK Invest AS is repre-
sented on the Board of Directors of Norwe-
gian Air Shuttle ASA by Mr. Bjørn H. Kiese,
who is elected Chair of the Board.
EVENTS AFTER DECEMBER 31
On January 26, 2016, Norwegian an-
nounced a new charter agreement for the
summer 2016, to continue its cooperation
with TUI Nordic, TUI UK, Thomas Cook
Northern Europe and Nazar Nordic to fly
their customers from the Nordics and the
UK to various summer destinations includ-
ing the Balearics, the Greek Isles and the
Canaries. The total value of the contracts
is approximately NOK 500 million, up NOK
100 million from previous year, and include
more than 2200 flights.
An arrangement for pre-delivery pay-
ment financing (PDP) for fifty Airbus 320
Neo aircraft scheduled for delivery in 2016
to 2019 was finalized at the end of January
2016. The facility covers PDP financing for
deliveries until the end of 2019 and is struc-
tured as a revolving credit facility. These
deliveries over the next four years are key
to the Norwegian Group's future growth
plans, and the PDP financing facility is a
milestone in Norwegian's ongoing program
for financing direct-buy aircraft.
On February 2, 2016, a long-term financ-
ing of six Boeing 737 800 aircraft was com-
pleted. The financing is structured as a pri-
vate placement directed to institutional in-
vestors in the US market.
In February 2016, Norwegian reached an
agreement with cabin crew in Norway and
Denmark. The new collective agreements
are for a two-year period.
GOING CONCERN ASSUMPTION
Pursuant to the requirements of Norwegian
accounting legislation, the Board confirms
that the requirements for the going concern
assumption have been met and that the an-
nual accounts have been prepared on this
basis.
PARENT COMPANY RESULTS AND
DISTRIBUTION OF FUNDS
Net profit for the parent company Norwe-
gian Air Shuttle ASA was negative of NOK
862.2 million.
In accordance with the Company’s cor-
porate governance policy, the Board recom-
mends the following distribution of funds:
(Amounts in NOK million)
Dividend
Transferred from other equity .
Total allocated .
CORPORATE RESPONSIBILITY
Norwegian is committed to operating in ac-
cordance with responsible, ethical, sustain-
able and sound business principles, with re-
spect for people and the environment.
Norwegian’s corporate responsibility
strategy is built on the Group’s commit-
SHARE PRICE DEVELOPMENT 2015 – NORWEGIAN AIR SHUTTLE ASA
NOK per share
200
225
250
275
300
325
350
375
400
Jan
2015
Feb
2015
Mar
2015
Apr
2015
May
2015
Jun
2015
Jul
2015
Aug
2015
Sep
2015
Oct
2015
Nov
2015
Dec
2015
"The Norwegian share yielded a
return of 17 per cent in 2015"
NORWEGIAN ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
ment to reduce emissions and make avia-
tion more environmentally friendly. The
single most important action an airline can
take to reduce its environmental footprint
is to invest in new aircraft, consequently re-
ducing emissions considerably. With an av-
erage fleet age of 3.6 years (as of January 1,
2016) and a pending order of more than 250
new aircraft, Norwegian boasts one of the
greenest and most fuel-efficient fleets in
the world, and from 2014 to 2015, the total
emissions were reduced by as much as 9.3
per cent. In 2015, The International Council
on Clean Transportation named Norwegian
the most fuel-efficient transatlantic airline,
with an average fuel burn of 40 passenger
kilometers per liter. Norwegian goal is to
help make aviation carbon neutral by 2050.
Other key aspects of the Group’s corpo-
rate responsibility strategy are its humani-
tarian work through a long-term signature
partnership with UNICEF as well as its code
of ethics.
THE ENVIRONMENT
Norwegian is committed to actively engage
in and support a sustainable environmental
policy, and to continue to reduce emissions
from aviation. Norwegian boasts one of the
greenest and most fuel-efficient fleets in
the world, thanks to its state-of the art Boe-
ing 737-800 and 787 Dreamliner.
Norwegian’s fleet renewal program com-
menced in 2007 and the Group has continu-
ously taken deliveries of brand new Boeing
aircraft, enabling it to open new routes and
expand into new markets. In 2012, Norwe-
gian placed an order of 222 new Boeing and
Airbus single-aisle aircraft. The order was
the single largest order made by any Euro-
pean airline. The Group currently has more
than 250 new aircraft on order, including
30 Boeing 787-9 Dreamliners. In 2015, Nor-
wegian took delivery of ten Boeing 737-800s
and one Boeing 787-8 Dreamliner. It also
phased out seven Boeing 737s.
In 2015, The International Council on
Clean Transportation named Norwegian
the most fuel-efficient transatlantic airline.
According to the study, Norwegian’s mod-
ern Dreamliner fleet – with its average fuel
burn of 40 passenger kilometers per liter –
is significantly more fuel-efficient than any
of the other 19 leading transatlantic air-
lines. The second most fuel-efficient airline
burned 14 per cent more fuel per passen-
ger kilometer than Norwegian. The three
least-efficient airlines were collectively
responsible for one-fifth of transatlantic
available seat kilometers and burned 44 per
cent to 51 per cent more fuel per passenger
kilometer.
In 2015, the Group consumed 1015,337
tons of Jet A-1 fuel, equivalent to 77 grams
of CO
2
per passenger per kilometer, a reduc-
tion of 9.3 per cent from last year.
Norwegian encourages the development
of biofuel and is fully committed to replac-
ing traditional jet fuel with a greener alter-
native when it becomes commercially avail-
able and sustainable. In 2014, Norwegian
conducted its first ever biofuel flight, reduc-
ing emissions by 40 per cent compared to
an average flight with traditional fuel. This
biofuel flight was an important milestone
in the industry's shared commitment to
make sustainable biofuel more easily avail-
able for airlines. Through the development
of new technologies and frameworks, Nor-
wegian wants to help make aviation carbon
neutral by 2050. All employees should fo-
cus on how they can contribute to a better
environment.
"The second most fuel-efficient airline
burned 14 per cent more fuel per passenger
kilometer than Norwegian"
NORWEGIAN ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
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The Group’s business model promotes
high load factors and higher capacity per
flight, which makes Norwegian’s operations
more environmentally sustainable as emis-
sions per passenger are lower. The Group’s
emissions per passenger kilometer are well
below the industry average and less than
many forms of land and sea-based trans-
portation.
Other key measures that minimize Nor-
wegian’s environmental impact:
●
“Green” approaches, or Continuous
Descent Approaches (CDAs), designed to
reduce overall emissions during the final
stages of the flight
●
Winglets, a tailfin-like extension of each
wingtip on the Boeing 737-800, reduce
drag. The effect is a reduction in fuel
consumption, as the same lift and speed
is created with less engine thrust.
●
The technologically advanced 787
Dreamliner uses more than 20 per cent
less fuel than its counterparts. With a
pending order of 30 Dreamliners, to be
delivered in the coming years, Norwegian
will continue to be one of the most
environmentally friendly airlines in the
world
●
Modern, slim and light seats, reducing
weight and emissions
●
As opposed to traditional network
carriers, Norwegian bypasses the big
“hubs” and offers more direct flights.
The result is a significant reduction of
fuel-intensive take offs and landings.
●
A special engine and aircraft wash
decreases fuel consumption, reducing
carbon emissions by approximately
16000 tons per year.
●
Our new aircraft reduce noise
considerably, improving the conditions
for people living around the airport.
HUMANITARIAN WORK
Norwegian has a collaboration with
UNICEF, the United Nation’s Children
Fund. Norwegian also believes that it is im-
portant to enable staff and customers to
make a difference. Fundraisers, internal
activities, relief flights and other activities
contribute to supporting UNICEF and its
important efforts to help children in need
all over the world. Norwegian and UNICEF
have had a Signature Partnership since
2007.
Norwegian's support to UNICEF con-
sists of travel funding, fundraisers and em-
ployee engagement:
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●
Every year, Norwegian conducts “The
most important flight of the year”. In
cooperation with UNICEF, partners and
customers, Norwegian fills an aircraft
with emergency aid and flies it to an
area where the need for help is vital. In
2015, “The most important flight of the
year went to Jordan and Syrian refugee
children and in 2014, it went to the
Central African Republic.
●
In June 2015, Norwegian and Amadeus
launched a service that enables
customers to donate money to UNICEF
when booking a flight on Norwegian’s
website. The response from the
customers have been overwhelming, and
in seven months, they donated a total of
almost NOK 3.2 million.
●
Instead of giving its employees a
Christmas present, Norwegian donates
money to UNICEF
●
UNICEF Norway employees fly for free
with Norwegian
●
In 2013, Norwegian donated 1 NOK
from each water bottle sold on board
to UNICEF's important work. Our
passengers bought 1.3 million water
bottles and consequently contributed
with 1.3 million NOK to the world's
children.
CODE OF ETHICS
Norwegian’s code of ethics provides the di-
rections for a good working environment
and highlights the Group’s guidelines for
human rights, preventing corruption, em
-
ployee rights and safety for all – both for
customers and employees. Everyone has a
joint responsibility to create a good working
environment and develop a sound corpo
-
rate culture characterized by openness and
tolerance. Norwegian promotes an environ
-
ment free from any discrimination, based
on religion, skin color, gender, sexual ori
-
entation, age, nationality, race or disability.
The work environment shall be free from
bullying or harassment. The Group has zero
tolerance for behavior that may be perceived
as degrading or threatening. When engag
-
ing in businesses with third party suppliers,
Norwegian will, whenever possible, ensure
that the suppliers adhere to international
rules of ethical standards. The Group has re
-
viewed and updated its ethical guidelines.
EMPLOYEES AND ORGANIZATION
The airline business is a service business
where good relations and respect between
people are key success factors. Everyone at
Norwegian has a joint responsibility to cre-
ate a good working environment and de-
velop a sound corporate culture marked by
openness and tolerance. Norwegian sup-
ports the international human rights as
outlined by the UN declaration and conven-
tions. No one shall in any way cause or con-
tribute to the violation or circumvention of
human rights. Norwegian places great im-
portance on ensuring compliance with em-
ployees’ basic human rights as outlined in
the International Labor Organization's core
conventions.
Equality between the genders in terms
of employment, working conditions, career
opportunities and remuneration is a given
essentiality for Norwegian Group. Norwe-
gian has a long-term focus on creating an
attractive workplace for employees. An im-
portant success factor is maintaining a
workforce of highly motivated and skilled
employees and leaders. The goal is to offer
unique opportunities to the employees as
well as a corporate culture that helps us to
attract and retain the best people in the in-
dustry, regardless of where the business is
located. Creating effective arenas for learn-
ing and professional development at all lev-
els of the organization is a priority at Nor-
wegian.
At the end of 2015, the Group employed
a total of 4576 full-time equivalents (FTE’s)
compared to 4375 FTEs at the end of 2014.
(Apprentices and hired staff included). This
was a planned increase, which has taken
place in line with the 2015 expansion of the
route network.
Norwegian’s successful apprentice pro-
gram in Travel & Tourism continued in 2015
with apprentices from both Norway and
"Norwegian promotes
an environment free
from any discrimination,
based on religion, skin
color, gender, sexual
orientation, age,
nationality, race
or disability"
NORWEGIAN ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
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Sweden. The program is approved by the
Norwegian Educational Authorities, and
comprized round about a 100 apprentices
at the end of 2015. The program runs over a
two to three year period dependent on the
apprentice’s educational background, and
has year round rolling admission. A further
intake is due in 2016, and the program is
continuously developed.
At graduation, the apprentices have suc-
cessfully completed modules in Sales &
Marketing, Customer Support & Booking
and Ground Handling and had at least one
international assignment over a longer pe-
riod. On top of that, they have spent sev-
eral months flying as cabin crew members
across Scandinavia and Europe. The stan-
dard of our apprentices is at the highest
level with a perfect pass rate in 2015. The
labor unions are actively included in plan-
ning of the apprentices’ curriculum.
Norwegian’s human resources policy
strives to be equitable, neutral and non-dis-
criminatory, regardless of for example eth-
nicity and national background, gender,
religion or age. The airline industry has his-
torically been male-dominated, but Nor-
wegian has a strong tradition of practicing
equality since its inception in 2002. Norwe-
gian gives weight to have staff with exper-
tise related to tip tasks and is committed to
recruit both women and men to these posi-
tions.
In 2015, 47 (48.3) per cent of the employ-
ees were women and 53 (51.7) per cent were
men. Most of the pilots are men. The share
of female pilots is around 4.5 (5) per cent.
The majority of the cabin personnel are
women, while men account for approxi-
mately 23 (23) per cent.
Among administrative staff, there is
more or less an equal spread between
women and men. Among employees in tech
-
nical positions as technicians and engineers
there has historically been a predominance
of men, but this has changed in last few
years with an increasing share of female em
-
ployees. The Board of Directors has above
40 (40) per cent female representation.
SICKNESS LEAVE PER GROUP OF EMPLOYEES IN THE NORWEGIAN GROUP,
INCLUDING AGENCY STAFF*:
Cabin crew Pilots Other
Norway .% .% .% .% .% .%
Sweden .% .% .% .% - -
Denmark .% .% .% .% - -
Finland .% .% .% .% - -
Spain .% .% .% .% - -
UK .% .% .% .% - -
US .% .% - - - -
Thailand .% .% .% .% - -
*) Calculated sick leave comparable across all units. For Norway the external reported sick leave is calculated
different. The official reported sick leave for Cabin Crew was 13.3% (12.7%) and 8.6% (8.1%) for Pilots.
Active monitoring of HSE indicators, corpo-
rate health insurance policies and continu-
ing cooperation with protective services
will contribute to ensure that reduction of
sickness leave remains a priority.
A number of key HSE activities (Health,
Safety and the Environment) are conducted
in compliance with labor laws and corpo-
rate guidelines, such as risk assessments,
audits, handling of occurrence reports,
work environment surveys and following
up with group processes on base-meetings
both for crew and technical staff. Activi-
ties also include participation in ERM-or-
ganization, FRSAG (Fatigue Risk Safety
Action Group), SAG (Safety Action Group),
Non SAG and in several HSE-related proj-
ects. HSE information is also provided in
connection with training of crew, pilots and
technical staff.
The Group HSE function also ensures
group HSE supervision, leading the work
with preventing addiction and abuse prob-
lems, Work Environment committees
(WEC) and safety representative meetings.
New WEC’s have been established in the
companies PSN, CSN and CSD, and there
is an ongoing work establishing WEC also
in PSS and PSD. Structural meetings with
safety representatives and agencies are im-
portant, and as the organization grow, it is
necessary to implement HSE into the new
Group structure. This is an ongoing pro-
cess.
Norwegian Air Shuttle ASA is a mem-
ber of NHO Aviation, which is a member of
NHO (Confederation of Norwegian Enter-
prise). The 2015 collective salary review was
conducted through local union negotia-
tions. Wage development reflects the social
situation, and was moderate according to
the consumer price index.
In March 2015 there were negotiations
with the Norwegian Pilot Union regarding
the tariff agreement for the pilot compa-
nies within Norwegian Group. The negotia-
tions lead to an extensive strike with conse-
quences for both Norwegian Group and its
customers.
People working in Norwegian are em-
ployed in the country where they are based,
and follow the laws and regulations for
the respective country. Group policies and
guidelines are however based upon a Scan-
dinavian approach in according to Norwe-
gians organizational culture.
CORPORATE GOVERNANCE
Good corporate governance is a priority for
the Board of Directors. Norwegian’s objec-
tive for corporate governance is based on
accountability, transparency, fairness and
simplicity with the ultimate goal of max-
imizing shareholder value while creating
added value for all stakeholders. The princi-
ples are designed in compliance with laws,
regulations and ethical standards. Norwe-
gian’s core values are simplicity, directness
and relevance, but no business conduct
within the Group should under any circum-
stances jeopardize safety and quality.
Norwegian is subject to the annual cor-
porate governance reporting requirements
under section 3-3b of the Norwegian Ac-
counting Act and the Norwegian Code of
Practice for Corporate Governance, cf. sec-
tion 7 on Oslo Børs’ continuing obligations
of listed companies. The Accounting
Act may be found (in Norwegian) at
www.lovdata.no. The Norwegian Code of
Practice for Corporate Governance (“the
code), which was last revised on October 30,
2014, may be found at www.nues.no.
NORWEGIAN ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
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The annual corporate governance state-
ment is approved by the Board of Directors
and is pursuant to Section 5-6 of the Public
Limited Companies Act, subject to approval
by the Annual General Meeting.
Norwegian has adapted to the code and
subsequent amendments in all areas.
A more detailed account of how Norwe
-
gian complies with the Code of Practice
and the Norwegian Accounting Act's re
-
quirements for reporting on corporate gov-
ernance is included in a separate section of
the annual report and separate document,
which is available on the Group’s website
www.norwegian.no.
OUTLOOK FOR 2016
The market in Norway is influenced by the
slowdown in the economy. In Denmark
there is increased competition as several
players have added capacity for the winter
2016. The demand for travelling with Nor-
wegian and advance bookings have been
satisfactory entering the first quarter of
2016. Norwegian will continue to take ad-
vantage of its increasing competitive power
realized through continuous cost efficiency,
and from introducing larger aircraft (sev-
enteen new 737-800Ws and four new 787-9
will be delivered in 2016) with a lower oper-
ating cost. In addition four Airbus 320neo
aircraft will be delivered in 2016, which will
be leased to airline HK Express.
Norwegian has twenty operational bases
globally. On March 27, 2016, the first Ital-
ian base will be opened at Rome Fiumicino
Airport.
Norwegian guides for a production
growth (ASK) of 18 per cent for 2016, includ-
ing the long haul production. The growth
in short haul production is mainly from in-
creasing the fleet by adding 737-800s. The
long haul production will grow in accor-
dance with the phasing in of aircraft and
the Company will have twelve Boeing 787
by the end of 2016. Norwegian may decide
to adjust capacity in order to optimize the
route portfolio depending on the develop-
ment in the overall economy and in the
marketplace.
Assuming a fuel price of USD 350 per
ton, USD/NOK 8.25 and EUR/NOK 9.00 for
the year 2016 (excluding hedged volumes)
and with the currently planned route port-
folio, the Group is targeting a unit cost
(CASK) in the area of NOK 0.37 for 2016.
Norwegian is establishing and preparing
for an organizational structure that will se-
cure cost efficient international expansion
and necessary traffic rights for the future.
In February 2016, Norwegian reached an
agreement with cabin crew in Norway and
Denmark. The new collective agreements
are for a two-year period and will secure a
steady foundation for the coming years.
Fornebu, March 16, 2016
Bjørn H. Kise Liv Berstad Christian Fredrik Stray
(Chair) (Deputy chair) (Director)
Ada Kjeseth Kenneth Utsikt Linda Olsen
(Director) (Director, employee representative) (Director, employee representative)
Thor Espen Bråten Bjørn Kjos
(Director, employee representative) (Chief Executive Officer)
NORWEGIAN ANNUAL REPORT 2015
BOARD OF DIRECTORS' REPORT
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS 2015
Consolidated income statement 1.1 - 31.12
Consolidated statement of comprehensive Income 1.1 - 31.12
Consolidated statement of financial position at December 31
Consolidated statement of changes in equity 1.1 – 31.12
Consolidated cash flow statement 1.1 - 31.12
Notes to the consolidated financial statements
Note 01: Summary of significant accounting policies
Note 02: Financial risk
Note 03: Fair value estimation
Note 04: Segment information
Note 05: Operating expenses
Note 05A: Other operating expenses
Note 06: Payroll expenses and number of employees
Note 07: Remuneration of the Board of Directors and executive management
Note 08: Net financial items
Note 09: Tax
Note 10: Intangible assets
Note 11: Tangible assets
Note 12: Operating leases
Note 13: Trade and other receivables
Note 14: Inventories
Note 15: Equity and shareholder information
Note 16: Earnings per share
Note 17: Options
Note 18: Pensions
Note 19: Provisions
Note 20: Financial instruments
Note 21: Trade and other payables
Note 22: Borrowings
Note 23: Assets pledged as collaterals and guarantees
Note 24: Bank deposits
Note 25: Investments in associated companies
Note 26: Related party transactions
Note 27: Contingencies and legal claims
Note 28: Commitments
Note 29: Events after the reporting date
FINANCIAL STATEMENTS FOR THE PARENT COMPANY
Income statement
statement of comprehensive income
Statement of financial position at December 31
Statement of changes in Equity
Cash flow statement
Notes to financial statements of the parent company
Note 01: General information and summary of significant accounting principles
Note 02: Financial risk
Note 03: Revenues
Note 04: Operational expenses
Note 04A: Other operating expenses
Note 05: Payroll expenses and number of employees
Note 06: Remuneration to the Board of Directors and executive management
Note 07: Net financial items
Note 08: Taxes
Note 09: Intangible assets
Note 10: Tangible assets
Note 11: Leasing
Note 12: receivables
Note 13: Inventories
Note 14: Shareholder’s equity and shareholder information
Note 15: Pensions
Note 16: Options
Note 17: Provisions
Note 18: Trade and other payables
Note 19: Financial instruments
Note 20: Assets pledged as collateral and guarantees
Note 21: Bank deposits
Note 22: Borrowings
Note 23: Investments in subsidiaries
Note 24: Investment in asssociates
Note 25: Related parties
Note 26: Contingencies and legal claims
Note 27: Commitments
Note 28: Transition to IFRS
Note 29: Events after the reporting date
INDEPENDENT AUDITOR’S REPORT
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS |
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CONSOLIDATED FINANCIAL STATEMENTS 2015
CONSOLIDATED INCOME STATEMENT 1.1 - 31.12
NOK 1 000 Note 2015 2014
Revenues
Other income
Total operating revenues and income
Operational expenses
Payroll , , ,
Depreciation, amortization and impairment ,
Other operating expenses a
Other losses/(gains) - net
Total operating expenses
Operating profit ()
Net financial items ( ) ()
Share of profit (loss) from associated company
Profit (loss) before tax ()
Income tax expense (income) ( ) ()
Profit (loss) for the year ()
Basic earnings per share . (.)
Diluted earnings per share . (.)
Profit attributable to:
Owners of the Company ()
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1.1 - 31.12
NOK 1 000 Note
Profit for the year ()
Non-reversible income and losses:
Actuarial gains and losses ()
Total reversible income and losses ()
Reversible income and losses:
Available-for-sale financial assets - ()
Exchange rate differences Group
Total reversible income and losses
Total comprehensive income for the period ()
Total comprehensive income attributable to:
Owners of the Company ()
The notes on pages 30-61 are an integral part of these consolidated financial statements.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | GROUP FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT DECEMBER 31
NOK 1 000 Note
ASSETS
Non-current assets
Intangible assets 10
Deferred tax asset 9
Aircraft, parts and installations on leased aircraft 11
Equipment and fixtures 11
Buildings 11
Financial lease asset 11 -
Financial assets available for sale 3, 20
Investment in associate 25
Prepayment to aircraft manufacturers 11
Other receivables 13
Total non-current assets
Current assets
Inventory 14
Trade and other receivables 13
Cash and cash equivalents 24
Total current assets
Total assets
NOK 1 000 Note
EQUITY AND LIABILITIES
Equity 15
Share capital
Share premium
Other paid-in equity
Other reserves
Retained earnings
Total equity
Non-current liabilities
Pension obligation 18
Provision for periodic maintenance 19
Other long term liabilities 19 -
Deferred tax 9 -
Borrowings 22
Financial lease liability 22 -
Total non-current liabilities
Short term liabilities
Short term part of borrowings 22
Trade and other payables 21
Air traffic settlement liabilities
Derivative financial instruments 3, 20
Tax payable 9
Total short term liabilities
Total liabilities
Total equity and liabilities
The notes on pages 30-61 are an integral part of hese consolidated financial statements.
Fornebu, March 16, 2016
Bjørn H. Kise Liv Berstad Christian Fredrik Stray
(Chair) (Deputy chair) (Director)
Ada Kjeseth Kenneth Utsikt Linda Olsen
(Director) (D ire c to r,
employee representative)
(D ire c to r,
employee representative)
Thor Espen Bråten Bjørn Kjos
(D ire c to r,
employee representative)
(Chief Executive Officer)
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | GROUP FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 1.1 – 31.12
NOK 1 000
Share
capital
Share
premium
Other paid-in
equity
Total paid-in
equity
Other
Reserves
Retained
earnings
Total
equity
Equity at January 1, 2014 ()
Net profit for the year - - - - - () ( )
Available for sale financial assets - - - - () - ( )
Actuarial gains and losses - - - - - () ( )
Exchange rate differences Group - - - - -
Comprehensive income 2014 - - - - () ( )
Equity change on employee options - -
Transactions with owners - -
Equity December 31, 2014
Net profit for the year - - - - -
Actuarial gains and losses - - - - -
Exchange rate differences Group - - - - -
Comprehensive income 2015 - - - -
Share issue - - -
Equity change on employee options - - -
Transactions with owners - -
Equity December 31, 2015
The notes on pages 30-61 are an integral part of these consolidated financial statements.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | GROUP FINANCIAL STATEMENTS
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CONSOLIDATED CASH FLOW STATEMENT 1.1 - 31.12
NOK 1 000 Note
Cash flows from operating activities:
Profit (loss) before tax ()
Taxes paid 9 ( ) ()
Depreciation, amortization and write-down 10, 11
Pension expense without cash effect
Profit from associated company 26 ( ) ()
Compensation expense for employee options 17
Fair value (gains)/losses on financial assets 20
Realized effects from currency and derivative contracts ( ) ()
Financial items 8
Interest received 8
Change in inventories, accounts receivable and accounts payable ( )
Change in air traffic settlement liabilities
Change in other current assets and current liabilities ()
Net cash flow from operating activities
Cash flows from investing activities:
Prepayments aircraft purchase 11 ( ) ()
Purchase of tangible assets 11 ( ) ()
Purchase of intangible assets 10 ( ) ()
Proceeds from sales of tangible assets 11
Payment to associated company 26 - ()
Net cash flow from investing activities ( ) ()
Cash flows from financial activities:
Proceeds from long-term debt 22
Payment of long-term debt 22 ( ) ()
Interest on borrowings ( ) ()
Proceeds from issuing new shares -
Net cash flow from financial activities
Foreign exchange effect on cash ( )
Net change in cash and cash equivalents ()
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31 24
The notes on pages 30-61 are an integral part of these consolidated financial statements.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | GROUP FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE : SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.1 General information
Norwegian Air Shuttle ASA and its subsidiar
-
ies (henceforth referred to as ‘the Group’) are
a low-cost airline incorporated in Norway and
headquartered at Fornebu outside of Oslo.
Norwegian Air Shuttle ASA is a public limited
liability company and listed on the Oslo Stock
Exchange.
The consolidated financial statements of
Norwegian Air Shuttle ASA for the year ended
December 31, 2015 were authorized for issue
by the Board of Directors on March 16, 2016.
1.2 Basis of preparation
The consolidated financial statements of Nor
-
wegian Air Shuttle ASA have been prepared in
accordance with the International Financial
Reporting Standards (IFRS) and IFRIC inter
-
pretations, as adopted by the EU. The consoli-
dated financial statements have been prepared
under the historical cost convention, as mod
-
ified by the revaluation of available-for-sale fi-
nancial assets, financial assets and financial lia-
bilities (including derivative instruments) at fair
value through profit or loss.
In order to prepare financial statements in
conformity with IFRS, it is necessary to apply
certain critical accounting estimates. It also
requires the Management to exercise its judg
-
ment when applying the Group’s accounting
policies. The areas involving a greater degree
of judgment or complexity, or areas where as
-
sumptions and estimates are significant to
the consolidated financial statements are dis
-
closed below. See paragraph 1.23.
The Group is in a strong financial position
and there are no indications that the Group is
in breach of the going concern convention. The
Group continues to adopt the going concern
convention in preparing its consolidated finan
-
cial statements.
1.2.1 Changes in accounting policies
and disclosures
Standards, amendments and interpretations
that are adopted
The following new or amended/revised IFRS or
IFRIC interpretations approved by the EU and
effective at the start of the financial year, be
-
ginning on or after January 1, 2015, have been
implemented, but have not had any material
impact on the Group other than minor disclo
-
sure changes related to some of the standards:
● Annual Improvements to IFRSs 2011-2013
Cycle
New standards, amendments and interpreta
-
tions not yet adopted
A number of new standards and amendments
to standards and interpretations approved by
the EU are effective for annual periods begin
-
ning after January 1, 2015, and have not been
applied in preparing these consolidated finan
-
cial statements. None of these are expected to
have a significant effect on the consolidated fi
-
nancial statements of the Group.
There are also some new standards and
amendments to standards that have not been
approved by the EU as per December 31, 2015
whereas such standards are effective on Jan
-
uary 1, 2016 or later. None of these new stan-
dards or amendments to standards have been
applied in preparing these consolidated finan
-
cial statements. From the Group’s perspective
the following new standards and interpreta
-
tions not yet approved are the most important:
● IFRS 9, ‘Financial instruments’ addresses the
classification, measurement and recognition
of financial assets and financial liabilities,
and replaces the guidance in IAS 39 that re
-
lates to the classification and measurement
of financial instruments. IFRS 9 establishes
three primary measurement categories for
financial assets: amortized cost, fair value
through OCI and fair value through P&L. For
financial liabilities there were no changes to
classification and measurement except for
the recognition of changes in own credit risk
in other comprehensive income, for liabil
-
ities designated at fair value through profit
or loss. IFRS 9 relaxes the requirements for
hedge effectiveness, and requires an eco
-
nomic relationship between the hedged item
and hedging instrument and for the ‘hedged
ratio’ to be the same as the one management
actually uses for risk management purposes.
The standard is effective for accounting pe
-
riods beginning on or after January 1, 2018.
Early adoption is permitted. The Group is yet
to assess IFRS 9’s full impact.
● IFRS 15, ‘Revenue from contracts with cus-
tomers’ deals with revenue recognition and
establishes principles for reporting use
-
ful information to users of financial state-
ments about the nature, amount, timing
and uncertainty of revenue and cash flows
arising from an entity’s contracts with cus
-
tomers. Revenue is recognized when a cus-
tomer obtains control of a good or service
and thus has the ability to direct the use
and benefit from the good or service. The
standard replaces IAS 18 ‘Revenue’ and IAS
11 ‘Construction contracts’ and related in
-
terpretations. The standard is effective for
annual periods beginning on or after Janu
-
ary 1, 2017 and earlier application is permit-
ted. The Group is yet to assess the impact
of IFRS 15.
● IFRS 16, ‘Leases’ replaces the current stan-
dards IAS 17 ‘Leases’ whereas IFRS 16 elim-
inates the classification of leases as either
operating leases or finance leases for a les
-
see. Instead all leases are treated in a simi-
lar way to finance leases applying IAS 17. Un-
der IFRS 16 leases are ‘capitalized’ by rec-
ognizing the present value of the lease pay-
ments and showing them either as lease
assets (right-of-use assets) or together with
property, plant and equipment. If lease pay
-
ments are made over time, a company also
recognizes a financial liability represent
-
ing its obligation to make future lease pay-
ments. IFRS 16 replaces the straight-line op-
erating lease expense for those leases ap-
plying IAS 17 with a depreciation charge for
the lease asset (included within operating
costs) and an interest expense on the lease
liability (included within finance costs). The
standard is effective for accounting periods
beginning on or after January 1, 2019. Early
adoption is permitted. As the Group is les
-
see in a large number of leases being classi-
fied as operational leases under IAS 17, one
expects a major increase in balance sheet
totals and also material reclassifications be
-
tween line items of the income statement.
The Group is yet to assess IFRS 16’s full im
-
pact. Further information on leases today
classified as operational leases are pre
-
sented in note 12.
There are no other IFRSs or IFRIC interpre
-
tations that are not yet effective that would
be expected to have a material impact on the
Group.
1.3 Basis of consolidation
The Group’s consolidated financial statements
comprize Norwegian Air Shuttle ASA, and its
subsidiaries, presented in note 25. Addition
-
ally, the Group has consolidated Special Pur-
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pose Vehicles (SPVs) according to IFRS 10. The
SPVs are solely established for aircraft financ
-
ing purposes. The Group does not own the
shares in those SPVs nor does it have control
over the management of those SPVs, but the
Group has accepted all risks and rewards re
-
lated to the assets, liabilities and operations of
the SPVs.
The financial statements of the subsidiaries
and SPVs are prepared for the same reporting
period as the parent company, using consis
-
tent accounting policies.
The acquisition method is applied when ac
-
counting for business combinations. Compa-
nies acquired or sold during the year are in-
cluded in the consolidated financial statements
from the date when control was achieved until
the date when control ceased.
The consideration that is transferred for the
acquisition of a subsidiary consists of the fair
values of the assets transferred, the liabili
-
ties incurred to the former owners of the ac-
quiree and the equity interests issued by the
Group. The transferred consideration includes
the fair value of any asset or liability result
-
ing from a contingent consideration arrange-
ment. Acquisition-related costs are expensed
as incurred. Acquired identifiable assets and
liabilities and contingent liabilities assumed
in a business combination are initially mea
-
sured at their fair values at the acquisition
date. On an acquisition-by-acquisition basis,
the Group recognizes any non-controlling in
-
terests of the acquiree either at fair value, or
at the non-controlling interest’s proportionate
share of the acquiree’s identifiable net assets.
The excess of the consideration transferred
and the amount of the non-controlling interest
over the fair value of the Group’s share of the
identifiable net assets acquired are recorded
as goodwill. If, in the case of a bargain pur
-
chase, the total of consideration transferred,
non-controlling interest recognized and pre
-
viously held interest measured is less than the
fair value of the net assets of the subsidiary ac
-
quired, the difference is recognized directly in
the income statement.
All intra group balances, transactions and
unrealized gains and losses on transactions be
-
tween group companies are eliminated.
When the Group ceases to have control any
retained interest in the entity is remeasured to
its fair value at the date when control ceased,
with the change in carrying amount recognized
in profit or loss. The fair value is the initial car
-
rying amount for the purposes of subsequently
accounting for the retained interest as an as
-
sociate, joint venture or financial asset. In ad-
dition, any amounts previously recognized in
other comprehensive income in respect of that
entity are accounted for as if the Group had
directly disposed of the related assets or lia
-
bilities.
The Group considers transactions with
non-controlling interests that do not result
in loss of control, as transactions with equity
owners of the Group. Any difference between
considerations paid and the relevant share ac
-
quired from the carrying value of net assets
are recorded in equity. Gains or losses on dis
-
posals to non-controlling interests are also re-
corded in equity.
An associate is an entity where the Group
holds a significant influence but does not con
-
trol the Management of its finances and opera-
tions (i.e. generally when the Group owns 20%-
50% of the voting rights of the Company). The
consolidated financial statements include the
Group’s share of the profits/losses from asso
-
ciates, accounted for using the equity method,
from the date when a significant influence is
achieved until the date when such influence
ceases. The Group’s share of its associates’
post- acquisition profits or losses is recog
-
nized in the income statement, and its share of
post-acquisition movements in other compre
-
hensive income is recognized in other compre-
hensive income. The cumulative post-acquisi-
tion movements are adjusted against the car-
rying amount of the investment. Dilution gains
and losses arising in investments in associates
are recognized in the income statement.
When the Group’s share of a loss exceeds
the Group’s investment in an associate, the
amount carried in the Group’s statement of fi
-
nancial position is reduced to zero and further
losses are not recognized unless the Group has
an obligation to cover any such losses. Unreal
-
ized gains on transactions between the Group
and its associates are eliminated in proportion
to the Group’s interest in the associates. Un
-
realized losses are also eliminated unless the
transaction provides evidence of an impair
-
ment of the asset transferred.
All other investments are recognized in ac
-
cordance with IAS 39, Financial Instruments:
Recognition and Measurement, and additional
information are provided in note 20.
1.4 Foreign currency translation
The Group’s presentation currency is Nor
-
wegian Krone (NOK). Norwegian Air Shuttle
ASA’s functional currency is NOK. Each en
-
tity of the Group determines its own func-
tional currency and items that are included
in the entities’ financial statements are mea
-
sured in that functional currency. For consoli-
dation purposes, the results and financial po-
sition of all the Group’s entities that have a
functional currency other than NOK are trans
-
lated to the closing rate at the reporting date
of each month. Income and expenses for each
income statement are translated to the aver
-
age exchange rate for the period, this being a
reasonable approximation for estimating ac
-
tual rate. Exchange differences are recognized
in comprehensive income and specified sepa
-
rately in equity.
Transactions in foreign currencies are ini
-
tially recorded at the functional currency rate
using the exchange rates prevailing of the
dates of the transactions or valuation where
items are re-estimated. Monetary assets and
liabilities denominated in foreign currencies
are translated to the functional currency ex
-
change rate of the reporting date. Any dif-
ferences are recognized in the income state-
ment. Non-monetary items that are measured
in terms of historical cost in a foreign currency
are translated using the exchange rates of the
dates of the initial transactions.
Foreign currency gains and losses on oper
-
ating activities are recognized within operat-
ing profit. Foreign currency gains and losses on
financing activities are recognized within net
financial items.
Goodwill and fair value adjustments aris
-
ing on the acquisition of a foreign entity are
treated as assets and liabilities of the for
-
eign entity and translated at the closing rate.
Any differences in exchange are recognized in
other comprehensive income.
1.5 Tangible assets
Tangible assets including buildings are carried
at historical cost, less accumulated depreci
-
ation and impairment losses. When assets are
sold or disposed of, the gross carrying amount
and accumulated depreciation and impairment
losses are derecognized. Any gain on the sale
is recognized in the income statement as other
income and any loss on the sale or disposal is
recognized in the income statement as other
losses/(gains)-net.
The gross carrying amount of non-current
assets is the purchase price, including duties/
taxes and direct acquisition costs relating to
making the non-current asset ready for its in
-
tended use. Subsequent costs, such as repair
and maintenance costs, are normally recog
-
nized in profit or loss as incurred. When in-
creased future economic benefits are the re-
sult of verified repair and maintenance work,
these costs will be recognized in the statement
of financial position as additions to non-cur
-
rent assets. Borrowing costs are capitalized on
qualifying assets.
Non-current assets are depreciated on a
straight-line basis or by airborne hours and cy
-
cles over the estimated useful life of the asset
beginning when the asset is ready for its in
-
tended use. Residual values, where applicable,
are reviewed annually against prevailing mar
-
ket rates at the reporting date for equivalently
aged assets and depreciation rates adjusted
accordingly on a prospective basis. The carry
-
ing value is reviewed for impairment if events
or changes in circumstances indicate that the
carrying value may not be recoverable.
An aircraft is recognized as two components
for depreciation purposes in order to consider
different useful lives of the aircraft compo
-
NORWEGIAN ANNUAL REPORT 2015
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NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
nents. The first aircraft component is defined
as maintenance components. In accordance
with official requirements, the aircraft must be
maintained which means significant compo
-
nents must be changed after a specific number
of take-offs or airborne hours. These compo
-
nents are identified as two heavy maintenance
checks of the aircraft body, power restoration
and life limited parts for the two engines on
each aircraft, as well as maintenance on land
-
ing gears and APU. The maintenance and over-
hauls of these components occur on a defined
interval, and the value is depreciated based on
the number of take-offs or airborne hours un
-
til the next maintenance is conducted. Com-
pleted maintenance and overhaul are capital-
ized and depreciated until the next relevant
maintenance and overhauls. The second air
-
craft component is defined as the remainder
of the aircraft and depreciated over the esti
-
mated useful life.
Investments in leased aircraft including
cabin interior modifications are depreciated
over their useful lives, but not exceeding the
remaining leasing period.
Rotable spare parts are carried as non-cur
-
rent assets and depreciated over their useful
lives.
The Group capitalizes prepayments on the
purchase contracts of aircraft. The prepay
-
ments are classified as tangible assets as pre-
sented at the face of the statement of financial
position. The prepayments include capitalized
borrowing costs. On the delivery of the aircraft,
the prepayments are included in the acquisition
costs of the aircraft and reclassified as aircraft
in the statement of financial position.
Financial lease assets are initially recognized
at the lower of acquisition cost or future min
-
imum lease payments. The assets are carried
as non-current assets and depreciated on a
straight-line basis over their expected useful
lives.
The depreciation period and method are as
-
sessed annually to ensure that they reconcile
with the substance of the non-current asset.
Additional details on tangible assets are out
-
lined in note 11.
1.6 Intangible assets
1.6.1 Computer software
Acquired computer software licenses are cap
-
italized on the basis of the costs incurred to
obtain and apply the specific software. These
costs are amortized over their estimated use
-
ful lives.
Costs associated with developing or main
-
taining computer software programs are rec-
ognized as an expense as incurred. Costs
which are directly associated with the devel
-
opment of identifiable software products con-
trolled by the Group, and which are estimated
to generate economic benefits, are recognized
as intangible assets. The costs of computer
software developments recognized as assets
are amortized over their estimated useful lives.
The depreciation of the software commence as
each module is completed.
1.6.2 Goodwill and other intangible assets
Goodwill represents the excess of the cost of
an acquisition over the fair value of the Group’s
share of the net identifiable assets of the ac
-
quired subsidiary at the date of acquisition.
Goodwill is tested annually for impairment and
carried at cost less accumulated impairment
losses. Gains and losses on the disposal of an
entity include the carrying amount of goodwill
relating to the entity sold.
Other intangible assets are related to iden
-
tifiable assets from business combinations and
investments in other intangible assets.
Intangible assets which are determined as
having indefinite useful lives, are not amor
-
tized, but subject to annual impairment test-
ing. The determination of indefinite useful lives
is based on Management’s assessment as to
whether there is any foreseeable limit to the
period over which the asset is expected to
generate net cash inflows for the entity.
See note 1.7 for details of impairment testing
of non-financial assets and note 10 for addi
-
tional details on intangible assets.
1.7 Impairment of non-financial assets
Intangible assets with indefinite useful lives are
not subject to amortization, and are tested an
-
nually for impairment. Assets that are subject
to amortization are reviewed for impairment
whenever events or changes in circumstances
indicate that the carrying amount may not be
recoverable. An impairment loss is recognized
for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use.
For the purposes of impairment testing, as
-
sets are grouped at the lowest levels of sep-
arately identifiable cash flows (cash-gener-
ating units). The allocation is made to those
cash-generating units that are expected to
benefit from the assets. The Management has
assessed the Group as one segment and the
Group’s total operations as its cash generat
-
ing unit. The determination of cash generating
units is based on how the Management oper
-
ates and assesses the Group’s performance,
profit and cash flow. The aircraft fleet is oper
-
ated as one unit and the route portfolio is ad-
ministered and diversified as one unit gener-
ating the Group’s profit and cash flow, hence
goodwill and other non-current assets are re
-
allocated to the entire group for the purpose
of impairment testing.
Non-current assets other than goodwill that
have suffered impairment are reviewed for a
possible reversal of the impairment at each re
-
porting date. Impairment losses on goodwill
are not reversed.
1.8 Financial assets
Financial assets are classified according to
the following categories; as fair value through
profit or loss, held-to-maturity investments,
loans and receivables and available-for-sale.
The Group holds financial instruments that are
classified as fair value through profit or loss,
available-for-sale and loans and receivables.
The classification depends on the purpose for
which the financial assets were acquired. The
Management determines the classification of
its financial assets at initial recognition.
Financial assets that are categorized as fair
value through profit or loss are financial assets
held for trading. A financial asset is classified
as in this category if it was principally acquired
for the purpose of selling on a short-term ba
-
sis. Derivatives are also categorized as held for
trading unless they are designated as hedges.
Assets in this category are classified as current
assets.
Loans and receivables are non-derivative fi
-
nancial assets with fixed or determinable pay-
ments that are not quoted in an active market.
They are included in current assets, except for
maturities greater than 12 months after the re
-
porting date. These are classified as non-cur-
rent assets. The Group’s loans and receivables
comprize trade and other payables/receiv
-
ables, and cash and cash equivalents in the
statement of financial position (See note 1.11
and 1.12 respectively).
Available-for-sale financial assets are
non-derivatives that are either designated in
this category or not classified as being in any
of the other categories. They are included in
non-current assets unless the Management in
-
tends to dispose of the investments within 12
months of the reporting date.
Regular purchases and sales of financial as-
sets are recognized on the trade-date; the date
which the Group commits to purchase or sell
the asset. Investments are initially recognized at
fair value plus transaction costs for all financial
assets not carried at fair value through profit
or loss. Financial assets carried at fair value
through profit or loss, are initially recognized at
fair value and transaction costs are expensed
in the income statement. Financial assets are
derecognized when the rights to receive cash
flows from the investments have expired or
have been transferred and the Group has sub
-
stantially transferred all risks and rewards of
ownership. Available-for-sale financial assets
and financial assets at fair value through profit
or loss are subsequently carried at fair value.
Loans and receivables are carried at amortized
cost using the effective interest method.
Gains or losses arising from changes in the
fair value of the ‘financial assets at fair value
through profit or loss’ category are presented
in the income statement within ‘other losses/
(gains) – net’ of the period in which they oc
-
NORWEGIAN ANNUAL REPORT 2015
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NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
cur. Gains or losses that occur from changes in
the fair value of the ‘available-for-sale’ cate
-
gory are presented in equity within other com-
prehensive income in the period in which they
occur. Interests on available-for-sale securities
which are calculated using the effective inter
-
est method, is recognized in the income state-
ment as part of other income. Dividend income
from financial assets at fair value through profit
or loss and available- for- sale financial assets
are recognized in the income statement as a
part of other income when the Group’s right to
receive payments is established.
Financial assets and liabilities are offset and
the net amount reported in the balance sheet
when there is a legally enforceable right to off
-
set the recognized amounts and there is an in-
tention to settle on a net basis or realize the
asset and settle the liability simultaneously.
The legally enforceable right must not be con
-
tingent on future events and must be enforce-
able in the normal course of business and in
the event of default, insolvency or bankruptcy
of the Company or the counterparty.
1.8.1 Impairment of financial assets
The Group assesses at each reporting date
whether there is objective evidence that a fi
-
nancial asset or a group of financial assets is
impaired. The fair values of quoted invest
-
ments are based on current mid prices at the
reporting date. If the market for a financial as
-
set is not active (and for unlisted securities),
the Group establishes fair value by using valu
-
ation techniques. The valuation hierarchy for
financial assets is detailed in note 3 where the
techniques are making maximum use of market
inputs and relying as little as possible on enti
-
ty-specific inputs.
Impairment losses of financial assets mea
-
sured at amortized cost are incurred only if
there is objective evidence of impairment as a
result of one or more events that occur after
initial recognition. Impairment losses are rec
-
ognized in the consolidated income statement
if the losses have had an impact on the esti
-
mated future cash flows and that the impact
can be reliably estimated.
For the loans and receivables category, the
amount of the loss is measured as the differ
-
ence between the asset’s carrying amount and
the present value of estimated future cash
flows (excluding future credit losses that have
not been incurred) discounted at the financial
asset’s original effective interest rate.
Impairment losses of available-for-sale fi-
nancial assets are incurred if there is objec-
tive evidence that a financial asset or a group
of financial assets is impaired. For debt secu
-
rities, if any such evidence exists the cumu-
lative loss – measured as the difference be-
tween the acquisition cost and the current
fair value, less any impairment loss on that
financial asset previously recognized in profit
or loss – is removed from equity and recog
-
nized in profit or loss. If, in a subsequent pe-
riod, the fair value of a debt instrument clas-
sified as available for sale increases and the
increase can be objectively related to an
event occurring after the impairment loss was
recognized in profit or loss, the impairment
loss is reversed through the consolidated in
-
come statement.
For equity investments, a significant or pro-
longed decline in the fair value of the security
below its cost is also evidence that the assets
are impaired. If any such evidence exists the
cumulative loss – measured as the difference
between the acquisition cost and the current
fair value, less any impairment loss on that fi
-
nancial asset previously recognized in profit or
loss – is removed from equity and recognized
in profit or loss. Impairment losses recognized
in the consolidated income statement on eq
-
uity instruments are not reversed through the
consolidated income statement.
1.9 Derivative financial instruments
and hedging activities
Derivatives are initially recognized at fair value
on the transaction date and subsequently
measured at their fair value. Derivatives are
classified within the category ‘financial assets
at fair value through profit or loss’ as long as
the derivatives are not designated as hedging
instruments for accounting purposes.
The Group has not designated any deriva
-
tives as hedging instruments for accounting
purposes in 2015 or 2014.
1.10 Inventory
Inventory of spare parts are carried at the
lower of acquisition cost and net realizable
value. Cost is determined using the first in –
first out (FIFO) method. Obsolete inventory has
been fully recognized as impairment losses. In
-
ventory is consumed during maintenance and
overhaul of the aircraft, and is expensed when
consumed.
1.11 Trade receivables
Trade receivables are amounts due from cus
-
tomers for services performed and goods sold
in the ordinary course of business. If collection
is expected in one year or less, they are clas
-
sified as current assets. If not, they are pre-
sented as non-current assets. Trade receiv-
ables are recognized initially at fair value and
subsequently measured at amortized cost us
-
ing the effective interest method, less provi-
sion for impairment.
Receivables from credit card companies are
classified as trade receivables in the statement
of financial position.
1.12 Cash and cash equivalents
Cash and cash equivalents include cash in hand
and in the bank, as well as short-term depos
-
its with an original maturity of three months or
less. Cash and cash equivalents in the state
-
ment of financial position include restricted
funds from withheld employee tax, guarantees
and deposits pledged as collateral to suppliers
(note 24).
The Group holds investments in money mar
-
ket funds. These investments are classified
as either cash equivalents or financial assets
available-for-sale depending on the maturity of
the investments.
1.13 Equity
Share capital comprizes the number of shares
multiplied by their nominal value, and are clas
-
sified as equity.
Transaction costs directly attributable to an
equity transaction are recognized directly in
equity net of tax.
Acquisitions of own shares are recognized
in share capital and retained earnings. The
number of shares purchased multiplied by the
nominal value is deducted from outstanding
share capital. The share premium paid is rec
-
ognized in other equity. The sale of own shares
is booked accordingly, with nominal value as
increase of share capital, and share premium
in other equity.
1.14 Liabilities
Borrowings are recognized initially at fair value,
net of transaction costs incurred. Borrow
-
ings are subsequently measured at amortized
cost; difference between the proceeds (net of
transaction costs) and the redemption value is
recognized in the income statement over the
period of the borrowings using the effective
interest method.
Borrowings are classified as current liabil
-
ities unless the Group has an unconditional
right to defer settlement of the liability for at
least 12 months after the reporting date.
Trade payables are obligations to pay for
goods or services purchased from suppliers in
accordance with general course of business.
Accounts payables are classified as current li
-
abilities if payment is due within the next 12
months. Payables due after the next 12 months
are classified as non-current liabilities. Trade
payables are recognized initially at fair value
and subsequently measured at amortized cost
using the effective interest method.
1.15 Provisions
Provisions are recognized when the Group has
a present obligation (legal or constructive) as
a result of a past event, it is probable that an
outflow of resources will be required to set
-
tle the obligation and the amount has been
reliably estimated. Where the Group expects
some or all of a provision to be reimbursed, for
example under an insurance contract, the re
-
imbursement is recognized as a separate as-
set but only when the reimbursement is virtu-
NORWEGIAN ANNUAL REPORT 2015
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NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
ally certain. The expense relating to any provi-
sion is presented in the income statement net
of any reimbursement. If the effect of the time
value of money is material, provisions are dis
-
counted using a current pre tax rate that re-
flects, where appropriate, the risks specific to
the liability. Where discounting is used, the in
-
crease in the provision due to the passage of
time is recognized as a finance cost.
1.16 Employee benefits
The Group operates various pension schemes.
The schemes are generally funded through
payments to insurance companies or trust
-
ee-administered funds, determined by peri-
odic actuarial calculations.
1.16.1 Defined benefit plans
The Group operated a defined benefit pension
plan until December 1, 2012, when the plan was
closed and all employees were transferred to
a defined contribution plan (see 1.16.2). In No
-
vember 2013, the Group issued a new defined
benefit pension plan, according to the Collec
-
tive Agreement with the Norwegian Pilot Union.
The cost of providing benefits under the de-
fined benefit plan is determined using the pro-
jected unit credit actuarial valuation method.
The past service cost is recognized as an ex
-
pense on a straight-line basis over the average
period until the benefits are vested. If the bene
-
fits are already vested immediately following the
introduction of or changes to a pension plan,
past service cost is recognized immediately.
The defined benefit obligation is the aggre-
gate of the present value of the defined bene-
fit obligation and actuarial gains and losses not
recognized reduced by past service costs not
yet recognized and the fair value of plan assets
out of which the obligations are to be settled
directly. If such aggregate is negative, the as
-
set is measured at the lower of such aggregate
or at the aggregate of cumulative unrecog
-
nized net actuarial losses and past service cost
and the present value of any economic ben
-
efits available in the form of refunds from the
plan or reductions in the future contributions
to the plan.
In addition, the Group participates in an
early retirement plan (AFP) for all employees in
Norway. The AFP pension plan is a multi-em
-
ployer defined benefit plan. However, the plan
is recognized in the income statement as a de
-
fined contribution plan as the plans adminis-
trator has not allocated actuarial gains/losses
to the members of the AFP pension plan as of
December 31, 2015.
Provisions for pension costs are detailed in
note 18.
1.16.2 Defined contribution plans
In addition to the defined benefit plan de
-
scribed above, the Group operates a defined
contribution plan. A defined contribution plan
is a pension plan under which the Group pays
fixed contributions to a separate entity. The
Group has no legal or constructive obligations
to pay further contributions should the fund
not hold sufficient assets to pay all employees
the benefits relating to employee service in the
current and prior periods. The contributions
are recognized as employee benefit expenses
when they are due. Prepaid contributions are
recognized as an asset to the extent that a cash
refund or a reduction in the future payments is
available.
1.16.3 Share-based payments
The Group operates a number of equity-set
-
tled, share-based compensation plans under
which the entity receives services from em
-
ployees as consideration for equity instru-
ments of the Group. The fair value of the em-
ployee services received in exchange for the
grants of the options is recognized as an ex
-
pense over the vesting period. The total
amount to be expensed is determined by re
-
ferring to the fair value of the options granted.
The fair value of the options to be settled in
equity instruments is estimated at the grant
date. The fair value is determined by an exter
-
nal part by applying the Black and Scholes op-
tion-pricing model. The assumptions underly-
ing the number of options expected to vest are
adjusted to reflect conditions prevailing at the
reporting date. For further details see note 17.
The social security contributions payable
in connection with the grant of the share op
-
tions is considered an integral part of the
grant itself, and the charge will be treated as a
cash-settled transaction.
1.16.4 Employee share purchase
savings program
Bonus shares and employer’s contribution
are measured at fair value using the Black and
Scholes option pricing model. Expenses for
bonus shares are included in payroll expenses.
The fair value of the bonus shares and the es
-
timated employer’s contribution are distrib-
uted as expenses over the expected period un-
til settlement. Changes in estimates affecting
employer’s contribution are expensed over the
remaining expected period. For further details
see note 17.
1.17 Current and deferred income tax
The tax expense for the period comprizes cur-
rent and deferred tax. Tax is recognized in the
income statement, except to the extent when
it relates to items recognized in other compre
-
hensive income or directly in equity. In this case,
the tax is also recognized in other comprehen
-
sive income or directly in equity, respectively.
1.17.1 Current income tax
Current income tax assets and liabilities for the
current and prior periods are measured at the
amount expected to be recovered from or paid
to the taxation authorities. The tax rates and
tax laws that are used to compute the amount
are those which are enacted or substantively
enacted at the reporting date.
1.17.2 Deferred income tax
Deferred income tax is determined by us
-
ing the liability method on temporary differ-
ences at the reporting date between the tax
bases of assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred income tax liabilities are recog
-
nized for all taxable temporary differences.
Deferred income tax assets are recognized for
all deductible temporary differences, carry
forward of unused tax credits and unused tax
losses, to the extent that it is probable that
taxable profit will be available against which
the deductible temporary differences, and the
carry forward of unused tax credits and un
-
used tax losses can be utilized.
The carrying amount of deferred income tax
assets is reviewed at each reporting date and
reduced to the extent that it is no longer prob
-
able that sufficient taxable profit will be avail-
able to allow all or part of the deferred income
tax asset to be utilized. Unrecognized deferred
income tax assets are reassessed at each re
-
porting date and are recognized to the extent
that it has become probable that future tax
-
able profit will allow the deferred tax asset to
be recovered.
Deferred income tax assets and liabilities are
measured at the tax rates that are expected in
the year when the assets are realized or when
the liabilities are settled, based on tax rates
(and tax laws) which have been enacted, or
substantively enacted, at the reporting date.
Deferred income tax assets and deferred in-
come tax liabilities are offset to the extent that:
● the Group has a legal and enforceable right
to offset the recognized amounts and
● if deferred tax assets and tax liabilities re-
lates to income tax from the same tax au-
thorities and the same taxable entity in the
Group, or if different taxable entities in the
Group intends either to settle on a net ba
-
sis, or to realize the asset and settle the lia-
bility simultaneously.
Deferred income tax is provided based on tem
-
porary differences arising from investments in
subsidiaries and associates, except where the
timing of the reversal of the temporary differ
-
ence is controlled by the Group and it is prob-
able that the temporary difference will not re-
verse in the foreseeable future.
1.18 Contingent assets and liabilities
A contingent asset is not recognized in the an
-
nual financial statements, but disclosed in the
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
notes where an inflow of economic benefits is
probable.
Contingent liabilities are defined as possible
obligations arising from past events the exis
-
tence of which depends on future events, or
for which it is improbable that they will lead to
an outflow of resources, or which cannot be
measured with sufficient reliability
Contingent liabilities are not recognized in
the annual financial statements, but significant
contingent liabilities are disclosed in the notes
to the financial statements, with the exception
of contingent liabilities where the probability
of the liability occurring is remote.
1.19 Revenue recognition
Revenue comprizes the fair value of the con
-
sideration received or receivable for the sale
of goods and services in the general course of
the Group’s activities. Revenue is shown net of
value-added tax and discounts. The Group rec
-
ognizes revenue when the amount of revenue
can be reliably measured, it is probable that
future economic benefits will flow to the en
-
tity and when specific criteria have been met
for each of the Group’s activities as described
below.
1.19.1 Passenger revenue
Passenger revenue is reported as traffic rev-
enue when the air transport has been carried
out. The value of tickets sold and which are
still valid but not used by the reporting date
(amounts sold in excess of revenue recog
-
nized) is reported as air traffic settlement lia-
bility. This liability is reduced either when the
Group or another airline completes the trans
-
portation or when the passenger requests a
refund.
1.19.2 Ancillary revenue
Ancillary revenue comprizes sales of ticket-re
-
lated products and services, e.g.; revenue from
baggage sales and seating. Some of the prod
-
ucts and services are earned at the time of the
transport, and such revenue is recognized in
the same manner as passenger revenue. Other
products and services are earned at the time
of purchase and immediately recognized in the
income statement.
Amounts paid by ‘no show’ customers are
recognized as revenue when the booked ser
-
vice is provided. ‘No show’ customers with low
fare tickets are not entitled to change flights or
seek refunds once a flight has departed.
1.19.3 Other revenue
Other revenue comprizes third party revenue,
such as wet lease, cargo and revenue from
business activities in subsidiaries which are not
airlines.
Other airline revenues are recognized when
the services have been rendered, fees are reli
-
able measurable, collections are probable, and
when other significant obligations have been
fulfilled.
Revenue from sales of Wi-Fi products and
services comprizes traffic fees. Revenue traffic
fees are recognized as revenue at the time of
consumption.
1.19.4 Customer loyalty program
– Norwegian Reward
The Group has implemented a frequent flyer
program; Norwegian Reward. Reward members
earn “CashPoints” and additional “Rewards” in
the following circumstances:
● Bank Norwegian Customer; 1% of the pay
-
ment is earned on all purchases. Cash-
Points are also earned on all LowFare and
Flex tickets purchased from Norwegian Air
Shuttle ASA, and which are paid with the
Bank Norwegian credit card, with 5% and
20% of the purchase price, respectively,
except for tickets for long distance and do
-
mestic travel in Norway and Sweden, which
earn 2% on LowFare tickets and 20% on Flex
tickets.
● Norwegian Air Shuttle ASA; Reward Mem-
bers earn 2% on all LowFare tickets and
20% on all Flex tickets.
● Corporate Reward Members; 3% on all Low-
Fare tickets and 7% on all Flex tickets.
● Members earn Cashpoints with selected
merchants that are in cooperation with
Norwegian Reward. Cash points can be
earned on purchases in the range of 2-20%.
● More rewarding Rewards were introduced
in 2015, and in addition to earning Cash
-
points on all flights, members can receive
additional Rewards for every sixth single
flight. Additional Rewards are CashPoints
Boost, Free Seating, Free luggage and Free
Fast Track and it’s valid for 12 months.
Member CashPoints gained from traveled air
-
line tickets are recognized as a liability in the
statement of financial position and recognized
as revenue only when it has fulfilled its ob
-
ligations. The member Cashpoint liability, is
derecognized from the statement of financial
position and recognized as income when cus
-
tomers utilize their CashPoints.
All other earned CashPoints are recognized
as a liability towards members in the state
-
ment of financial position and immediately ex-
pensed. The cash points earned with other
merchants are invoiced and recognized as in
-
come in the corresponding period. When the
customers use their collected CashPoints, the
liability is derecognized and cash payment on
the Group’s services is reduced.
CashPoints are valid throughout the year
they were earned, plus two years. In this period
Cashpoints are presented as deferred revenue
in the balance sheet, and they are released to
the income statement when the points are re
-
deemed or expire.
The deferred income is measured by refer
-
ence to fair value. It is classified as short term
as available statistics as of December 31, 2015
indicate that members CashPoints are utilized
within one year. Hence, the carrying value of
the liability is estimated as the fair value of the
liability.
1.20 Leasing
To determine whether an arrangement is,
or contains a lease, it is necessary to assess
whether the fulfillment of the arrangement is
dependent on the use of a specific asset and
whether the arrangement conveys a right to
use the asset.
The lease agreements, in which, most of the
risk lies with the contracting party are classi
-
fied as operating leases. Operating lease pay-
ments are recognized as an expense in the in-
come statement on a straight-line basis over
the lease term. Payments for the lease and
payments for other elements are recognized
separately.
Deposits made at the inception of operat
-
ing leases are carried at amortized cost. The
difference between the nominal value of a de
-
posit paid, carried at less than market interest
and its fair value, is considered as additional
rent, payable to the lessor and is expensed on
a straight-line basis over the lease term.
The Group leases tangible assets where
the lease agreements transfer all material
risks and rewards of the asset to the lessee at
the end of the lease term. Such lease agree
-
ments are classified as financial leases. Finan-
cial leases are recognized at inception to the
lowest of acquisition cost and the net present
value of minimum lease payments. Financial
lease assets are depreciated on a straight-line
basis over the lease period if such is shorter
than the useful life of the financial lease as
-
set. Financial lease assets are included in the
statement of financial position as tangible as
-
sets.
Each lease payment under financial leases
is split between the lease liability and finance
cost to amortize the financial costs related to
such leases for the duration of the lease pe
-
riod. The lease liability is classified as borrow-
ings, see note 22 for details.
Sale and lease back transactions are treated
as financial leases and operating leases de
-
pending on the nature of the lease. The Group
entered into no sale and lease back transac
-
tions in 2015 (none also in 2014). All sales and
lease back transactions are defined as oper
-
ating leases established at fair value and any
profit or loss is recognized immediately in the
income statement as other income or other
losses/(gains)-net.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
1.21 Segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided
to the chief operating decision maker who is
responsible for allocating resources and as
-
sessing the performance of the operating seg-
ments. The chief operating decision maker has
been identified as the Board of Directors and
the Executive Management. The Group has one
operating segment, which is low cost air pas
-
senger travel. The Group has one geographical
segment which is the route portfolio. See note
4 for further details.
1.22 Events after the reporting date
New information regarding the Group’s po
-
sitions at the reporting date is taken into ac-
count in the preparation of the annual financial
statements. Events occurring after the report
-
ing date which do not affect the Group’s po-
sition at the reporting date, but which will af-
fect the Group’s position in the future, are dis-
closed if significant.
1.23 Critical accounting estimates
and judgments
In preparing the consolidated financial state
-
ments, the Management is required to assess
judgments, estimates and assumptions that af
-
fect the reported amounts of assets and liabil-
ities, income and expenses. The critical judg-
ments and key sources of estimation uncer-
tainty that have been made in preparing the
consolidated financial statements are detailed
below. These judgments involve assumptions
or estimates in light of future events that can
differentiate from what is expected.
The lease contracts require the aircraft to be
returned at the end of the lease in accordance
with the specific redelivery conditions stated
in the lease contracts. To meet this require
-
ment, the Group must conduct maintenance
on these aircraft, both regularly and at the ex
-
piration of the leasing period. Provisions are
made based on the estimated costs of over
-
hauls and maintenance. In order to estimate
these conditions, the Management must make
assumptions regarding expected future main
-
tenance. For sensitivity analysis, see note 19.
Non-current assets are depreciated on a
straight-line basis or by airborne hours and cy
-
cles over the estimated useful lives, taking ex-
pected residual value into consideration. An
aircraft is decomposed into two components
for depreciation purposes in order to con
-
sider different useful lives of the aircraft com-
ponents, in accordance with official require-
ments. The depreciation period and method
are assessed annually to ensure that they rec
-
oncile with the substance of the non-current
asset, and the residual value is estimated at
each year-end. The assessments require man
-
agement to make assumptions regarding ex-
pected useful lives and residual values.
Deferred tax assets are recognized for
all unused tax losses to the extent that tax
-
able profits are probable. Significant manage-
ment judgment is required to determine the
amounts of deferred tax assets that can be
recognized, based on the anticipated timing
and level of future taxable profits together with
future tax planning strategies. See note 9 for
further details.
The Group tests annually whether good
-
will and other intangible assets with indefi-
nite useful lives, have suffered any impair-
ment in accordance with the accounting policy
stated in note 1.8. The recoverable amounts of
cash-generating units have been determined
based on value-in-use calculations. These cal
-
culations require the use of estimates (see
note 10).
Bad debt provisions for credit card receiv
-
ables are based on actual historical loss per-
centage and actual withdrawal for payments
from credit card companies.
Fair value of financial instruments is deter
-
mined using fair value estimation techniques.
Valuation techniques and details on financial
instruments are outlined in note 3.
NOTE : FINANCIAL RISK
The Group’s activities expose it to a variety of
financial risks; market risk (including currency
risk, interest rate risk and price risk), credit risk
and liquidity risk. The Group’s overall financial
risk management program focuses on changes
and fluctuations in financial markets and seeks
to minimize potential adverse effects on the
Group’s financial performance. The Group uses
derivative financial instruments to hedge cer
-
tain financial risk exposures.
Financial risk management is carried out by a
central treasury department (Group Treasury),
under policies approved by the Board of Direc
-
tors. Group treasury identifies, evaluates and
hedges financial risk in close co-operation with
the Group’s operating units. The Board pro
-
vides principles for overall risk management
such as foreign currency risk, interest rate risk,
credit risk, use of derivative financial instru
-
ments and investment of excess liquidity.
2.1 Market risk
Market risk is the risk of changes in market
prices, such as foreign exchange rates, jet-fuel
prices and interest rates which will affect the
Group’s income or value of its holdings of fi
-
nancial instruments.
2.2 Foreign exchange risk
A substantial part of the Group’s expenses
are denominated in foreign currencies. The
Group’s leases, aircraft borrowings, mainte
-
nance, jet-fuel and related expenses are mainly
denominated in USD, and airplane operation
expenses are partly denominated in EUR. The
carrying amount of the Group’s net invest
-
ments in foreign entities and proceeds from
these investments varies with changes in the
foreign exchange rate. The net income of the
Group is also affected by currency fluctua
-
tions, as the profit and losses from foreign op-
erations are translated into NOK using average
exchange rates for the period. In order to re
-
duce currency risk, the Group has a mandate
to hedge up to 100% of its currency exposure
for the following 12 months. The hedging con
-
sists of forward currency contracts and flexi-
ble forwards.
Exchange rate risk sensitivity analysis
This analysis does not take into account cor
-
relation between currencies. Empirical stud-
ies confirm substantial diversification effect
across the currencies that the Group is ex
-
posed to.
Effects on net currency gains (losses)
The Group is exposed to currency fluctuations
on monetary items in the statement of finan
-
cial position, denominated in other currencies
than the functional currency.
If NOK had weakened/strengthened by 1%
against USD in 2015, with all other variables held
constant, post-tax profit would have been NOK
30.2 million (2014: NOK 7.5 million) higher/lower,
mainly as a result of foreign exchange losses/
gains on receivables, payables, derivative finan
-
cial instruments, cash and cash equivalents and
long-term borrowings denominated in USD.
If NOK had weakened/strengthened by 1%
against EUR with all other variables held con
-
stant, post-tax profit and post-tax equity effect
for the year would have been NOK 5.4 million
(2014: NOK 8.6 million) higher/lower, mainly as
a result of foreign exchange losses/gains on re
-
ceivables, payables, derivative financial instru-
ments and cash and cash equivalents.
If NOK had weakened/strengthened by 1%
against GBP with all other variables held con
-
stant, post-tax profit and post-tax equity effect
for the year would have been NOK 7.4 million
(2014: NOK 5.6 million) higher/lower, mainly as
a result of foreign exchange losses/gains on re
-
ceivables, payables, derivative financial instru-
ments and cash and cash equivalents.
Effects due to foreign exchange translations on
other comprehensive income
The Group has major investments in opera
-
tions in Ireland, whose net assets are exposed
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
to foreign currency translation risk. Cur-
rency exposure arising from the net assets of
the Group’s foreign operations can be mate
-
rial, but the variances create a natural hedge
against the Group’s currency exposure on
operating expenses. If NOK had weakened/
strengthened against USD with all other vari
-
ables held constant, other comprehensive
income would have been NOK 29.7 million
(2014: 32.3 million) higher/lower. If NOK had
weakened/strengthened against EUR with all
other variables held constant, other com
-
prehensive income would have been NOK 0.7
million (2014: 0 million) higher/lower.
Effects due to foreign exchange translations
on net income
Translation of net income from subsidiar
-
ies with functional currency other than NOK,
also represents a currency exposure for the
Groups reported figures. The sensitivity anal
-
ysis is only carried out for the Group’s major
subsidiaries. If local currency had weakened/
strengthened by 1% against all other curren
-
cies included in the analysis, net income for
the Group would have been NOK 2.2 million
lower/higher in 2015 (NOK 3.5 million in 2014).
2.3 Cash flow and fair value interest
rate risk
As the Group has net interest bearing debt,
the Group’s income and operating cash flows
are dependent on changes in the market in
-
terest rates. The Group’s cash flow interest
rate risk arises from cash and cash equiva
-
lents and floating interest rate borrowings.
Floating interest rate borrowings consist of
unsecured bond issue, aircraft and prepay
-
ment financing, loan facility and financial
lease liabilities. Borrowings issued at fixed
rates expose the Group to fair value interest
rate risk. Fixed interest rate borrowings con
-
sist of aircraft financing, guaranteed by the
Ex-Im Bank of the United States. Borrowings
are denominated in USD and NOK.
If the floating interest rate in 2015 had
been 1% higher/lower with all other variables
held constant, post-tax profit and post-tax
equity effect for the year would have been
NOK 35.7 million (2014: NOK 13.1 million)
higher/lower, mainly as a result of higher/
lower interest income on floating rate cash
and cash equivalents and borrowings.
The sensitivity analysis of interest rate
risk is calculated based on amortized cost
of floating rate borrowings, cash and cash
equivalents.
The Group measures borrowings at amor
-
tized cost. No changes in fair value of fixed
rate interest rate borrowings would be ac
-
counted for. Fair value calculations of fixed
interest rate borrowings are detailed in
note 22.
2.4 Jet-fuel prices
Expenses for jet-fuel represents a substan
-
tial part of the Group’s operating costs, and
fluctuations in the jet-fuel prices influence
the projected cash flows. The objective of
the jet-fuel price risk management policy is
to safeguard against significant and sudden
increases in jet-fuel prices whilst retaining
access to price reductions. The Group man
-
ages jet-fuel price risk using fuel derivatives.
The Management has a mandate to hedge up
to 100% of its expected consumption over
the next 24 months with forward commodity
contracts.
The Group holds forward commodity con
-
tracts to hedge jet-fuel price risk. Such de-
rivative contracts affect the financial state-
ments through unrealized gains/losses
from jet-fuel prices. At December 31, 2015,
the Group held forward contracts totaling
752 000 tons of Jet Fuel, equaling approxi
-
mately 50% of fuel consumption in 2016 and
20% of fuel consumption in 2017.
2.5 Credit risk
Credit risk is managed on group basis. Credit
risk arises from cash and cash equivalents,
derivative financial instruments and deposits
with banks and financial institutions, as well
as credit exposures to travel agencies and
commercial customers, including outstanding
receivables and committed transactions. The
utilization of credit limits is regularly moni
-
tored. The Group’s policy is to maintain credit
sales at a minimum level. Sales to private cus
-
tomers are settled in cash or using major
credit card companies.
A portion of the Group’s sales, are paid for
by the customers at the time of booking and
Norwegian receive the actual payments from
the credit card companies, or acquires are
received at a later point in time. Delayed pay
-
ments from credit card companies vary be-
tween credit card brands. The risk arising
from receivables on credit card companies or
credit card acquires are monitored closely.
Credit risk related to bank defaults is
closely monitored and partly offset by diver
-
sifying the Group’s deposit portfolio.
There is re-invoicing of maintenance costs
on aircraft to leasing companies, and Nor
-
wegian regularly evaluates and assesses the
value of these credits. See note 20 for further
disclosure on credit risk.
2.6 Liquidity risk
Prudent liquidity risk management implies
maintaining sufficient cash and marketable
securities, the availability of funding through
an adequate amount of committed credit fa
-
cilities and the ability to close out market po-
sitions.
Management monitors rolling forecasts of
the Group’s liquidity reserve, cash and cash
equivalents (see note 24) on the basis of ex
-
pected cash flow. The Group's liquidity man-
agement policy involves projecting cash flows
in major currencies and considering the level
of liquid assets necessary to monitor liquidity
ratios against internal and external regulatory
requirements and maintaining debt financ
-
ing plans.
The Group’s aircraft fleet consist of leased
aircraft (note 12) and owned aircraft (note 11),
whereof the Group has 266 owned and leased
aircraft on firm order with future delivery.
The table below shows the expected time
-
line of future deliveries of aircraft at Decem-
ber 31, 2015. Prepayments to aircraft manu-
facturers on future aircraft deliveries are fi-
nanced by internal and external funds. The
Group has ensured export credit support on
all aircraft on order. Deliveries in 2016 will be
financed through export guaranteed financ
-
ing, in the US capital market or through other
commercial financing. The Group is currently
in the process of securing pre-delivery pay
-
ment financing and term financing according
to the Group’s financing policy for deliveries
in the finance planning for 2016-2018.
Aircraft delivery 2016 2017–2018 2019– Total
737-800 -
737 Max 8 -
Airbus 320 neo
787-9 Dreamliner -
787-9 Dreamliner (operational lease) -
Total
The Group’s financing policy includes sales and
lease backs transactions on several aircraft to
diversify its aircraft fleet. In 2015, no aircraft
were delivered and financed as sales and lease
backs transactions (none also in 2014).
The table below analyses the maturity pro-
file of the Group’s financial liabilities at the
reporting date. The amounts disclosed are
the contractual undiscounted cash flows:
NORWEGIAN ANNUAL REPORT 2015
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NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOK 1 000
Less than 1
year
Between 1
and 2 years
Between 2
and 5 years
Over
5 years
At December 31, 2015
Borrowings
Derivative contracts – payments - - -
Trade and other payables - - -
Interest on borrowings*
Total financial liabilities
*) Calculated interests on borrowings
NOK 1 000
Less than 1
year
Between 1
and 2 years
Between 2
and 5 years
Over
5 years
At December 31, 2014
Borrowings
Financial lease liability - -
Derivative contracts – payments - - -
Trade and other payables - - -
Interest on borrowings*
Total financial liabilities
*) Calculated interests on borrowings
2.7 CAPITAL RISK MANAGEMENT
The Group’s capital management policy is to
have a capital structure which meets the de
-
mands of operations, reduces cost of capital
and complies with financial covenants and fu
-
ture investments planned by the Group. The
Group will at all times adjust debt and eq
-
uity to maintain and secure an optimal capi-
tal structure by continuously monitoring the
total equity level and the equity ratio of the
Group. This ratio is calculated as equity di
-
vided by total assets as presented in the con-
solidated statement of financial position and
consolidated statement of changes in equity.
The equity level is an important factor in fi
-
nancial covenants as detailed in note 22. The
Management monitors these externally im
-
posed financial covenants closely as a part of
the Group’s capital risk management policy.
The Board of Directors has imposed an in
-
ternal liquidity target which is closely moni-
tored by the Management.
The equity ratios at December 31 were as
follows:
NOK 1 000
Equity
Total assets
Equity ratio .% .%
NOTE : FAIR VALUE ESTIMATION
Financial instruments which are measured in the statement of financial position at fair value, re-
quires disclosures of fair value measurements by the following levels of fair value measurement
hierarchy:
Level 1
The fair value of financial instruments traded in active markets is based on quoted market
prices of the reporting date. A market is regarded as active if quoted prices are readily and reg
-
ularly available and represent actual and regular occurring market transactions on an arm’s
length basis.
Level 2
The fair value of financial instruments that are not traded in an active market is determined by
using valuation techniques. These valuation techniques maximize the use of observable mar
-
ket data where it is available and rely as little as possible on entity specific estimates. Finan-
cial instruments in level 2 include forward contracts classified as derivatives. The fair values of
forward foreign currency contracts and forward commodities contracts are determined using
mark to market values from financial institutions. Spot prices in the mark to market calculations
are based on mid-prices as set by the financial institutions (Nordea, DNB, Handelsbanken, Dan
-
ske Bank, Mitsui, SEB, and Pareto) at the reporting date.
Level 3
If one or more of the significant inputs are not based on observable market data, specific val
-
uation techniques are applied. Financial instruments included in level 3, relate to investments
in unlisted shares in Silver Pensjonsforsikring, and the investment in Bank Norwegian AS’ listed
bond due to low market activity.
The following table presents financial assets and liabilities measured at fair value at December
31, 2015:
NOK 1 000 Level 1 Level 2 Level 3 Total
Assets
Financial assets at fair value through profit and loss
- Derivative financial instruments - - - -
Available-for-sale financial assets - -
Total assets - -
Liabilities
- Derivative financial liabilities -
-
Total liabilities - -
There have not been any changes in the valuation techniques used on the assets and liabilities
listed above through the year.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
The following table presents financial assets and liabilities measured at fair value
at December 31, 2014:
NOK 1 000 Level 1 Level 2 Level 3 Total
Assets
Financial assets at fair value through profit and loss - - - -
Available-for-sale financial assets - -
Total assets - -
Liabilities
- Derivative financial liabilities -
-
Total liabilities - -
NOTE : SEGMENT INFORMATION
Executive management reviews the Group’s internal reporting in order to assess performance
and allocate resources. Management has determined the operating segment based on these re
-
ports. Executive management considers the business as one operating segment, which is low-
cost air passenger travel. The Group’s operating profit comes from airline-related activities
and the Group’s main revenue generating asset is its aircraft fleet, which is utilized across the
Group’s geographical segment.
Performance is measured by the Executive Management based on the operating segment’s
earnings before interests, tax, depreciation and amortization (EBITDA). Other information is
measured in accordance with the financial statements.
The table below shows revenues from low-cost air passenger travel which is split between pas
-
senger revenues, ancillary revenues and other revenues. A division of revenues from geograph-
ical markets categorizes domestic revenues as all domestic routes independent of country thus
domestic routes in Norway, Sweden, Denmark and Finland are included.
NOK 1 000
By activity:
Passenger transport
Ancillary revenue
Other revenues
Total revenues
By geographic market:
Domestic
International
Total revenues
NOTE : OPERATING EXPENSES
NOK 1 000
Sales and distribution expenses
Aviation fuel
Aircraft leases
Airport charges
Handling charges
Technical maintenance expenses
Other aircraft expenses
Total operational expenses
NOTE A: OTHER OPERATING EXPENSES
Other operating expenses amount to NOK 1 263.2 million (2014: NOK 1 049.6 million). Other op-
erating expenses are related to the operating of systems, marketing, back office, consultants
and other costs not directly attributable to the operation of the aircraft fleet and related airline
specific costs.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : PAYROLL EXPENSES AND NUMBER OF EMPLOYEES
NOK 1 000
Wages and salaries
Social security tax
Pension expenses
Employee stock options
Other benefits
Hired crew personnel
Total
Payroll expenses include hired crew personnel. The employees are participants in defined pen
-
sion plans. See note 18 for details.
Number of man-labour years*
Norway
Sweden
Danmark
Finland
Spain
United Kingdom
Irland
Singapore/Bangkok
USA
Total
*) Including man-labour years related to hired crew personnel
NOTE : REMUNERATION OF THE BOARD OF DIRECTORS AND EXECUTIVE
MANAGEMENT
Remuneration of the Board of Directors
Total remuneration paid to the Board in 2015 was NOK 1.4 million (2014: NOK 1.5 million). The
chair of the Board, Bjørn Kise, received NOK 0.5 million. (2014: NOK 0.5 million) There were no
bonuses or other forms of compensation paid to the Board members in 2015.
Directive of Remuneration of the CEO and the Executive Management
The principles of leadership remuneration in Norwegian Air Shuttle ASA are to stimulate a strong
and lasting profit oriented culture. The total compensation level should be competitive, how
-
ever, not market leading compared to similar organizations. The Board determines the remu-
neration of the CEO, and the guidelines for remuneration of the Executive Management. The re-
muneration of the Board and the Executive Management must not have negative effects on the
Group, nor damage the reputation and standing of the Group in the public eye. There have been
no changes to the guidelines or principles of management remuneration during the year. The
actual remuneration in 2015 was consistent with the guidelines and principles.
Compensation made to the Executive Management should primarily consist of a fixed yearly
salary with additional compensations such as a company car, free telephone, internet and
newspapers, and a standard pension and insurance plan. The Executive Management is also a
part of the Group’s stock option plan.
The CEO does not receive compensation in form of performance-based salary or bonuses,
except for options in the stock option plan. The Executive Management can on an individual
level be awarded with a special compensation for profit enhancing projects.
The Executive Management is a part of the Group’s collective pension plan for salaries up to
12 G, which applies to all employees. The Executive Management has not been given any specific
rights in case of terminated employment.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Total compensation year 2015:
NOK 1 000 Fee Salary Bonus
Other
benefits
2
Total
Compensation
Pension
expense
3
The Board of Directors
Bjørn Kise (Chair) - - - -
Ola Krohn-Fagervoll (Board member and Deputy chair until May 12, 2015) - - - -
Liv Berstad (Deputy chair) - - - -
Christian Fredrik Stray (Board member since May 12, 2015) - - - - - -
Ada Kjeseth (Board member since May 12, 2015) - - - - - -
Thor Espen Bråthen
1
- - - -
Kenneth Utsikt
1
- - - -
Linda Olsen
1
- - - -
Benedicte Elisabeth Schillbred Fasmer (Board member unitl January 1, 2015) - - - -
Total Board of Directors - - - -
Executive management
Bjørn Kjos (Chief Executive Officer) - -
a
Frode Foss (Chief Financial Officer) - -
b
Asgeir Nyseth (CEO Norwegian UK Ltd.)
4
- -
c
Gunnar Martinsen (Chief Human Resources Officer) - -
d
Anne-Sissel Skånvik (Chief Communications Officer) - -
e
Frode Berg (Chief Legal Officer) - -
f
Geir Steiro (Chief Operating Officer) - -
g
Thomas Ramdahl (Chief Commercial Officer) - -
h
Dag Skage (Chief Information Officer) - -
Tore Jenssen (CEO Norwegian Air International Ltd, included in executive management July 1, 2015) - -
Edward Thorstad (Chief Customer Officer, included in executive management July 1, 2015) - -
Total executive management -
1) For the employee representatives in the Board of Directors, only their fee for serving on the Board of Directors is stated.
2) Other benefits include company car, telephone, internet, etc.
3) Pension expense reflects paid pension premium less employee contribution
4) Including compensation for expatriation
a) Bjørn Kjos exercised share options in 2015 that has been reported as additional taxable income with TNOK 9 259
b) Frode Foss exercised share options in 2015 that has been reported as additional taxable income with TNOK 8 468
c) Asgeir Nyseth exercised share options in 2015 that has been reported as additional taxable income with TNOK 8 486
d) Gunnar Martinsen exercised share options in 2015 that has been reported as additional taxable income with TNOK 4 094
e) Anne-Sissel Skånvik exercised share options in 2015 that has been reported as additional taxable income with TNOK 4 094
f) Frode Berg exercised share options in 2015 that has been reported as additional taxable income with TNOK 1 864
g) Geir Steiro exercised share options in 2015 that has been reported as additional taxable income with TNOK 674
h) Thomas Ramdahl exercised share options in 2015 that has been reported as additional taxable income with TNOK 1 156
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Total compensation year 2014:
NOK 1 000 Fee Salary Bonus
Other
benefits
2
Total
Compensation
Pension
expense
3
The Board of Directors
Bjørn Kise (Chair) - - - -
Ola Krohn-Fagervoll (Deputy chair) - - - -
Liv Berstad - - - -
Marianne Wergeland Jenssen (Board member until May 2014) - - - -
Thor Espen Bråthen
1
- - - -
Kenneth Utsikt
1
- - - -
Linda Olsen
1
- - - -
Benedicte Elisabeth Schillbred Fasmer (Board member from May 2014) - - - - - -
Total Board of Directors - - - -
Executive management
Bjørn Kjos (Chief Executive Officer)
4
- -
Frode Foss (Chief Financial Officer) - -
Asgeir Nyseth (CEO Norwegian UK Ltd.)
5
- -
Gunnar Martinsen (Chief Human Resources Officer) - -
Anne-Sissel Skånvik (Chief Communications Officer) - -
Per-Ivar Gjørvad (Chief IT Officer, until October 13, 2014) - -
Frode Berg (Chief Legal Officer) - -
Geir Steiro (Chief Operating Officer) - -
Thomas Ramdahl (Chief Commercial Officer) - -
Dag Skage (Chief Information Officer, started on October 13, 2014) - - -
Total executive management - -
1) For the employee representatives in the Board of Directors, only their fee for serving on the Board of Directors is stated.
2) Other benefits include company car, telephone, internet etc.
3) Pension expense reflects paid pension premium less employee contribution.
4) Including delayed payment of previous years salary adjustment.
5) Including compensation for expatriation.
No share options were excercised by the Management in 2014.
The tables above are presented excluding employers contribution. Shares and options held by the Executive Management
are presented in note 15. There are no outstanding loans or guarantees made to the Board of Directors or the Executive
Management.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Audit remuneration (excl. VAT)
NOK 1 000 2015
Audit fee
Other audit related services
Tax advisory -
Other services
Total
All amounts stated exclude VAT. Deloitte has been the Group’s auditor since June 21, 2013.
NOTE : NET FINANCIAL ITEMS
NOK 1 000
Interest income
Interest expense ( ) ()
Net foreign exchange (loss) or gain ()
Appreciation cash equivalents ( )
Fair value adjustment long term deposits
Other financial items ( ) ()
Net financial items ( ) ()
Foreign exchange derivatives and fuel derivatives are categorized as financial assets or finan
-
cial liabilities at fair value through profit or loss and are measured at fair value at each reporting
date with changes in fair value recognized as other gains and losses within operating expenses.
Net foreign exchange gain of NOK 26.5 million is recognized in 2015 (2014: NOK 36.9 million loss).
Non-interest bearing deposits for aircraft leases are initially measured at fair value and a peri
-
odic interest income is calculated using the same interest rate as for fair value calculation.
See note 3 for fair value estimation and note 20 for further information concerning available-
for-sale financial assets.
Interest expenses include amortized cost on borrowings. Capitalized interests reduce interest
expenses (note 11).
NOTE : TAX
This year's tax expense consists of:
NOK 1 000
Tax payable
Tax paid in current year on current year income - -
Adjustments from previous year ( ) ()
Change in deferred tax ( ) ()
Income tax expense ( ) ()
Adjustments from previous years consists of both taxes paid in 2015 related to earlier years tax
assessments, and changes in deferred tax from previous years, please see table below.
Reconciliation from nominal to effective tax rate:
NOK 1 000
Profit before tax ()
Expected tax expense using nominal tax rate (27%) ()
Tax effect of the following items:
Non deductible expenses/income ( ) ()
Adjustments from previous year ( ) ()
Tax rate outside Norway other than 27% ( )
Change in tax rate in Norway to 25% -
Other items ( )
Tax expense ( ) ()
Effective tax rate (.%) .%
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
The following table details deferred tax assets and liabilities:
Deferred tax:
NOK 1 000 Assets 2015 Liabilities 2015 Assets 2014 Liabilities 2014
Intangible assets ( ) - () ()
Tangible assets ( ) - ()
Long term receivables and borrowings in foreign currency - - - -
Inventories - -
Receivables - -
Financial instruments - -
Derferred gains/losses ( ) - () -
Other accruals - -
Pensions - - -
Other temporary differences ( ) - () -
Loss carried forward - -
Gross deferred tax assets and liabilities - ()
Reconciliation of deferred tax assets and liabilities:
Recognized at January 1 ( ) ()
Charged/credited to the income statement ( ) ()
Adjustment from previous year ( ) ()
Charged directly to equity - - -
Translation differences ( ) ()
Recognized at December 31 - ()
Deferred tax asset is based on unused tax loss carry forwards and temporary differences in as
-
sets and liabilities. The tax loss carried forward is expected to be utilized by future taxable prof-
its. Adjustments from previous years consists of differences in deferred tax positions between
the Group reporting last year and each company’s tax reporting finalized later in 2015.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : INTANGIBLE ASSETS
Other intangible assets
NOK 1 000 Software Goodwill Indefinite life Definite life Total
Acquisition costs January 1, 2014
Additions - - -
Acquisition costs December 31, 2014
Acquisition costs January 1, 2015
Additions - - -
Acquisition costs December 31, 2015
Accumulated amortization January 1, 2014 - -
Amortization - - -
Accumulated amortization December 31, 2014 - -
Accumulated amortization January 1, 2015 - -
Amortization - - -
Accumulated amortization December 31, 2015 - -
Book value at December 31, 2014 -
Book value at December 31, 2015 -
Useful life -years Indefinite Indefinite Seebelow
Amortization plan Straight-line None None Straight-line
Capitalized software is related to external consulting fees for the development of Norwegian's own
systems for bookings and ticket-less travels, various sales portals, back office and maintenance
system. These costs are amortized over their estimated useful lives (three to five years).
Other intangible assets and goodwill are related to the purchase of Norwegian Air Shuttle Swe
-
den AB on July 31, 2007. Other intangible assets from business combinations consist of estimated
fair value of Brand name, charter operations, slots and the Air Operating Certificate. Other intangi
-
ble assets also consist of intellectual property rights that are related to purchases of internet do-
mains. The Group has developed international web portals in major markets.
Goodwill, slots and intellectual property rights are determined to have indefinite useful lives,
and are not amortized. Slots and intellectual property rights do not expire over time, as long as the
Management has the intention to continue using the assets.
Impairment testing of goodwill and intangible assets
The Group tests goodwill and assets with indefinite useful lives annually at year-end for impair
-
ment. Intangible assets with definite lives are tested for impairment if indicators of impairment are
identified. No indications of impairment have been identified in 2015, or in 2014.
The method used to estimate the recoverable amount is value in use, based on discounted cash
flow analysis. The analysis reflects the cash flow projections in the financial business plan covering
the next year which is approved by the Board of Directors. The budget for the next 12 months is ap
-
plied for cash flows within a planning horizon of 8 years, as the aircraft fleet is estimated for re-in-
vestment every eight years. Key assumptions used in the calculation are growth rates, operating
costs, terminal value and discount rate. Cash flows beyond the eight year period are extrapolated
with a long-term growth rate. Estimated cash flows and discount rate are after tax.
Discount rate
The applied discount rate is 7.4% (2014: 6.2%) and based on the Weighted Average Cost of Capital
(WACC). The cost of the Group’s debt and equity capital, weighted accordingly to reflect its capi
-
tal structure, gives the Group’s weighted average cost of capital. The WACC rates which are used
to discount future cash flows are based on market risk free interest rates adjusted for inflation dif
-
ferentials and also include the debt premium, market risk premium, gearing corporate tax rate and
asset beta. An increase of the discount rate of 5% will not result in impairment of goodwill and in
-
tangible assets.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Growth rates
The basis for calculating future growth rate is next year management approved budget. Except
for budgeted growth stemming from existing assets, no growth is incorporated in the impair
-
ment test for 2015.
Operating costs
The operating costs are calculated based on the budget period. Committed operations effi
-
ciency programs for the next 12 months are taken into account. Changes in the outcome of
these initiatives may affect future estimated operating costs. A permanent increase of 5% of to
-
tal costs, with all other assumptions unchanged, will not result in impairment of assets.
Terminal value
A growth rate of 2% is used in calculating cash flow beyond the eight year period.
Sensitivity
At December 31, 2015, the Group’s value in use was significantly higher than the carrying amount
of its goodwill and intangible assets. The impairment calculation is not particularly sensitive to
changes in assumptions.
NOTE : TANGIBLE ASSETS
NOK 1 000 Buildings
Aircraft, parts and
installations on leased aircraft
Prepayment
Boeing contract
Equipment
and fixtures
Financial
lease Total
Acquisition cost at January 1, 2014
Additions -
Transfers - () - - -
Foreign currency translation -
Acquisition cost at December 31, 2014
Acquisition cost at January 1, 2015
Additions -
Transfers - () - - -
Disposals - () - - () -
Foreign currency translation -
Acquisition cost at December 31, 2015
Accumulated depreciation at January 1, 2014 - -
Depreciation -
Foreign currency translation - - - -
Accumulated depreciation at December 31, 2014 -
Accumulated depreciation at January 1, 2015 -
Depreciation -
Depreciation disposals - () - - () -
Foreign currency translation - - -
Accumulated depreciation at December 31, 2015 -
Book value at December 31, 2014
Book value at December 31, 2015
Estimated useful life, depreciation plan and residual value is as follows:
Useful life Seebelow Seebelow Seebelow -years -years
Depreciation plan Seebelow Straight-line Seebelow Straight-line Straight-line
Residual value Seebelow Seebelow Seebelow % %
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
As at December 31, 2015, the Group operated a total of 101 (2014: 100) aircraft, whereas 54
(2014: 48) were owned and 47 (2014: 52) were leased under operational leases. See note 12 for
details about operational leases.
Aircraft
The Group acquired 10 (2014: 11) Boeing 737-800 and 1 (2014: 1) Boeing 787-8 aircraft during
2015.
The residual value is NOK 5 770 million (2014: NOK 3 686 million) in total for all owned aircraft
and deducted from the depreciable amount of the body of the aircraft. The life expectancy of
the body of the aircraft is 25 years for the 737 and the 787 aircraft, and the economic life of the
owned aircraft is 25 years less the age of the aircraft at time of purchase.
The majority of the aircraft in the Group are accounted for in USD by the Groups subsidiary in
Ireland, after transfers at December 31 2013 and during 2014. Hence, the values in consolidated
accounts as per December 31, 2015 include effects from currency translation.
Installations on leased aircraft
The installations on the leased aircraft include cabin interior modifications and other improve
-
ments to the aircraft after lease commencement. The capitalized value is depreciated over the
remainder of the aircraft lease, which is between 1-10 years. Linear depreciation is applied and
residual value is NOK 0. In 2015 and 2014 several engines on the leased aircraft were in overhaul,
and replacement costs for life limited parts were capitalized to the extent that the costs were
improvements to the engines and therefore exceeding the requirements that were specified in
the leasing contracts. These components are depreciated at a defined rate per engine cycle,
limited to the remainder of the aircraft lease.
Spare parts
Spare parts consist of rotable parts for the aircraft and are depreciated over their useful life.
The useful life of spare parts ranges between 5-8 years. Straight-line depreciation is applied and
25% of the acquisition cost is calculated as residual value.
Buildings
Buildings consist of three apartments in Berlin, purchased in 2007 for the purpose of housing
crew and trainees stationed in Berlin on a temporary basis. In 2010, the Group purchased an
apartment in Seattle, and in 2013 purchased and apartment in Florida, for the purpose of hous
-
ing personnel stationed in the United States in respect of the delivery of new 737-800 aircraft
and opening new destinations. The apartments are carried at acquisition cost. The residual
value is estimated to equal the acquisition cost. In 2014, a new hangar at Gardermoen airport
was constructed. The hangar is estimated to have a useful life of 50 years, and is depreciated
linear over useful economic life. Residual value is NOK 0.
Prepayments to aircraft manufacturers
In 2007 the Group entered a purchase contract with Boeing Commercial Airplanes concerning
42 new 737-800 aircraft, with an option of purchasing 42 additional aircraft. The contract was
extended in June 2011 for an additional 15 Boeing 737-800. In 2011, the Group entered a pur
-
chase contract with Icelandair for the right to acquire 3 Boeing 787-8 Dreamliner aircraft, which
Icelandair had on order with Boeing Commercial Airplanes. In January 2012, the Group entered
into additional purchase contracts with Boeing Commercial airplanes and Airbus S.A.S compris
-
ing a total of 372 aircraft, of which 222 were firm orders. On October 22, 2015, the subsidiary
Arctic Aviation Assets Ltd entered into a purchase contract for 19 new 787-9 Dreamliner aircraft,
with an additional purchase option of 10 aircraft. Note 2.6 includes a table showing the timeline
of future deliveries.
At December 31, 2015, 54 owned and 13 sale and lease backs had been delivered (2014: 43
and 13). Until delivery of the aircraft, the Group will make prepayments to aircraft manufactur
-
ers, following a defined prepayment schedule. The Group capitalizes borrowing costs incurred
for the construction of qualifying assets during the period of time which is required to complete
the aircraft. Borrowing costs of NOK 268.6 million (2014: NOK 144.6 million) have been capital
-
ized during the year. An average capitalization rate of 4.1% (2014:4.5%) was used.
Financial lease assets
In 2009, the Group entered into lease agreements concerning de-icing equipment and elec
-
tronic flight bag equipment. The lease agreements are classified as financial leases as all risks
and rewards are transferred to the Group after the end of the lease agreement. The financial
lease assets are depreciated over their useful lives. De-icing equipment is depreciated over 20
years, while electronic flight bag equipment is depreciated over four years. Residual value of fi
-
nancial lease assets is 0. In 2015, the Group sold the de-icing equipment at book value.
Impairment of tangible assets
Tangible assets are tested for impairment if there are indicators that impairment may exist.
No impairment losses have been recognized in 2015 or 2014.
For information regarding assets pledged as collateral for debt, see note 23.
NOTE : OPERATING LEASES
The lease agreements on the Boeing 737 aircraft last between three and ten years from the date
of agreement, with some extension options. The lease agreements on the Boeing 787 aircraft
last for 12 years with an option for extension. From 2002 to 2012, 59 aircraft were delivered. In
2013 and 2014, nine and three aircraft were delivered respectively, including sale leaseback. Re
-
negotiations have resulted in the extension of some of the shorter leases. In 2015, three (2014:
three) aircraft were redelivered to the lessor. Contracts for five of the aircraft will expire in
2016. The remaining contracts expire in 2017 or later.
Leasing costs expensed on aircraft lease within operational expenses was NOK 2 108.2 million
in 2015 (2014: NOK 1 537.1 million). Included in leasing costs are operating lease costs on aircraft
from sale-and-leaseback transactions.
In addition, the Group leases one (2014: 11) car and 37 (2014: 37) properties in Oslo, Stavan
-
ger, Stockholm and Copenhagen, Alicante, Bangkok, Barcelona, Bergen, Dublin, Florida, Hel-
sinki, Las Palmas, London, Madrid, Malaga, Malmø, New York, Sandefjord, Tenerife, Tromsø and
Trondheim. Leasing costs related to cars and properties expensed in other operating expenses
in 2015 was NOK 63.1 million. (2014: NOK 59.8 million).
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Annual minimum rent on non-cancellable operating lease agreements per December 31 is as follows:
Nominal value 2015 Nominal value 2014
NOK 1 000 Aircraft Cars Property Total Aircraft Cars Property Total
Within one year
Between 1 and 5 years
After 5 years - - -
The aircraft's minimum lease payments consist of ordinary lease payments, contractual pay
-
ments for maintenance reserves and expensed deferred lease payments resulting from non-in-
terest bearing deposits paid at inception of lease agreements. Aircraft leases committed
through letter of intent are not included in the table above.
NOTE : TRADE AND OTHER RECEIVABLES
Spesification of receivables
NOK 1 000
Trade receivables
Credit card receivables
Deposits
Deferred leasing costs
Reimbursements claims maintenance costs
Other claims
Trade and other receivables
Prepaid costs
Public duty debt
Prepayments to employees
Prepaid rent
Prepayments
Total
Maximum credit risk
Due dates
NOK 1 000
Within one year
After 1 year
Total
Fair value of trade and other receivables
NOK 1 000
Due within one year
After one year
*
Total
*) Discount rate 2,5% (2014: 2,5%) . For receivables due within one year, fair value is equal to nominal value.
Provision for bad debt
NOK 1 000
Balance January 1
Charged to the income statement
Accruals
Reversals ( ) ()
Balance December 31
Changes in provision for bad debt is recognized as other operating expenses.
Overdue accounts receivables
NOK 1 000
Overdue less than 1 month
Overdue 1-2 months
Overdue 2-3 months
Overdue over 3 months
Total
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Provisions for bad debt include trade – and credit card receivables. The provisions for bad
debts on trade receivables relates to provisions for overdue receivables that are not impaired
at December 31. Overdue accounts receivables include trade receivables and credit card re
-
ceivables.
Non-interest bearing deposits are measured at amortized cost in the statement of financial po-
sition. Deposits denominated in foreign currencies are converted using the prevailing exchange
rates on the reporting date.
NOTE : INVENTORIES
NOK 1 000
Consumables
Parts for heavy maintenance
Total
In 2015 and 2014 the Group removed stock parts from aircraft engines in relation to heavy main
-
tenance. These parts are held for sale and sold in secondary markets. Charges for obsolete
parts in 2015 were NOK 33.9 million (2014: NOK 28.7 million).
NOTE : EQUITY AND SHAREHOLDER INFORMATION
At December 31 the share capital consists of the following share categories:
NOK 1 000
Number
of shares
Ordinary
shares
Share
premium Total
January 1, 2014
December 31, 2014
Share issue May 7, 2015
Share Issue July 23, 2015
Share issue September 18, 2015
December 31, 2015
All issued shares are fully paid with a par value of 0.1 NOK per share (2014: 0.1 NOK per share).
There is only one category of shares, and all shares have equal rights. For information about em
-
ployee share options, see note 17.
DESCRIPTION OF ITEMS BOOKED DIRECTLY ON SHAREHOLDER’S EQUITY:
Translation differences
NOK 421.1 million has been booked as comprehensive income at December 31, 2015 (2014: NOK
467.4 million). The translation differences arise from translating the subsidiaries from functional
currency to presentation currency.
Actuarial gains and losses
At December 31, 2015, NOK 44.5 million in actuarial loss arising from the Group defined benefit
pension plan was booked directly to equity (2014: -52.5).
Stock option plan
Share options were granted in 2013, under which a total of 625 000 share options were granted
to the Management and to key personnel. The options had an exercise price 10% above the
weighted average price on March 20, 2013 which is equal to NOK 231.20. The options granted
were to be exercised two years after the grant, and the exercise window were set to six months.
Through 2015 the stock options granted in 2013 were either exercised or terminated. No new
share options have been granted in 2014 or in 2015.
Total share option expense in 2015 was NOK 7.1 million (2014: NOK 14.5). See note 17 for further
details.
Shareholder structure
The largest shareholders at December 31, 2015 were:
A-Shares Ownership Voting rights
HBK Invest AS .% .%
Folketrygdfondet .% .%
Verdipapirfondet DNB Norge (IV) .% .%
Skagen Vekst .% .%
Ferd AS .% .%
Danske Invest Norske Instit. II. .% .%
Skagen Kon-Tiki .% .%
Clearstream Banking S.A. .% .%
Verdipapirfondet DNB Norge Selektiv .% .%
Danske Invest Norske Aksjer Inst .% .%
Verdipapirfondet KLP Aksjenorge .% .%
Morgan Stanley & Co. International .% .%
DNB Livsforsikring ASA .% .%
Verdipapirfondet Handelsbanken .% .%
Statoil Pensjon .% .%
Deutsche Bank AG .% .%
Storebrand Norge I .% .%
Swedbank Generator .% .%
Kommunal Landspensjonskasse .% .%
DNB NOR Markets, aksjehand/analyse .% .%
Other .% .%
Total number of shares % %
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Shareholder structure
The largest shareholders at December 31, 2014 were:
A-shares Ownership Voting rights
HBK Invest AS .% .%
Folketrygdfondet .% .%
Skagen Vekst .% .%
Verdipapirfondet DNB Norge (IV) .% .%
Skagen Kon-Tiki .% .%
Danske Invest Norske Instit. II. .% .%
Clearstream Banking S.A. .% .%
DNB NOR Markets, aksjehandel .% .%
Morgan Stanley & Co. International .% .%
Credit Suisse Securities .% .%
Verdipapirfondet DNB Norge selektiv .% .%
KLP Aksje Norge VPF .% .%
Statoil Pensjon .% .%
Danske Invest norske aksjer .% .%
BNP Paribas S.A. .% .%
J.P. Morgan Chase Bank N.A. London .% .%
JP Morgan Chase Bank, N.A .% .%
Deutsche Bank AG .% .%
Odin Norge .% .%
Kommunal Landspensjonskasse .% .%
Other .% .%
Total number of shares % %
The shareholding of HBK Invest at December 31, 2015 and December 31, 2014 reflects the actual
shareholding and may deviate from the official shareholder register as HBK Invest has signed a
securities lending agreement with Nordea and Danske Bank. Under this agreement these insti
-
tutions may borrow shares from HBK Invest for a limited period of time to improve the liquidity
in the share trading, for example by fulfilling their market maker obligations.
Shares directly or indirectly held by members of the Boards of Directors,
Chief Executive Officer and executive management:
Name Title Shares
1
Bjørn Kise
2
Chair
Liv Berstad Board member -
Ada Kjeseth Board member -
Christian Fredrik Stray Board member -
Linda Olsen Board member – employee representative -
Thor Espen Bråten Board member – employee representative
Kenneth Utsikt Board member – employee representative
Bjørn Kjos
3
Chief Executive Officer
Frode E Foss Chief Financial Officer
Asgeir Nyseth CEO Norwegian UK Ltd.
Geir Steiro Chief Operating Officer -
Anne-Sissel Skånvik Chief Communications Officer -
Gunnar Martinsen Chief Human Resources Officer
Thomas Ramdahl Chief Commercial Officer -
Frode Berg Chief Legal Officer -
Dag Skage Chief Information Officer -
Tore K. Jenssen
CEO Norwegian Air International Ltd.
-
Edward Thorstad Chief Customer Officer
1) Including shares held by related parties
2) Bjørn Kise holds 8.2% of HBK invest AS
3) Bjørn Kjos holds 84.1% of HBK Invest AS
Options directly or indirectly held by Chief Executive Officer and executive management:
Name Title
Exercised
2015
Outstan-
ding 2015
Bjørn Kjos Chief Executive Officer () -
Frode E. Foss Chief Financial Officer () -
Geir Steiro Chief Operating Officer () -
Asgeir Nyseth CEO Norwegian UK Ltd. () -
Frode Berg Chief Legal Officer () -
Anne-Sissel Skånvik Chief Communications Officer () -
Gunnar Martinsen Chief Human Resources Officer () -
Thomas Ramdahl Chief Commercial Officer () -
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Specification of other reserves
Available-for sale
financial assets
Translation
differences Total
January 1, 2014 () ( )
Available for sale financial assets () - ( )
Translation differences -
December 31, 2014 -
Translation differences
December 31, 2015 -
Other paid-in capital consists of accumulated stock option expenses.
NOTE : EARNINGS PER SHARE
Basic earnings per share calculations are based on the weighted average number of common
shares outstanding during the period, while diluted earnings per share calculations are per
-
formed using the average number of common shares and dilutive common shares equivalents
outstanding during each period.
(NOK 1 000)
Profit ()
Average number of shares outstanding
Average number of shares and options outstanding
Basic earnings per share . (.)
Diluted earnings per share . (.)
Average number of shares outstanding
Dilutional effects
Stock options
Average number of shares outstanding adjusted for dilutional effects
NOTE : OPTIONS
In 2013, the Board issued 625 000 share options to employees. The share options had an ex-
ercise price of NOK 231.2, equal to 10% above the weighted average share price on March 20,
2013. The share options were to be exercised two years after the grant, with an exercise window
of six months. There were no share option grants in 2014 or in 2015.
The stock option program was expensed on a straight-line basis at fair value over the vest
-
ing period. The cost was offset in other paid-in capital. Fair value calculations were conducted
using the Black & Scholes option-pricing model. There was no market conditions linked to the
vesting of the options.
The following estimates were used in calculating the fair value for options granted in 2013:
2015
Dividend (%) %
Expected volatility (%) .%
Risk-free interest (%) .%
Expected lifetime (years) .
Share price at grant date .
Expected lifetime assumes that stock options are exercised at expiration. Expected volatility
is based on the historical volatility over the most recent period that corresponds with the ex
-
pected life of the option.
The option program is expensed with NOK 7.1 million in 2015 (NOK 14.5 in 2014).
2015
shares
Weighted
avg. exerc.
price
2014
shares
Weighted
avg. exerc.
price
Outstanding at the beginning of the period . .
Exercised . - -
Terminated . - -
Outstanding at the end of the period - - .
Vested options - - - -
Weighted average fair value of options
allocated in the period - - - -
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Share options were exercised May 7, July 23, and September 18, 2015 respectively. The weighted
average share price at the three exercise dates was NOK 330.86 per share.
Norwegian Air Shuttle ASA has implemented a share purchase savings program for the em
-
ployees, whereby the employees purchase shares in the parent company by way of salary de-
ductions, and the Company will fund up to 50% of the purchased shares, limited to NOK 6 000
per year. In addition the Company will also distribute bonus shares depending on the total
amount of purchased shares per employee.
The fair value of the bonus shares are measured at the grant date using the Black & Scholes
option-pricing model. The fair value of the bonus shares and the corresponding estimated so
-
cial security cost are expensed as personnel costs over the vesting period. Changes in esti-
mated social security costs are expensed over the remaining vesting period. At December 31,
2015, NOK 4.5 million (2014: NOK 2.9 million) was expensed.
NOTE : PENSIONS
The Group operated defined benefit plans and defined contribution plans in Norway, Denmark
and Sweden. In March 2014, the Group renegotiated its pension obligations with the Norwegian
Pilots Union, resulting in a change for some members to defined contribution plan. Additional
renegotiations in March 2015 with the Norwegian Pilots Union, resulted in an agreement where
all pilots aged 46 or younger entered into a defined contribution plan. Pension plans in Norway
are placed with DNB Liv and pension plans in Sweden are placed with Alecta and Fora.
Defined contribution plan
The defined contribution plans require that the Group pays premiums to public or private ad
-
ministrative pension plans on a mandatory, contractual or voluntary basis. The Group has no
further obligations once these premiums are paid. The premiums are accounted for as person
-
nel expenses as soon as they are incurred. Pre-paid premiums are accounted for as an asset to
the extent that future benefits can be determined as plausible.
Defined contribution plans comply with Norwegian, Danish and Swedish Pension legislation.
Pension expenses on defined contribution plans are NOK 227.2 million in 2015 (2014: NOK
130.2 million). The increase in expenses in 2015 relates to a transfer of pilot employee contracts
from Norwegian Air Norway AS to Pilot Services Norway AS. The defined benefit plan was closed
at the time of transfer for all pilots aged 46 or younger, and a new defined contribution plan was
issued.
Defined benefit plan
As per December 31, 2015, 106 employees were active members (2014: 391) and five (2014: one)
were on pension retirement. The related pension liability is recognized at NOK 135.8 million
(2014: 201.8 million).
The pension plans are in compliance with the Occupational Pensions Act and actuarial calcu
-
lations comply with IAS 19.
The mortality and disability estimates are based on up-to-date mortality tables K2013 BE. This
has had no material effect on the consolidated financial statements in 2015.
Pension expense
Funded
NOK 1 000
Net present value of benefits earned
Interest cost on pension liability
Return on plan assets () ()
Administrative expenses
Recognized settlement ( ) -
Social security tax ( )
Net pension expense defined benefit plans
Pension expense on defined contribution plans
Social security tax
Total pension expense
Defined benefit liability and fund
Funded
NOK 1 000 2015 2014
Change in present value of defined benefit liability:
Gross pension liability January 1
Current service costs
Interest cost
Actuarial gains/losses ( )
Settlement - -
Social security on payments to plan ( ) -
Gross pension liability December 31
Change in fair value of plan assets:
Fair value of pension assets January 1
Expected return
Actuarial gains/losses ( ) ()
Administrative expenses - ()
Contributions paid
Benefits paid () -
Fair value of plan assets December 31
Net pension liability
Social security tax -
Net recognized pension liability December 31
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Actual return on pension funds* .% .%
Expected contribution to be paid next year (NOK 1000)
*) Actual return on pension funds is based on reported amounts per first quarter each year.
The net pension liability was based on several assumptions. The discount rate was based on
long-term government bonds in Norway, with adjustments for duration. The pension liability's
average duration was 25 years. Wage adjustments, pension adjustments and the expected in
-
crease in state pensions were based on historical observations for the Group, and an expected
long-term inflation rate of 2.5%.
Discount rate .% .%
Expected return on pension funds .% .%
Wage adjustments .% .%
Increase of social security base amount (G) .% .%
Future pension increase .% .%
Average turnover -% -%
The Groups pension fund is invested in the following instruments:
Equity .% .%
Alternative investments .% .%
Bonds .% .%
Money market funds .% .%
Hold-to maturity bonds .% .%
Real estate .% .%
Various .% .%
The table shows actual distribution of plan assets at December 31, 2015 and 2014.
Historical information
(NOK 1 000)
Present value of defined benefit obligation
-
Fair value of plan assets -
Deficit/(surplus) in the plan -
Experience adjustments on plan liabilities ( ) - -
Experience adjustments on plan assets ( ) - -
NOTE : PROVISIONS
Periodic maintenance on leased Boeing 737 aircraft:
(NOK 1 000)
Opening balance
Charges to the income statement ( ) ()
Accruals
Closing balance
Classified as short term liabilities
Classified as long term provision
The lease contracts require the aircraft to be returned by the end of the lease term in ac
-
cordance with specific redelivery conditions stated in the contract. In addition, the Group is
obliged to follow the maintenance program as defined by Boeing. In order to meet this require
-
ment, the Group must carry out maintenance of aircraft, both regularly as well as at the expira-
tion of the leasing period. The overhauls and maintenance of the aircraft are contractual lease
obligations. The specific event that gives rise to the obligation is each airborne hour or cycle
completed by the aircraft as these determine the timing and nature of the overhauls and main
-
tenance that must be carried out. For some of the contracts, there is a degree of uncertainty
about what kind of maintenance is covered by the maintenance funds, and the provision for this
increase of expenses for the Group, is distributed over the period until the maintenance is con
-
ducted.
The estimation technique for maintenance reserve contribution (MRC) additional provi
-
sions is based on contractual payments for maintenance and mandatory maintenance. The es-
timated costs of overhauls and maintenance are based on the Group’s maintenance program
and contractual prices. In addition, additional provisions are set to meet redelivery conditions
for leased aircraft. Additional provisions are dependent on redelivery date and redelivery con
-
ditions of the different lease terms. In case of lease extension, estimates on maintenance costs
will be revised. For the additional provisions set to meet redelivery conditions, an increased
cost upon redelivery of 10% would increase the MRC additional provisions with approximately
NOK 10.3 million (2014: NOK 4.7 million)
Parts of the periodic maintenance will be conducted in 2016, and NOK 86.2 million is classi
-
fied as a short-term liability for periodic maintenance (2014: NOK 83.8 million). The short-term
part of periodic maintenance is estimated based on the planned maintenance in 2016.
Other long-term liabilities
Other long-term liabilities consists of deposits on future aircraft leases from external parties.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : FINANCIAL INSTRUMENTS
Financial instruments by category:
2015
(NOK 1 000)
Loans and
receivables
Fair value
through
profit or loss
Available-
for-sale Total
Assets as per balance sheet
Available-for-sale financial assets - -
Derivative financial instruments - - - -
Trade and other receivables* - -
Cash and cash equivalents - -
Total -
*) Prepayments not included in
trade and other receivables
2014
(NOK 1 000)
Loans and
receivables
Fair value
through
profit or loss
Available-
for-sale Total
Assets as per balance sheet
Available-for-sale financial assets - -
Derivative financial instruments - - - -
Trade and other receivables* - -
Cash and cash equivalents - -
Total -
*) Prepayments not included in
trade and other receivables
2015
NOK 1 000
Fair value
through profit
or loss
Other
financial
liabilities Total
Liabilities per balance sheet
Borrowings -
Derivative financial instruments -
Trade and other payables* -
Total
*) Public duties not included in
trade and other payables
2014
NOK 1 000
Fair value
through profit
or loss
Other
financial
liabilities Total
Liabilities per balance sheet
Borrowings -
Derivative financial instruments -
Trade and other payables* -
Total
*) Public duties not included in trade
and other payables
See note 22 for details related to borrowings.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Credit quality of financial assets
NOK 1 000
Trade receivables
Counterparties with external credit rating A or better
Counterparties without external credit rating
Total trade receivables
Cash and cash equivalents
A+ or better
BBB +
Total cash and cash equivalents
Derivative financial assets
A+ or better - -
Total derivative and financial assets - -
Available-for sale financial assets
January 1
Additions - -
Sale - ()
December 31
Non-current portion
Current portion - -
Available-for-sale financial assets at December 31, 2015 consist of an investment in an unlisted
equity instrument in Silver Pensjonsforsikring and an investment in a listed bond issue in Bank
Norwegian.
See note 3 for fair value calculations.
Derivative financial instruments
2015 2014
NOK 1 000 Assets Liabilities Assets Liabilities
Forward foreign exchange contracts - -
Forward commodities contracts - -
Total - -
Current portion - -
Trading derivatives are classified as current assets or liabilities.
The total amount from derivatives amounts to a loss of NOK 782.5 million (2014: loss of NOK
489.5 million). See details under the specification of ‘Other losses/(gains) – net’ below.
Forward foreign currency contracts
The fair value of the outstanding forward foreign currency contracts at December 31, 2015 were
NOK – 1.4 million (2014: NOK – 0.4 million). At December 31, 2015, the Group had forward foreign
currency contracts to secure MDKK 140, MSEK 150, MPLN 3 and MGBP 5 (2014: MUSD 35, MDKK
125, MSEK 125 and MGBP 2).
Forward commodities contracts
Forward commodities contracts relates to jet-fuel derivatives. The fair value of the outstand
-
ing forward commodities contracts at December 31, 2015 were NOK – 781.1 million (2014: NOK
– 458.6). As of December 31, 2015, the Group had secured 752 000 tons of Jet-fuel through for
-
ward contracts that matures in the period January 2016 – December 2017.
Other losses/gains – net
NOK 1 000
Net losses/(gains) on financial assets at fair value through
profit or loss
Foreign exchange losses/(gains) on operating acitivities ( )
Total
NOTE : TRADE AND OTHER PAYABLES
NOK 1 000
Accrued vacation pay
Accrued airport and transportation taxes
Accrued expenses
Trade payables
Payables to related party (note 27)
Public duties
Short-term provisions for MRC (note 19)
Other short-term provisions
Total
The short-term payables and provisions are non-interest bearing and are due within the next 12
months.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : BORROWINGS
Nominal value at December 31, 2015
NOK 1 000 Nominal value
Unamortized
transaction cost Book value
Effective
interest rate
Bond issue () .%
Facility agreement () .%
Aircraft financing () .%
Financial lease liability - - - .%
Total ()
Nominal value at December 31, 2014
NOK 1 000 Nominal value
Unamortized
transaction cost Book value
Effective
interest rate
Bond issue () .%
Facility agreement () .%
Aircraft financing () .%
Financial lease liability - .%
Total ()
Effective interest rate during 2015, recognized as financial items (note 8) and capitalized bor
-
rowing costs (note 11), is 4.1% (2015: 4.5%).
Classification of borrowings
NOK 1 000 2015 2014
Non-current
Bond issue
Facility agreement -
Aircraft financing
Financial lease liability -
Total
Current
Bond issue -
Facility agreement
Aircraft financing
Financial lease liability -
Total
Total borrowings
The carrying amounts of the Group’s borrowings are denominated in the following currencies:
NOK 1 000 2015 2014
USD
NOK
EUR -
Total
Collateralized borrowings are detailed in note 23.
Covenants
Bond issues
Minimum Equity of 1500 million
Dividend payments less than 35% of net profit
No dividends unless liquidity is above NOK 1 000 million
Minimum liquidity of NOK 500 million
Revolving credit facilities
There are no financial covenants on revolving credit facilities.
Aircraft financing
No financial covenants. All borrowings related to delivery of new 737-800 aircraft from Boeing
are guaranteed by the Ex-Im Bank of the United States. The Ex-Im Bank of the United States has
pledged security in the owned aircraft delivered under the Boeing contract.
There are no financial covenants related to the financial lease liabilities.
The Group has not been in breach of any covenants during 2015.
Fair value calculations
The carrying amounts and fair values of the non-current borrowings are as follows:
Carrying amount Fair Value
NOK 1 000 2015 2014 2015 2014
Bond issue
Facility agreement
Aircraft financing
Financial lease liability
Total fair value
The fair value of current borrowings approximates their carrying amount as the impact of dis
-
counting is not significant. The fair value of non-current borrowings are based on cash flows
which are discounted using a rate based on the following assumptions:
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Bond Issue I
Interest rate of NIBOR 3M and a risk premium equal to the spread at the reporting date. The
bond issue is an unsecured bond issue denominated in NOK and matured April 13, 2015. The
coupon is 3M NIBOR + 5.5%.
ISIN: NO0010642200
Ticker: NAS03
Name: Norwegian Air Shuttle ASA 12/15 FRN
Bond Issue II
Interest rate of NIBOR 3M and a risk premium equal to the spread at the reporting date. The
bond issue is an unsecured bond issue denominated in NOK and matures July 3, 2017. The cou
-
pon is 3M NIBOR + 3.75%.
ISIN: NO0010713860
Ticker: NAS04
Name: Norwegian Air Shuttle ASA
Bond Issue III
Interest rate of NIBOR 3M and a risk premium equal to the spread at the reporting date. The
bond issue is a secured bond issue pledged in the Group’s hangar at OSL, is denominated in
NOK and matures November 21, 2017. The coupon is 3M NIBOR + 4.0%.
ISIN: NO0010724313
Ticker: NAS05
Name: FRN Norwegian Air Shuttle ASA Senior Secured Bond Issue 2014 / 2017
Bond Issue IV
Interest rate of NIBOR 3M and a risk premium equal to the spread at the reporting date. The
bond issue is an unsecured bond issue denominated in NOK and matures May 22, 2018. The cou
-
pon is 3M NIBOR + 5.75%.
ISIN: NO0010736549
Ticker: NAS06
Name: Norwegian Air Shuttle ASA 15/18 FRN
Bond Issue V
Interest rate of 4Y EUR swap interest rate and a risk premium equal to the spread at the report
-
ing date. The bond issue is an unsecured bond issue denominated in EUR and matures 11 De-
cember 2019. The coupon is 7.25%
ISIN: NO0010753437
Ticker: NAS07
Name: Norwegian Air Shuttle ASA 15/19 7.25% EUR
Facility agreement
Interest rate of LIBOR 3M and a risk premium equal to the spread at the reporting date. The
Group has entered into facility agreements with DVB Bank SE and BOC Aviation Limited in 2014
to cover pre-delivery financing for aircraft with delivery in 2015 and 2016. The borrowings which
mature at the delivery of each aircraft in 2016 are classified as short-term borrowings and are
denominated in USD.
Aircraft financing
Fixed and floating interest rate based on LIBOR market rates and a risk premium equal to the
spread at the reporting date. The spread is not entity specific, as the agreed spread is based on
the overall credit risk of the financial markets in the United States. 12% of aircraft financing is
exposed to cash flow interest rate risk with quarterly re-pricing dates, while 88% of aircraft fi
-
nancing is exposed to fair value risk on fixed interest rates. The borrowings mature quarterly af-
ter the delivery of the aircraft from Boeing. See note 2 for further maturity analysis of borrow-
ings. The aircraft financing is denominated in USD.
Future minimum lease payments under financial lease liability:
NOK 1 000
Future minimum lease payments
- No later than 1 year -
- Between 1 and 5 years -
- Later than 5 years - -
Total -
Future finance charges on financial lease liability -
Present value of financial lease liability -
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : ASSETS PLEDGED AS COLLATERALS AND GUARANTEES
Liabilities secured by pledge
NOK 1 000 2015 2014
Bond issue -
Aircraft financing
Loan Facility - -
Facility agreement
Financial lease liability
Total
The owned aircraft are pledged as collateral for the aircraft financing. The purchase contracts
with aircraft manufacturers are pledged as collateral for the revolving credit facility agreement
with BOC Aviation Limited and DVB Bank SE to secure the pre-delivery payments.
There was no pledged collateral for the financial lease liability, but the financial lease asset is
an actual security for the financial lease liability through fulfilment of the lease agreement. For
references to pledged asset, see note 11, and for borrowings related to those asset, see note 22.
The Group has not issued any guarantees for third parties.
Book value of assets pledged as security and guarantees:
NOK 1 000 2015 2014
Prepayment and aircraft
Buildings -
Financial lease asset -
Total
NOTE : BANK DEPOSITS
Cash and cash equivalents
NOK 1 000 2015 2014
Cash in bank
Cash equivalents
Total
Deposits in money market funds are classified as cash equivalents, as the underlying maturity
of the deposits are three months or less. At December 31, 2015, the interest terms of the main
cash deposits in folio accounts are one month NIBOR – 0.25% p.a. The interest terms on re
-
stricted cash deposits in folio accounts are one month NIBOR +0.85% p.a.
Receivables from credit card companies are included in trade receivables. See note 13.
Restricted cash
NOK 1 000
Guarantees for leases and credits from suppliers
Taxes withheld
Total
Bank guarantees are granted for the leasing liabilities of aircraft, suppliers of fuel and handling
services, as well as airport charges from airports and governments.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : INVESTMENTS IN ASSOCIATED COMPANIES
Norwegian Air Shuttle ASA has the following investments in associates (NOK 1 000):
Entity Country Industry Ownership interest
Carrying amount
December 31, 2014 Net profit/(loss) 2015 Share issue 2015
Carrying amount
December 31, 2015
Norwegian Finans Holding ASA Norway
Financial
Institution %
Entity Country Industry Ownership interest
Carrying amount
December 31, 2013 Net profit/(loss) 2014 Share issue 2014
Carrying amount
December 31, 2014
Norwegian Finans Holding ASA Norway
Financial
Institution %
The associated company, Norwegian Finans Holding ASA, owns 100% of the shares in Bank
Norwegian AS. Norwegian Air Shuttle ASA owns 20% of the shares in Norwegian Finans Holding
ASA. The company is situated in Oslo, Norway. The equity method is applied when accounting
for the investment, and the Group’s share of the associated company’s profit and loss is
included in the carrying amount.
The Group’s share of the results and its aggregate assets and liabilities in the associated
company, are as follows (NOK 1 000):
2015
Entity Country Assets Liabilities Revenues Profit/(Loss) Interestheld
Norwegian Finans Holding ASA Norway %
2014
Entity Country Assets Liabilities Revenues Profit/(Loss) Interestheld
Norwegian Finans Holding ASA Norway %
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : RELATED PARTY TRANSACTIONS
The Chief Executive Officer is the principal shareholder in Norwegian Air Shuttle ASA with an
ownership share of 24.6% through the controlling ownership of HBK Invest AS. The chair owns a
minority of shares in HBK Invest AS. There have been no financial transactions between HBK In
-
vest AS and Norwegian Air Shuttle ASA in 2015 or 2014, except for indirect transactions through
Fornebu Næringseiendom.
The chair, Bjørn Kise, is a partner, and the CEO is a former partner, of the law firm Simonsen
Vogt Wiig which operates as the legal advisor for Norwegian Air Shuttle ASA.
The Group leases its property at Fornebu from Fornebu Næringseiendom AS, which is a
wholly owned subsidiary of HBK Invest AS. The leasing agreement entitles the Group to lease Ok
-
senøyveien 3 at Fornebu for ten years until 2020, with an option to extend the lease for another
five years.
The parent company has received commissions from the associated company Norwegian Fi
-
nans Holding ASA (Bank Norwegian) in 2015 and 2014. The commissions relate to sales made by
the parent company's customers by using the 'Bank Norwegian' credit cards. In addition, the
subsidiary Norwegian Brand Ltd receives license fees from Norwegian Finans Holding ASA for
the use of the Norwegian Brand. The total commission and license fee is enclosed in the table
below. Receivables and payables to related parties are included below.
No loans or guarantees have been issued to related parties in 2015 or 2014.
See note 7 for details on key management compensations and note 15 for shares and options
held directly or indirectly by members of the Board of Directors, the CEO and the Executive
Management.
The following transactions were carried out with related parties (NOK 1 000):
NOK 1 000
Sales (-) and purchases (+) of goods and services (excl VAT)
- Simonsen Vogt Wiig (legal services)
- Associate (commission and licence fee) ( ) ()
- Associate (interests on subordinated loan) ( ) ()
- Fornebu Næringseiendom (property rent)
Year-end balances arising from sales/purchases of goods/
services (incl VAT)
Receivables from related parties (note 13)
- Associate (commission)
Payables from related parties (note 21)
- Simonsen Vogt Wiig (legal services)
- Fornebu Næringseiendom (property rent) -
Investment in related parties
- Associate (subordinated loan)
Transactions with subsidiaries have been eliminated on consolidation and do not represent re-
lated party transactions. See note 25 Related Parties and note 23 Shares in Subsidiaries in the
financial statements of Norwegian Air Shuttle ASA for further details.
NOTE : CONTINGENCIES AND LEGAL CLAIMS
Through their respective unions, pilots and cabin crew that have been subject to business
transfers from Norwegian Air Shuttle (NAS) to Norwegian Air Norway (NAN) and from NAN to lo
-
cal national resourcing entities for pilots and cabin crew in Norway, have raised claims that NAS
primarily, NAN alternatively shall be considered employer. Trial is set to May 26, 2016. Financial
exposure is considered as limited.
The Norwegian Group has since the end of 2013 continuously reorganized its operations.
Consequently, The Norwegian Tax authorities have been requesting additional information re
-
garding the transactions between Group companies and there is an ongoing process to respond
and communicate with the authorities.
NOTE : COMMITMENTS
In August 2007 Norwegian Air Shuttle ASA entered into a purchase agreement for 42 new Boe-
ing 737-800 aircraft with Blended Winglets and purchase rights for additional 42 aircraft of the
same model from Boeing. The order of 42 aircraft has a list price of USD 3.1 billion.
Between 2008 and 2011 the Group extended its aircraft order and exercised purchase rights
for an additional 36 aircraft, bringing the total order of Boeing 737-800 to 78 aircraft.
Norwegian Air Shuttle ASA entered into a purchase agreement for three Boeing 787-8 Dream
-
liner aircraft in June 2011. One aircraft was delivered in 2013, one in 2014 and one in 2015. The
aircraft had a (total) list price of USD 580 million.
In January 2012, the Group entered into additional purchase contracts with Boeing Commer
-
cial airplanes and Airbus S.A.S comprising a total of 372 aircraft, of which 222 were firm orders.
The firm orders were for 22 Boeing 737-800, 100 Boeing 737 MAX8 and 100 Airbus A320neo. The
agreements also include purchase rights for an additional 100 Boeing 737 MAX8 and 50 Airbus
A320neo. The firm orders have an aggregated value at list price of approximately NOK 127 billion.
The delivery of aircraft starts in 2016. The aircraft purchase is supported by the Export-Import
Bank of the United States (Ex-Im) and European Export Credit Agencies.
In August 2015 the Group entered into a letter of intent for operational lease for two Boe
-
ing 787-9 Dreamliner with delivery in 2017. The two aircraft will be leased for a 12 year period
from delivery. The 787-9 is a stretch version of the 787-8 with longer range, and with 344 seats
(+18%) based on Norwegian's configuration. At December 31, 2015, the Group has 11 Boeing 787-9
Dreamliner lease orders with expected delivery from 2016 to 2018.
In October 2015 the Group entered into purchase contracts with Boeing Commercial air
-
planes for 19 Boeing 787-9 Dreamliner to be delivered over the years 2017 through 2019. All air-
craft will be operated by Norwegian. The agreement includes purchase options for an additional
10 aircraft of the same type.
The Group presents list prices on aircraft purchase contracts. Discounts are achieved on the
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
aircraft purchase contracts; hence the actual committed purchase prices are lower than the
presented list prices. Actual committed purchase prices are regarded as contractual and busi
-
ness sensitive information.
For details on commitments for aircraft leases, see note 12.
Norwegian Air Shuttle ASA has selected the Rolls-Royce Trent 1000 engine to power up to 9 new
787-8 Dreamliners. The contract, signed with Rolls-Royce, includes "Total Care" long-term sup
-
port agreements which include all maintenance, spare parts and other support services. The
contract value quoted at list price is USD 450 million when comprising 18 engines.
Norwegian Air Shuttle ASA has entered into a maintenance agreement with Boeing comprising
all long-haul aircraft on order. The agreement secures cost efficient maintenance and has a du
-
ration of 12 years.
At December 18, 2015 the Group signed an agreement to lease out 12 Airbus 320neo aircraft
to airline HK Express. The 12 aircraft are scheduled to be delivered between 2016 and 2018.
In December 2015 the Group signed an agreement with OSM Aviation to form a stronger global
partnership in employment and management of aviation crew. Norwegian Air Resources Holding
is acquiring 50% of OSM Aviation which in turn will acquire a 49% stake in Norwegian’s resourc
-
ing companies in Spain, Finland and the UK. The closing of the agreement is subject to The Eu-
ropean Commission approval under the EU Merger Regulation. The transaction is expected to
close by the end of Q1 2016.
NOTE : EVENTS AFTER THE REPORTING DATE
On 26 January 2016, Norwegian announced a new charter agreement for summer 2016 to con-
tinue its cooperation with TUI Nordic, TUI UK, Thomas Cook Northern Europe and Nazar Nor-
dic to fly their customers from the Nordics and the UK to various summer destinations including
the Balearics, the Greek Isles and the Canaries. The total value of the contracts is approximately
NOK 500 million, NOK 100 million more than previous year, and include more than 2 200 flights.
An arrangement for pre-delivery payment financing (PDP) of fifty Airbus 320 Neo aircraft
scheduled for delivery in 2016 to 2019 was finalized at the end of January 2016. The facility cov
-
ers PDP financing for deliveries until the end of 2019 and is structured as a revolving credit facil-
ity. These deliveries in the next four years are key to the Norwegian group's future growth plans,
and the PDP financing facility is a milestone in Norwegian's ongoing program for financing di
-
rect-buy aircraft.
On February 2, 2016, a long-term financing of six Boeing 737 800 aircraft was completed. The
financing is structured as a private placement directed to institutional investors in the US market.
In February 2016, Norwegian reached an agreement with cabin crew in Norway and Denmark.
The new collective agreements are for a two-year period.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
FINANCIAL STATEMENTS FOR THE PARENT COMPANY
INCOME STATEMENT
NOK 1 000 Note
Revenues 3
Other income 3
Total operating revenues and income
Operational expenses 4
Payroll 5, 6
Depreciation, amortization and impairment 9, 10
Other operating expenses 4a
Other losses/(gains) – net 19
Total operating expenses
Operating profit ( ) ()
Net financial items 7 ( ) ()
Profit (loss) before tax ( ) ()
Income tax expense (income) 8 ( ) ()
Profit (loss) for the year ( )
Basic earnings per share (.) .
Diluted earnings per share (.) .
Profit attributable to:
Owners of the Company ( )
STATEMENT OF COMPREHENSIVE INCOME
NOK 1 000 Note
Profit for the year ( )
Reversible income and losses:
Available-for-sale financial assets 19
Total comprehensive income for the period
Total comprehensive income attributable to:
Owners of the Company
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | FINANCIAL STATEMENTS FOR THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
STATEMENT OF FINANCIAL POSITION AT DECEMBER 31
NOK 1 000 Note 2015 2014
January 1,
2014
ASSETS
Non-current assets
Intangible assets 9
Deferred tax asset 8 -
Aircraft, parts and installations on
leased aircraft 10
Equipment and fixtures 10
Buildings 10
Financial lease asset 10 -
Prepayment to aircraft manufacturers 10 -
Financial assets available for sale 19, 24
Investments in subsidiaries 23
Financial lease receivable 25
Other receivables 12
Total non-current assets
Current assets
Inventory 13
Trade and other receivables 12
Derivative financial instruments 2, 19 -
Financial assets available for sale 2, 19 -
Cash and cash equivalents 21
Total current assets
Total assets
NOK 1 000 Note 2015 2014
January 1,
2014
EQUITY AND LIABILTIES
Equity
Share capital 14
Share premium
Other paid-in equity
Other reserves
Retained earnings
Total equity
Non-current liabilities
Pension obligation 15
Provision for periodic maintenance 17
Deferred tax 8 - -
Borrowings 22
Financial lease liability 22
Total non-current liabilities
Current liabilities
Short term part of borrowings 22
Trade and other payables 18
Air traffic settlement liabilities
Derivative financial instruments 2, 19 -
Total short term liabilities
Total liabilities
Total equity and liabilities
Fornebu, March 16, 2016
Bjørn H. Kise Liv Berstad Christian Fredrik Stray
(Chair) (Deputy chair) (Director)
Ada Kjeseth Kenneth Utsikt Linda Olsen
(Director) (D ire c to r,
employee representative)
(D ire c to r,
employee representative)
Thor Espen Bråten Bjørn Kjos
(D ire c to r,
employee representative)
(Chief Executive Officer)
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | FINANCIAL STATEMENTS FOR THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
STATEMENT OF CHANGES IN EQUITY
NOK 1 000
Share
capital
Share
premium
Other paid-in
equity
Total paid-in
equity
Other
Reserves
Retained
earnings
Total
equity
Equity at December 31 2013
Transition to simplified IFRS at January 1, 2014 - - - - -
Equity January 1, 2014
Net profit for the year - - - - -
Available for sale financial assets - - - - -
Comprehensive income 2014 - - - -
Equity change on employee options - -
Transactions with owners - -
Equity December 31, 2014
Net profit for the year - - - - - () ( )
Available for sale financial assets - - - - -
Comprehensive income 2015 - - - - ()
Share issue - - -
Equity change on employee options - - - -
Transactions with owners - -
Equity December 31, 2015
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | FINANCIAL STATEMENTS FOR THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
CASH FLOW STATEMENT
NOK 1 000 Note
Cash flows from operating activities:
Profit (loss) before tax ( ) ()
Taxes paid 8 ( ) ()
Depreciation, amortization and write-down 9, 10
Compensation expense for employee options 16
Fair value (gains)/losses on financial assets 19
Financial items 7 ()
Interest received 7
Change in inventories, accounts receivable and accounts payable
Change in air traffic settlement liabilities
Change in other current assets and current liabilities ( )
Net cash flow from operating activities ( )
Cash flows from investing activities:
Prepayments aircraft purchase 10 - ()
Purchase of tangible assets 10 ( ) ()
Purchase of intangible assets 9 ( ) ()
Payment to subsidiaries - ()
Payment to associates 24 ( ) -
Net cash flow from investing activities ( ) ()
Cash flows from financial activities:
Proceeds from long term debt 22
Payment of long term debt 22 ( ) ()
Interest on borrowings ( ) ()
Transaction cost ( ) -
Paid-in equity -
Net cash flow from financial activities ()
Foreign exchange effect on cash ( ) -
Net change in cash and cash equivalents ( ) ()
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31 21
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | FINANCIAL STATEMENTS FOR THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NOTE : GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING PRINCIPLES
Norwegian Air Shuttle ASA is the parent in the
Norwegian ASA Group. Besides being an op
-
erative airline it also serves the purpose of
holding company in the Norwegian Group,
and contains the Group Management and
Corporate Functions, in addition to serving
other Group airlines and other business ar
-
eas with shared services. The information
provided in the consolidated financial state
-
ments covers the Company to a significant
degree. Please refer to the consolidated fi
-
nancial statement of the Group for a descrip-
tion of the operative activities of Norwegian
Air Shuttle ASA.
The financial statements of Norwegian Air
Shuttle ASA for the year ended December 31,
2015 were authorized for issue by the Board
of Directors on March 16, 2016.
The financial statement of the Company
has been prepared in accordance with sim
-
plified IFRS pursuant to the Norwegian Ac-
counting Act § 3-9 and regulations regarding
simplified application of IFRS issued by the
Ministry of Finance on January 21, 2008. This
is the Company’s first annual financial state
-
ments prepared in accordance with simpli-
fied IFRS. The date of transition is January 1,
2014. The effects of the transition are shown
in note 28.
The company’s significant accounting prin
-
ciples are consistent with the accounting
principles of the Group, as described in note
1 of the consolidated financial statement.
Where the notes for the parent company are
substantially different from the notes for the
Group, these are shown below. Otherwise,
refer to the notes to the Group’s Consoli
-
dated Financial Statements (hereinafter re-
ferred to as the Group’s Consolidated Finan-
cial Statements).
The option in the regulation for simplified
IFRS which the Company has utilized in rec
-
ognition and measurement and which differ
from the consolidated financial statements
are:
Dividends and group contribution
Dividend and group contributions are rec
-
ognized in accordance with the Accounting
Act and recognized in the reporting period to
which they relate.
Investments in subsidiaries and associates
Ownership interests in subsidiaries are pre
-
sented at cost and tested for impairment.
Any impairment losses and reversal of im
-
pairment losses are classified as net gains
(loss and impairment) on investments in sub
-
sidiaries in the income statement. Loans pro-
vided to subsidiaries are measured at cost
according to IAS 39.
Norwegian’s investment in Bank Norwe
-
gian is considered as an investment in an as-
sociate in accordance with the definitions of
IAS 28 Investments in Associates and Joint
Ventures. In accordance with IAS 28 and IAS
27 Separate Financial Statements Norwegian
has chosen to account for the investment
in accordance with IAS 39 Financial instru
-
ments: Recognition and Measurement. Un-
der IAS 39 the investment is classified as an
available-for-sale financial asset, and hence
measured at fair value with gains and losses
from changes in fair value recognized in other
comprehensive income.
NOTE : FINANCIAL RISK
The company’s exposure to and management of financial risk is primarily the same as disclosed
for the Group. For further information, please refer to note 3 in the consolidated financial
statements.
NOTE : REVENUES
Other income amounts to NOK 1 110.8 million (2014: NOK 1 286.8 million) and include gains from
sale of assets (note 28).
NOK 1 000
By activity:
Passenger transport
Ancillary revenue
Other revenues
Total revenues
By geographic market:
Domestic
International
Total revenues
The Company is a low-cost airline, using its fleet of aircraft. Revenues from this business are
specified in the table above. Passenger revenue consists of revenue generated from sales of
airline tickets, while ancillary revenue consists of other services directly generated from ticket
sales. Other revenue consists of sales that are not directly related to an airline ticket, e.g. cargo
and sales of third-party products.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : OPERATIONAL EXPENSES
NOK 1 000
Sales and distribution expenses
Aviation fuel
Aircraft leases
Airport charges
Handling charges
Technical maintenance expenses
Other operating expenses
Total
Aircraft lease expenses includes wet-lease costs.
NOTE A: OTHER OPERATING EXPENSES
Other operating expenses amount to NOK 1 165.5 million (2014: NOK 847.4 million). Other oper-
ating expenses are related to the operation of systems, marketing, back office, consultants and
other costs not directly attributable to operation of the aircraft fleet and related airline specific
costs.
NOTE : PAYROLL EXPENSES AND NUMBER OF EMPLOYEES
NOK 1 000
Wages and salaries
Social security tax
Pension expenses
Employee stock options
Other benefits
Total
In 2015, NOK 7.1 million (2014: NOK 14.5 million) was charged as an expense to salaries, according
to the stock option program (note 16). The Company has a pension scheme covering all employ
-
ees. The scheme is in compliance with the act on occupational pensions (note 15).
Number of man-labor years
NOTE : REMUNERATION TO THE BOARD OF DIRECTORS AND EXECUTIVE
MANAGEMENT
For information on remuneration of the Board of Directors and Executive management, please
refer to note 7 in the Group’s Consolidated Financial Statements.
Auditor remuneration:
NOK 1 000
Audit fee
Other audit related services
Tax advisory -
Other services
Total
All amounts stated exclude VAT.
NOTE : NET FINANCIAL ITEMS
NOK 1 000
Interest income
Interest expense ( ) ()
Net foreign exchange loss or gain ( ) ()
Appreciation cash equivalents ( )
Impairment of investment in subsidiaries ( ) -
Fair value adjustment long term deposits -
Other financial items ( )
Net financial items ( ) ()
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : TAXES
This year's tax expense consists of:
NOK 1 000
Tax payable -
Tax paid in current year on current year income - -
Adjustments from previous year ()
Change in deferred tax ( ) ()
Income tax expense ( ) ()
Adjustments from previous years consists of both taxes paid in 2015 related to earlier years tax
assessments, and changes in deferred tax from previous years.
Reconciliation from nominal to effective tax rate:
NOK 1 000
Profit before tax ( ) ()
Expected tax expense using nominal tax rate (27%) ( ) ()
Tax effect of the following items:
Non deductible expenses/income
Adjustments from previous year ()
Tax rate outside Norway other than 27% - -
Change in tax rate in Norway to 25% -
Other items () ()
Tax expense ( ) ()
Effective tax rate .% .%
Deferred tax
NOK 1 000
Assets
2015
Liabilities
2015
Assets
2014
Liabilities
2014
Intangible assets - - - -
Tangible assets ( ) - -
Long term receivables and borrowings in
foreign currency - - - -
Inventories - -
Receivables - -
Financial instruments - -
Derferred gains/losses ( ) - () -
Other accruals - -
Pensions - - - -
Other temporary differences ( ) - () -
Loss carried forward - -
Gross deferred tax assets and liabilities - -
Reconciliation of deferred tax assets and liabilities
NOK 1 000
Assets
2015
Liabilities
2015
Assets
2014
Liabilities
2014
Recognized at January 1 - - ()
Charged/credited to the income
statement - ()
Adjustment from previous year - -
Recognized at December 31 - -
Deferred tax asset is based on unused tax loss carry forwards and temporary differences in as
-
sets and liabilities. The tax loss carried forward is expected to be utilized by future taxable prof-
its. Adjustments from previous years consists of differences in deferred tax positions between
the Financial Statement release last year and the Company’s tax reporting finalized later in the
year.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : INTANGIBLE ASSETS
NOK 1 000 Software Goodwill
Other
intangible assets Total
Acquisition cost at January 1, 2014
Additions - -
Disposals - - () ( )
Acquisition cost at December 31, 2014
Acquisition cost at January 1, 2015
Additions - -
Acquisition cost at December 31, 2015
Accumulated amortization and write-down at January 1, 2014 -
Amortization in 2014 - -
Accumulated amortization and write-down at December 31, 2014 -
Accumulated amortization and write-down at January 1, 2015 -
Amortization in 2015 - -
Accumulated amortization and write-down at December 31, 2015 -
Book value at December 31, 2014
Book value at December 31, 2015
Economic life -years Indefinite Indefinite
Amortization plan Linear None None
Capitalized software is related to external consulting fees for the development of Norwegian's own
systems for bookings and ticket-less travels, various sales portals, back office and maintenance
system. These costs are amortized over their estimated useful lives (three to five years).
Other intangible assets and goodwill are related to the purchase of Norwegian Air Shuttle Swe
-
den AB on July 31, 2007. Other intangible assets from business combinations consist of estimated
fair value of Brand name, charter operations, slots and the Air Operating Certificate. Other intangi
-
ble assets also consist of intellectual property rights that are related to purchases of internet do-
mains. The Group has developed international web portals in major markets.
Goodwill, slots and intellectual property rights are determined to have indefinite useful lives,
and are not amortized. Slots and intellectual property rights do not expire over time, as long as the
Management has the intention to continue using the assets.
Impairment testing of goodwill and intangible assets
The Company tests goodwill and assets with indefinite useful lives annually at year-end for impair
-
ment. Intangible assets with definite lives are tested for impairment if indicators of impairment are
identified. No indications of impairment have been identified in 2015, or in 2014.
The method used to estimate the recoverable amount is value in use, based on discounted cash
flow analysis. The analysis reflects the cash flow projections in the financial business plan covering
the next year which is approved by the Board of Directors. The budget for the next 12 months is ap
-
plied for cash flows within a planning horizon of 8 years, as the aircraft fleet is estimated for re-in-
vestment every eight years. Key assumptions used in the calculation are growth rates, operating
costs, terminal value and discount rate. Cash flows beyond the eight year period are extrapolated
with a long term growth rate. Estimated cash flows and discount rate are after tax.
Discount rate
The applied discount rate is 7.4% (2014: 6.2%) and based on the Weighted Average Cost of Capital
(WACC). The cost of the Group’s debt and equity capital, weighted accordingly to reflect its capi
-
tal structure, gives the Group’s weighted average cost of capital. The WACC rates which are used
to discount future cash flows are based on market risk free interest rates adjusted for inflation dif
-
ferentials and also include the debt premium, market risk premium, gearing corporate tax rate and
asset beta. An increase of the discount rate of 5% will not result in impairment of goodwill and in
-
tangible assets.
Growth rates
The basis for calculating future growth rate is next year management approved budget. Except for
budgeted growth stemming from existing assets, no growth is incorporated in the impairment test
for 2015.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : TANGIBLE ASSETS
NOK 1 000 Buildings Aircraft Prepayment Boeing contract Equipment and fixtures Financial lease Total
Acquisition cost at January 1, 2014
Additions - -
Disposals - () () - - ( )
Acquisition cost at December 31, 2014 -
Acquisition cost at January 1, 2015 -
Additions - -
Disposals - - - - () ( )
Acquisition cost at December 31, 2015 - -
Accumulated depreciation at January 1, 2014 - -
Depreciation -
Depreciation on disposals - () - - - ( )
Accumulated depreciation at December 31, 2014 -
Accumulated depreciation at January 1, 2015 -
Depreciation -
Depreciation on disposals - - - () ( )
Accumulated depreciation at December 31, 2015 - -
Book value at December 31, 2014 -
Book value at December 31, 2015 - -
Economic life Seebelow Seebelow Seebelow Seebelow -years
Depreciation plan Seebelow Seebelow None Linear Linear
Residual value Seebelow Seebelow Seebelow Seebelow MNOK
At December 31, 2015, the Company operated a total of 72 aircraft, 23 were leased under oper
-
ational leases from external lessors, while 45 were leased under internal operating leases, and
4 were owned. For comparison, the Company operated 60 aircraft at December 31, 2014, 20
were leased under operational leases from external lessors and 40 were leased under opera
-
tional leases from internal Group Companies. In addition, the Company had 1 (34) wet lease air-
craft from subsidiary Norwegian Air Norway AS at year end 2015.
Aircraft
Aircraft consist of purchased aircraft. The Company owns 4 aircraft per December 31, 2015
(2014: 5 aircraft) and the total residual value for these aircraft was NOK 4.1 million (2014: NOK
79.4 million. The residual value is deducted from the depreciable amount of the remainder of
the aircraft. The life expectancy is 25 years on all the 737 aircraft, and the economic life of the
owned aircraft is 25 years less the age of the aircraft at time of purchase.
Installations on leased aircraft
The installations on the leased aircraft include cabin interior modifications and other improvements
to the aircraft after lease commencement. The capitalized value is depreciated over the remainder
of the aircraft leases, which is between 1-10 years. Linear depreciation is applied and residual value
is NOK 0. In 2015 and 2014 several engines of the leased aircraft were in overhaul, and replacements
costs for life limited parts were capitalized to the extent that the costs are improvements to the en
-
gines which exceed the requirements specified in the leasing contracts. These components are de-
preciated at a defined rate per engine cycle, limited to the remainder of the aircraft lease.
Spare parts
Spare parts consist of rotable parts for aircraft, and are depreciated over their useful life. The
useful life of spare parts ranges between 5 to 8 years. Linear depreciation is applied and 25% of
the acquisition cost is calculated as residual value.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Buildings
Buildings consist of three apartments in Berlin, purchased in 2007 for the purpose of hous
-
ing crew and trainees stationed in Berlin on a temporary basis. In 2010, the Group purchased
an apartment in Seattle, and in 2013 purchased and apartment in Florida, for the purpose of
housing personnel stationed in the United States in respect of the delivery of new 737-800 air
-
craft and opening new destinations. In 2014, a new hangar at Oslo Airport Gardermoen was
constructed. The apartments are carried at acquisition cost. The residual value is estimated to
equal the acquisition cost. The hangar is estimated to have a useful life of 50 years, and is de
-
preciated linear over useful economic life. Residual value is NOK 0.
Prepayments to aircraft manufacturers
In 2007, the Company entered a purchase contract of 42 new 737-800 aircraft with Boeing
Commercial Airplanes, with an option of purchasing 42 additional aircraft. The contract was ex
-
tended in June 2011 for an additional 15 Boeing 737-800. In 2011, the Company entered a pur-
chase contract with Icelandair for the right to acquire three Boeing 787-8 Dreamliner aircraft,
which Icelandair had on order with Boeing Commercial Airplanes. In January 2012, the Company
entered additional purchase contracts with Boeing Commercial airplanes and Airbus S.A.S com
-
prising a total of 372 aircraft, whereof 222 were firm orders.
On December 1 2014, the Company transferred the purchase rights, including the prepay
-
ments to aircraft manufacturers to its subsidiary Arctic Aviation Assets Ltd in Ireland. The pre-
payments are transferred at book value, as the contracts and prepayments do not have stand-
alone market value.
Financial lease assets
The Company entered lease agreements in 2009 related to de-ice equipment and electronic
flight bag equipment. The lease agreements are classified as financial leases as all risks and re
-
wards are transferred to the Company after the end of the lease agreement. The financial lease
assets are depreciated over their economic useful lives. De-ice equipment is depreciated over
20 years, while electronic flight bag equipment is depreciated over 4 years. Residual value of fi
-
nancial lease assets is 0. The Company sold its financial lease assets in 2015 at book value.
Impairment of tangible assets
In 2015 and 2014, management determined that the total operations of the Company were its
cash generating unit. Impairment testing of tangible assets are covered by impairment testing
on the whole Company, see note 8 for details.
For information regarding assets pledged as collateral, see note 20.
NOTE : LEASING
The lease agreements on the Boeing 737 aircraft last between three and ten years from the date
of agreement, with some extension options. From 2002 to 2013, 66 aircraft were delivered. In
2014, 13 aircraft were delivered, including sale leaseback. In 2015, five intercompany leased
aircraft were delivered. Renegotiations have resulted in the extension of some of the shorter
leases. In 2015, three (2014: three) aircraft were redelivered to the lessor or novated to other
Group companies.
Leasing costs expensed on aircraft lease within operational expenses was NOK 2 654.8 million
in 2015 (2014: NOK 1 676.2 million).
In addition, the Company leases one (2014: 11) car and 30 (2014: 35) properties in Oslo,
Stavanger, Stockholm, Copenhagen, Bergen, Helsinki, London, Madrid, Malaga, Malmø, San
-
defjord, Tenerife, Tromsø, Trondheim and Guadeloupe/Martinique in the Caribbean. Leasing
costs related to cars and properties expensed in other operating expenses in 2014 was NOK 57.6
million (2014: NOK 56.2 million).
Annual minimum rent on non-cancellable operating lease agreements per December 31 is as follows:
Nominal value 2015 Nominal value 2014
NOK 1 000 Aircraft Cars Property Total Aircraft Cars Property Total
Within one year
Between 1 and 5 years
After 5 years - - -
The aircraft's minimum lease payments consist of ordinary lease payments, contractual payments
for maintenance reserves and expensed deferred lease payments resulting from non- interest
bearing deposits paid at inception of the lease agreement. Aircraft leases committed through
letter of intent are not included in the table above. Only aircraft leases for aircraft operated by
the Company is included above. 29 of the leases are leased from internal Group Companies. For
the Company’s leasing commitments on behalf of other Group Companies, see note 25.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : RECEIVABLES
Specification of receivables:
NOK 1 000
Trade receivables
Intercompany receivables
Credit card receivables
Deposits
Deferred leasing costs
Reimbursements claims maintenance costs
Other claims
Trade and other receivables
Prepaid costs
Public duty
Prepayments to employees
Prepaid rent
Prepayments
Total
Due dates:
NOK 1 000
Within one year
After 1 year
Total
The Company pays deposits on aircraft leases. Non-interest bearing deposits are measured at
amortized cost in the statement of financial position. Receivables denominated in foreign cur
-
rency are converted using the prevailing exchange rates on the reporting date.
NOTE : INVENTORIES
NOK 1 000
Consumables
Parts for heavy maintenance
Total
In 2015 and 2014, the Group removed parts from aircraft engines in relation to heavy mainte
-
nances. These parts are held for sale and sold in secondary markets. Charges for obsolete parts
in 2015 were NOK 33.9 million (2014: NOK 28.7 million).
NOTE : SHAREHOLDER’S EQUITY AND SHAREHOLDER INFORMATION
Refer to note 15 in the Group’s consolidated financial statements.
NOTE : PENSIONS
The Company operates defined contribution plans. Pension plans are placed with DNB Liv.
Defined contribution plan
The defined contribution plans require that the Company pays premiums to public or private
administrative pension plans on mandatory, contractual or voluntary basis. The Company has no
further obligations once these premiums are paid. The premiums are accounted for as payroll
expenses as soon as they are incurred. Pre-paid premiums are accounted for as an asset to the
extent that future benefits can be determined as plausible.
Defined contribution plans comply with Norwegian Pension legislation.
Pension expenses on defined contribution plans were NOK 48.6 million in 2015 (2014: NOK
60.0 million).
In addition, employees are included in the early retirement scheme (AFP), with the right to
retire at the age of 62. The AFP is a multi-employer plan, where the Norwegian government fi
-
nances 1/3 of the contribution plans. The AFP pension plan is a defined benefit plan adminis-
tered by a separate legal entity (Fellesordningen). The plan is temporarily accounted for as a de-
fined contribution plan, as the plans administrators have not been able to calculate the pension
obligation for each entity participating in the plan.
The scheme is in compliance with the Occupational Pensions Act.
NOTE : OPTIONS
Refer to note 17 in the Group’s consolidated financial statements.
NOTE : PROVISIONS
The Company pays fee to maintenance funds held by the lessor on leased aircraft. The accrued
provisions in the accounts are estimated payments for periodic maintenances in excess of pay
-
ments to the maintenance funds, and are provided on the basis of aircraft utilization. For some
of the contracts, there is a degree of uncertainty about what kind of maintenance is covered by
the maintenance funds, and the provision for this increase in expenses for the Company is dis
-
tributed over the period until the maintenance is performed.
On December 31, 2015 the Company had NOK 815.7 million (2014: NOK 563.9 million) in pro
-
vision for maintenance reserves. Parts of the periodic maintenances will be conducted in 2016,
and NOK 86.2 million (2015: NOK 83.8 million) is classified as short term liability for periodic
maintenances. The short term part of periodic maintenance is estimated based on planned
maintenances in 2016.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : TRADE AND OTHER PAYABLES
NOK 1 000
Accrued vacation pay
Accrued airport and transportation taxes
Accrued expenses
Trade payables
Intercompany liabilities
Payables to related party (note 27)
Public duties
Short term provisions for MRC (note 19)
Other short term provisions
Total
The short term payables and provisions are non-interest bearing and are due within the next
12 months.
NOTE : FINANCIAL INSTRUMENTS
The accounting policies for financial instruments have been applied to the line items below:
2015:
NOK 1 000
Loans and
receivables
Fair value
through
profit
or loss
Available-
for-sale Total
Assets as per balance sheet
Available-for-sale financial assets - -
Trade and other receivables* - -
Cash and cash equivalents - -
Total -
*) Prepayments not included in trade and other receivables 318 766.
2014:
NOK 1 000
Loans and
receivables
Fair value
through
profit
or loss
Available-
for-sale Total
Assets as per balance sheet
Available-for-sale financial assets - -
Trade and other receivables *) - -
Cash and cash equivalents - -
Total -
*) Prepayments not included in trade and other receivables 354 376.
2015:
NOK 1 000
Fair value
through profit
or loss
Other
financial
liabilities Total
Liabilities per balance sheet
Borrowings -
Derivative financial instruments -
Trade and other payables* -
Total
*) Public duties not included in trade and other payables 48 432.
2014:
NOK 1 000
Fair value
through profit
or loss
Other
financial
liabilities Total
Liabilities per balance sheet
Borrowings -
Derivative financial instruments -
Trade and other payables* -
Total
*) Public duties not included in trade and other payables 35 186.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Credit quality of financial asset:
NOK 1 000
Trade receivables
Counterparties with external credit rating A or better
Counterparties without external credit rating
Total trade receivables
NOK 1 000
Cash and cash equivalents
A+ or better
BBB +
Total cash and cash equivalents
Available-for sale financial assets:
NOK 1 000
January 1
Additions
Sale - ()
Net gains/(losses) recognized in comprehensive income
Net gains/(losses) recognized in profit and loss - -
December 31
Non-current portion
Available for sale financial assets includes the Company’s share of the associate company Nor
-
wegian Finans Holding. For information regarding associate company, please refer to note 24.
Other investments included in available-for-sale financial assets at December 31, 2015 is an
investment in unlisted equity instrument in Silver Pensjonsforsikring and an investment in a
listed bond issue in Bank Norwegian. The investment in Forth Moment Fund managed by Warren
Capital AS, was sold in 2014. The fair value of available for sale financial assets for 2015 is NOK
82.7 million (2014: NOK 82.7 million).
Derivative financial instruments:
Assets Liabilities
NOK 1 000 Short term Long term Short term Long term
December 31, 2015
Foreign exchange hedges fair value - - -
Jet-fuel contracts - - -
Total financial instruments - - -
Assets Liabilities
NOK 1 000 Short term Long term Short term Long term
December 31, 2014
Foreign exchange hedges fair value - - -
Jet-fuel contracts - - -
Total financial instruments - - -
Trading derivatives are classified as current assets or liabilities.
Forward foreign currency contracts
The fair value of the outstanding forward foreign currency contracts at December 31, 2015 were
NOK – 1.4 million (2014: NOK – 0.4 million). On December 31, 2015, the Group had forward for
-
eign currency contracts to secure DKK 140 million, SEK 150 million, PLN 3 million and GBP 5 mil-
lion (2014: USD 35 million, DKK 125 million, SEK 125 million and GBP 2 million).
Forward commodities contracts
Forward commodities contracts relates to jet-fuel derivatives. The fair value of the outstand
-
ing forward commodities contracts at December 31, 2015 were NOK – 800.0 million (2014: NOK
– 458.6 million). As of December 31, 2015, the Group had secured 752 000 tons of Jet-fuel
through forward contracts that matures in the period January 2016 – December 2017.
Other losses/(gains) – net
NOK 1 000
Net losses/(gains) on financial assets at fair value through
profit or loss
- Foreign exchange (gains)/losses on operating activities ( )
Net losses/(gains)
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : ASSETS PLEDGED AS COLLATERAL AND GUARANTEES
NOK 1 000
Liabilities secured by pledge
Aircraft financing
Bond issue
Financial lease liability -
Total
During 2013 and 2014, the Company transferred several of its owned aircraft to its fully owned
asset company. Norwegian Air Shuttle ASA carries the financial obligation towards external fi
-
nancing institutions, with security in the aircraft transferred. For information regarding the in-
tercompany transfer of aircraft, see note 27.
There is no pledged collateral for the financial lease liability, but the financial lease asset is an
actual security for the financial lease liability through fulfilment of the lease agreement. For ref
-
erences to pledged asset, see note 10 and for borrowings related to those asset, see note 22.
Book value of assets pledged as security and guarantees:
NOK 1 000
Prepayment and aircraft* - -
Hangar -
Financial lease asset -
Total
*) In 2014, aircraft owned by subsidiary Group Arctic Aviation Assets Ltd are pledged as collateral for aircraft
financing.
NOTE : BANK DEPOSITS
NOK 1 000
Cash in bank
Cash equivalents
Total
Restricted cash items are:
Guarantees for leases and credits from suppliers
Taxes withheld
Total restricted cash
Bank guarantees are granted for leasing liabilities for aircraft, suppliers of fuel and handling ser
-
vices, as well as airport charges from airports and governments.
NOTE : BORROWINGS
Nominal value at December 31, 2015
NOK 1 000 Nominal value
Unamortised
transaction
cost Book value
Effective
interest rate
Bond issue () .%
Aircraft financing () .%
Total ()
Nominal value at December 31, 2014
NOK 1 000 Nominal value
Unamortised
transaction
cost Book value
Effective
interest rate
Bond issue () .%
Aircraft financing () .%
Financial lease liability - .%
Total ()
Classification of borrowings
NOK 1 000
Non-current
Bond issue
Aircraft financing
Financial lease liability -
Total
Current
Bond issue -
Aircraft financing
Financial lease liability -
Total
Total borrowings
Collateralized borrowings are detailed in note 20.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Covenants
Bond issues
Minimum Equity of NOK 1 500 million
Dividend payments less than 35% of net profit
No dividends unless liquidity is above NOK 1 000 million
Minimum liquidity of NOK 500 million
Aircraft financing
No financial covenants. All borrowings related to delivery of new 737-800 aircraft from Boeing
are guaranteed by the Ex-Im Bank of the United States. The Ex-Im Bank of the United States has
pledged security in the owned aircraft delivered under the Boeing contract.
There are no financial covenants related to the financial lease liabilities.
The Company has not been in breach of any covenants during 2015.
Maturity of borrowings:
NOK 1 000
Less than
1 year
Between
1 and 2 years
Between
2 and 5 years
Over
5 years
At December 31, 2015
Borrowings
Financial lease liability - - - -
Total liabilities
NOK 1 000
Less than
1 year
Between
1 and 2 years
Between
2 and 5 years
Over
5 years
At December 31, 2014
Borrowings
Financial lease liability - -
Total liabilities
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : INVESTMENTS IN SUBSIDIARIES
Name Date of establishment Office Number of shares Ownership
Norwegian Air Shuttle Sweden AB August 31, 2007 Stockholm, Sweden %
Call Norwegian AS January 14, 2008 Fornebu, Norway %
Norwegian Holiday AS August 4, 2008 Fornebu, Norway %
Norwegian Long Haul AS January 1, 2012 Fornebu, Norway %
Norwegian Red Handling Spain S.L. June 11, 2015 Madrid, Spain %
Norwegian Air Norway AS May 28, 2013 Fornebu, Norway %
Pilot Services Sweden AB August 30, 2013 Stockholm, Sweden %
Pilot Services Norway AS November 11, 2014 Fornebu, Norway %
Pilot Services Denmark Aps February 20, 2015 Copenhagen, Denmark %
Norwegian Cargo AS April 16, 2013 Fornebu, Norway %
Norwegian Brand Limited December 9, 2013 Dublin, Ireland %
Arctic Aviation Assets Limited August 9, 2013 Dublin, Ireland %
Oslofjorden Limited August 22, 2013 Dublin, Ireland %
Drammensfjorden Leasing Limited September 24, 2013 Dublin, Ireland %
Geirangerfjorden Limited November 26, 2013 Dublin, Ireland %
Boknafjorden Limited March 14, 2014 Dublin, Ireland %
DY1 Aviation Ireland Limited November 26, 2013 Dublin, Ireland %
DY2 Aviation Ireland Limited November 26, 2013 Dublin, Ireland %
DY3 Aviation Ireland Limited November 26, 2013 Dublin, Ireland %
DY4 Aviation Ireland Limited November 26, 2013 Dublin, Ireland %
DY5 Aviation Ireland Limited November 26, 2013 Dublin, Ireland %
DY6 Aviation Ireland Limited November 26, 2013 Dublin, Ireland %
DY7 Aviation Ireland Limited August 2, 2013 Dublin, Ireland %
DY9 Aviation Ireland Limited November 27, 2014 Dublin, Ireland %
Fedjefjorden Limited June 23, 2015 Dublin, Ireland %
Larviksfjorden Limited September 4, 2015 Dublin, Ireland %
Torskefjorden Limited April 23, 2015 Dublin, Ireland %
Torefjorden Limited November 12, 2015 Dublin, Ireland %
Norwegian Air International Limited April 3, 2013 Dublin, Ireland %
Norwegian Air Resources Holding Limited September 20, 2013 Dublin, Ireland %
Norwegian Air Resources Sweden AB August 28, 2013 St.holm Arl., Sweden %
Norwegian Resources Denmark ApS September 5, 2013 Hellerup, Danmark %
Norwegian Air Resources Technical AB February 7, 2014 St.holm Arl., Sweden %
Norwegian Air Resources Spain S.L October 6, 2014 Madrid, Spain %
AB Norwegian Air Resources Finland Ltd June 14, 2011 Helsinki, Finland %
Norwegian Air Resources Asia PTE Limited November 29, 2012 Singapore, Singapore %
Norwegian Air Resources UK Limited February 27, 2015 Gatwick Airport, UK %
Cabin Services Norge AS January 27, 2014 Fornebu, Norway %
Cabin Services Denmark Aps February 20, 2014 Hellerup, Danmark %
Norwegian Air Resources SSC AS November 15, 2012 Fornebu, Norway %
Norwegian Air UK Limited December 18, 2015 London, UK %
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
NOTE : INVESTMENT IN ASSSOCIATES
Norwegian Air Shuttle ASA has the following investments in associates:
NOK 1 000 Country Industry
Ownership
interest
Carrying amount
.. ..
Entity:
Norwegian Finans
Holding ASA
Norway Financial
Institution %
The associated company, Norwegian Finans Holding ASA, owns 100% of the shares in Bank Nor
-
wegian AS. Norwegian Air Shuttle ASA owns 20% of the shares in Norwegian Finans Holding ASA.
Norwegian Finans Holding’s shares are publicly traded on the OTC marketplace at Oslo Stock
Exchange. The company is situated in Oslo, Norway. The investment is accounted for as financial
instrument according to IFRS 39, classified as available-for-sale (note 19). The carrying amount is
equivalent to market value based on last trade on December 31, 2015.
NOTE : RELATED PARTIES
The company’s related parties are:
Key management personnel, close members of the family of a person and entities that are con
-
trolled or jointly controlled by any of these and owners with significant influence. The company’s
subsidiaries, and associates. Please refer to note 7 to the Group’s consolidated financial state
-
ments for information on transactions with and remuneration to key management personnel
and owners with significant influence.
Transactions with subsidiaries:
Intercompany balances December 31, 2015 Short term Long term
Receivables
Payables () ()
Intercompany balances December 31, 2014 Short term Long term
Receivables
Payables () ()
Intercompany sales (-) and Purchases (+) 2015 2014
Sales and financial revenue ( ) ()
Purchases and financial expenses
Dividend - -
Norwegian Air Shuttle ASA has provided some of the Group’s external stakeholders with par
-
ent company guarantees for some of the obligations of subsidiaries. The issued guarantees are
mainly in relation to purchase contracts, aircraft financing and leasing contracts. To the extent
subsidiaries receive an economic benefit from the issued guarantees, the guarantee is priced
according to the risk undertaken by the parent company. Guarantee fees are included in the
above intercompany transactions.
Transactions with other related parties
The Chief Executive Officer is the principal shareholder in Norwegian Air Shuttle ASA with an
ownership share of 24.6% through the controlling ownership of HBK Invest AS. This ownership
share is the actual shareholding, and may deviate from the official shareholder register, as HBK
Invest has entered into a security agreement with Nordea and Danske Bank. Under this agree
-
ment, these institutions may borrow shares from HBK Invest for a limited period of time to im-
prove the liquidity in the share trading, for example by fulfilling their market maker obligation.
The chair of the Board owns a minority of shares in HBK Invest AS. There have been no financial
transactions between HBK Invest AS and Norwegian Air Shuttle ASA in 2015 or 2014, except for
indirect transactions through Fornebu Næringseiendom AS.
The chair of the Board, Bjørn Kise, is a partner, and the CEO is a former partner, of the law
firm Simonsen Vogt Wiig which operates as the legal advisor for Norwegian Air Shuttle ASA.
The company leases its property at Fornebu from Fornebu Næringseiendom AS, which is a
wholly owned subsidiary of HBK Invest AS. The leasing agreement entitles the Company to lease
Oksenøyveien 3 at Fornebu for ten years until 2020, with an option to extend the lease for an
-
other five years.
Norwegian Air Shuttle ASA has received commissions from the associated company Norwe
-
gian Finans Holding ASA (Bank Norwegian) in 2015 and 2014. The commissions relate to sales
made by the parent company's customers by using the 'Bank Norwegian' credit cards. The total
commission is enclosed in the table below. Receivables and payables to related parties are in
-
cluded below.
No loans or guarantees have been issued to related parties in 2015 or 2014.
See note 7 in Consolidated Financial Statements for details on key management compensa
-
tions and note 15 in Consolidated Financial Statements for shares and options held directly or
indirectly by members of the Board of Directors, the CEO and the Executive Management.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
The following transactions were carried out with related parties:
NOK 1 000
Sales (-) and purchases (+) of goods and services (excl VAT)
- Simonsen Vogt Wiig (legal services)
- Associate (commission and licence fee) ( ) ()
- Associate (interests on subordinated loan) ( ) ()
- Fornebu Næringseiendom (property rent)
Year-end balances arising from sales/purchases of goods/
services (incl VAT):
Receivables from related parties (note 13)
- Associate (commission) -
Payables from related parties (note 21)
- Simonsen Vogt Wiig (legal services)
- Fornebu Næringseiendom (property rent) -
Investment in related parties
- Associate (subordinated loan)
NOTE : CONTINGENCIES AND LEGAL CLAIMS
In 2013, pilots employed in Norwegian Air Shuttle ASA was transferred to the wholly owned sub-
sidiary Norwegian Air Norway AS. In 2014, the employment was transferred from Norwegian Air
Norway AS to local national resourcing entities for pilots. In 2014, the cabin crew employed in
Norwegian Air Shuttle ASA was transferred to wholly owned crew subsidiaries in Norway and
Denmark respectively. In 2015, crew and pilots have through their respective labor unions raised
claims that the Company primarily, and Norwegian Air Norway AS alternatively shall be consid
-
ered economic employer. The case is set to be heard on May 26. Financial exposure is consid-
ered limited.
The Norwegian Group has since the end of 2013 continuously reorganized its operations.
Consequently, The Norwegian Tax authorities have been requesting additional information re
-
garding the transactions between Group companies and there is an ongoing process to respond
and communicate with the authorities.
NOTE : COMMITMENTS
In 2007 through 2012, the Company entered into purchase contracts with Boeing Commercial
Airplanes and Airbus S.A.S on purchase of new commercial aircraft. In 2013 and 2014, the Com
-
pany sold the aircraft already delivered, to its subsidiary Arctic Aviation Assets Ltd in Ireland.
In December 2014, the Company transferred the aircraft purchase contracts to its subsidiary
Arctic Aviation Assets Ltd, the 100% owned leasing Group established in 2013 for the purpose
of leasing aircraft to internal and external operators. All future deliveries of aircraft on order will
be received in Arctic Aviation Assets Ltd Group, and the Company as operator will receive air
-
craft on operating leases.
For further details regarding aircraft commitments, please see note 28 in the Consolidated
Financial Statements.
For details on commitments for aircraft leases, see note 11.
NOTE : TRANSITION TO IFRS
The financial statement of the Company has been prepared in accordance with simplified IFRS
pursuant to the Norwegian Accounting Act § 3-9 and regulations regarding simplified application
of IFRS issued by the Ministry of Finance on January 21, 2008. This is the Company’s first annual
financial statements prepared in accordance with simplified IFRS. The date of transition is Jan
-
uary 1, 2014.
The comparative financial statements for 2014 have been restated to reflect the effects of
changes from Norwegian Generally Accepted Accounting Principles (NGAAP) to IFRS, and the ta
-
bles below show the effects on equity, net income and statement of financial position for 2014.
Equity:
NOK 1 000
Note
December 31,
2015
December 31,
2014
Equity NGAAP 1
Deemed cost shares in subsidiaries at transition date 2
Fair value of transactions with Group Companies 3 -
Adjustment for Fair value of Associated company 4 -
Adjustment of Goodwill
Equity IFRS
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Income statement 2014:
NOK 1 000 Note NGAAP Adjustments IFRS
Revenues -
Other income 2
Total operating revenues and income
Operational expenses -
Payroll -
Depreciation, amortization and impairment 4 ()
Other operating expenses -
Other losses/(gains) – net -
Total operating expenses ()
Operating profit () ()
Net financial items () - ()
Share of profit (loss) from associates 3 () -
Profit (loss) before tax () ()
Income tax expense (income) () - ()
Profit (loss) for the year ()
Statement of comprehensive income 2014:
NOK 1 000 Note NGAAP Adjustments IFRS
Profit for the year () -
Reversible income and losses:
Available-for-sale financial assets 3 -
Total comprehensive income for the period ()
Statement of financial position December 31, 2014:
NOK 1 000 Note NGAAP Adjustments IFRS
ASSETS
Non-current assets
Intangible assets 4
Deferred tax asset -
Aircraft, parts and installations on leased
aircraft -
Equipment and fixtures -
Buildings -
Financial lease asset -
Prepayment to aircraft manufacturers - - -
Financial assets available for sale 3
Investment in associate 3 () -
Investments in subsidiaries 1, 2
Financial lease receivable -
Other receivables
1
-
Total non-current assets
Current assets
Inventory
Trade and other receivables
1
1, 2
Cash and cash equivalents -
Total current assets
Total assets
1) Includes reclassification in NGAAP statement, of intercompany receivable in the amount of NOK 1 455 million
from short-term to long-term receivables.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Statement of financial position 2014 (continued):
NOK 1 000 Note NGAAP Adjustments IFRS
EQUITY AND LIABILITIES
Equity
Share capital -
Share premium -
Other paid-in equity -
Other reserves -
Retained earnings
Total equity
Non-current liabilities
Provision for periodic maintenance
Deferred tax - -
Borrowings
Financial lease liability
Total non-current liabilities
Short term liabilities
Short-term part of borrowings -
Trade and other payables 1 ()
Air traffic settlement liabilities -
Derivative financial instruments -
Tax payable
Total short term liabilities ()
Total liabilities ()
Total equity and liabilities
Explanatory notes to the transition tables
Note 1 – Deemed cost shares in subsidiaries
Shares in subsidiaries were measured at the lower of historical cost and fair value according to
NGAAP. For first-time adoption of IFRS, an entity may choose to measure its investments in sub
-
sidiaries at deemed cost (IFRS 1.D15). The deemed cost is either the fair value of the investments
at the entity’s date of transition to IFRS or the previous NGAAP carrying amount. The Company
has elected to measure the investments at fair value, which consequently increases the Compa
-
ny’s equity with NOK 2 160 million at transition date.
Note 2 – Fair value recognition of sale to subsidiaries
In 2014, the Company sold several assets to its subsidiaries in Ireland, hereunder several owned
aircraft and the aircraft purchase contracts. See note 28 in the consolidated financial state
-
ments for further information regarding the purchase contracts.
The transactions was performed at arms-length terms and an independent valuation of fair
value was done. According to NGAAP, the transaction was accounted for at continuity method,
whereas any gains and losses over book value was unrecognized in the financial statements. In
the IFRS restated financial statements, the Company has recognized the fair value of the trans
-
actions with Group companies. The effect in the income statement in 2014 is a gain on sale of
assets, recognized in other income, of NOK 1 098 million in 2014. Transaction settlement was
equity contribution and sellers credit, and consequently, investments in subsidiaries, trade and
other receivables and trade and other payables are increased/decreased respectively.
Note 3 – Fair value recognition of investment in associates
According to NGAAP, investments in associates are accounted for according to the equity
method. According to IFRS, investments in associates may be accounted for at fair value, if the
fair value can be reliably measured. The shares in the associated Norwegian Finans Holding ASA
was listed on the OTC list at the Oslo Stock exchange in June 2014. On IFRS transition date at
January 1, 2014, the shares were unlisted, and the fair value of the holdings at transition date
is the Group’s share of the Company's equity at book value. Later measurement are following
traded market price. The investment is classified as financial asset available for sale, according
to IFRS 39, and changes in fair value is recognized in other comprehensive income.
Note 4 – Adjustment of Goodwill
Under NGAAP, goodwill is amortized over the economic life of the asset. Norwegian Air Shuttle
ASA has recognized goodwill related to the acquisition of Nordic Airlink Holding AB in 2007. Ac
-
cording to IFRS, goodwill is not amortized but tested for impairment. In the IFRS restated finan-
cial statements as per January 1, 2014, the Company has applied retrospective business combi-
nation according to IFRS 3. The restated business combination results in Goodwill recognized at
the same value as at acquisition date, and as such, the accumulated amortization, in the amount
of NOK 31.4 million under NGAAP is reversed. Goodwill is subsequently impairment tested. The
impairment test did not result in any impairment loss at January 1, 2014 nor at December 31,
2014. In the restated IFRS Income Statement for 2014, amortization for 2014 under NGAAP prin
-
ciples (NOK 6.3 million) has been reversed.
NOTE : EVENTS AFTER THE REPORTING DATE
On January 26, 2016, Norwegian announced a new charter agreement for the summer 2016,
to continue its cooperation with TUI Nordic, TUI UK, Thomas Cook Northern Europe and Nazar
Nordic to fly their customers from the Nordics and the UK to various summer destinations in
-
cluding the Balearics, the Greek Isles and the Canaries. The total value of the contracts is ap-
proximately NOK 500 million, NOK 100 million more than previous year, and include more than
2 200 flights.
In February 2016, Norwegian reached an agreement with cabin crew in Norway and Denmark.
The new collective agreements are for a two-year period.
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | NOTES TO FINANCIAL STATEMENTS OF THE PARENT COMPANY
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AUDITOR'S REPORT
To the Annual Shareholders' Meeting of Norwegian Air Shuttle ASA:
INDEPENDENT AUDITOR’S REPORT
Report on the Financial Statements
We have audited the accompanying financial
statements of Norwegian Air Shuttle ASA, which
comprize the financial statements of the par-
ent company and the financial statements of
the group. The financial statements of the par-
ent company comprize the statement of finan-
cial position as at December 31, 2015, and the
income statement, statement of other compre-
hensive income, statement of changes in eq-
uity and cash flow statement for the year then
ended, and a summary of significant account-
ing policies and other explanatory information.
The financial statements of the group comprize
the consolidated statement of financial position
as at December 31,2015, and the consolidated
income statement, consolidated statement of
comprehensive income, consolidated statement
of changes in equity and consolidated state
-
ment of cash flows for the year then ended, and
a summary of significant accounting policies and
other explanatory information.
The Board of Directors and the Managing
Director's Responsibility for the Financial
Statements
The Board of Directors and the Managing Di
-
rector are responsible for the preparation and
fair presentation of these financial statements
in accordance with simplified application of
international accounting standards according
to the Norwegian accounting act § 3-9 for the
Company accounts and in accordance with In
-
ternational Financial Reporting Standards as
adopted by EU for the group accounts, and for
such internal control as the Board of Directors
and the Managing Director determine is nec-
essary to enable the preparation of financial
statements that are free from material mis-
statement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with laws,
regulations, and auditing standards and practices
generally accepted in Norway, including Interna-
tional Standards on Auditing. Those standards re-
quire that we comply with ethical requirements
and plan and perform the audit to obtain rea-
sonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures
to obtain audit evidence about the amounts
and disclosures in the financial statements.
The procedures selected depend on the au-
ditor's judgment, including the assessment of
the risks of material misstatement of the finan-
cial statements, whether due to fraud or error.
In making those risk assessments, the auditor
considers internal control relevant to the en-
tity's preparation and fair presentation of the
financial statements in order to design audit
procedures that are appropriate in the circum-
stances, but not for the purpose of expressing
an opinion on the effectiveness of the entity's
internal control. An audit also includes evaluat-
ing the appropriateness of accounting policies
used and the reasonableness of accounting es-
timates made by management, as well as eval-
uating the overall presentation of the financial
statements.
We believe that the audit evidence we have
obtained is sufficient and appropriate to pro-
vide a basis for our audit opinion.
Opinion on the financial statements for the
parent company
In our opinion, the financial statements of the
parent company are prepared in accordance
with the law and regulations and give a true and
fair view of the financial position of Norwegian
Air Shuttle ASA as at December 31, 2015, and of
its financial performance and its cash flows for
the year then ended in accordance with sim
-
plified application of international accounting
standards according to the Norwegian account-
ing act § 3-9.
Opinion on the financial statements for the Group
In our opinion, the financial statements of the
group are prepared in accordance with the law
and regulations and give a true and fair view of
the financial position of the group Norwegian Air
Shuttle ASA as at December 31, 2015, and of its
financial performance and its cash flows for the
year then ended in accordance with International
Financial Reporting Standards as adopted by EU.
Report on Other Legal and Regulatory
Requirements
Opinion on the Board of Directors' report and the
statements on Corporate Governance and Cor-
porate Social Responsibility
Based on our audit of the financial statements as
described above, it is our opinion that the infor-
mation presented in the Board of Directors re-
port concerning the financial statements and in
the statements on Corporate Governance and
Corporate Social Responsibility, the going con-
cern assumption and the proposal for the allo-
cation of the loss is consistent with the financial
statements and complies with the law and reg-
ulations.
Opinion on Registration and Documentation
Based on our audit of the financial statements
as described above, and control procedures
we have considered necessary in accordance
with the International Standard on Assurance
Engagements (ISAE) 3000, «Assurance Engage
-
ments Other than Audits or Reviews of His-
torical Financial Information», it is our opin-
ion that management has fulfilled its duty to
produce a proper and clearly set out registra
-
tion and documentation of the Company's ac-
counting information in accordance with the
law and bookkeeping standards and practices
generally accepted in Norway.
Oslo, March 16, 2016
Deloitte AS
Jørn Borchgrevink
State Authorized Public Accountant (Norway)
Translation from the original Norwegian version
has been made for information purposes only.
Deloitte refers to one
or more of Deloitte Touche Tohmatsu
Limited, a UK private company limited by guarantee, and its
network of member firms, each of which is a legally separate
and independent entity. Please see www.deloitte.corn/no/or-
noss for a detailed description of the legal structure of Deloitte
Touche Tohmatsu Limited and its member firms.
Registrert i Foretaksregisteret
Medlemmer av Den norske Revisorforening
Organisasjonsnummer: 980 211 282
Deloitte AS
Dronning Eufemias gate 14
Postboks 221 Sentrum
NO-0103 Oslo
Tel: +47 23 27 90 00
Fax: +4723 27 90 01
www.deloitte.no
NORWEGIAN ANNUAL REPORT 2015
FINANCIAL STATEMENTS | AUDITOR'S REPORT
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CORPORATE GOVERNANCE
Norwegian’s objective for corporate governance is based on accountability,
transparency, fairness and simplicity with the ultimate goal of maximizing
shareholder value while creating added value for all stakeholders. The
principles are designed in compliance with laws, regulations and ethical
standards. Norwegian’s core values are simplicity, directness and relevance,
but no business conduct within the Group should under any circumstances
jeopardize safety and quality.
1. HOW WE UNDERSTAND THE
CONCEPT
The description of the main features is gen-
erally structured like the Code of Practice.
As recommended, more details are pro-
vided on the individual points.
The topic of corporate governance is sub-
ject to annual evaluation and discussion by
the Board. The following report was carried
at the Board meeting on March 16, 2016.
The Group's core values and corporate
code of ethics are the fundamentals of Nor-
wegian’s corporate governance. Corporate
governance deals with issues and principles
associated with the distribution of roles be-
tween the governing bodies of a company,
and the responsibilities and authorities as-
signed to each body. Good corporate gover-
nance is distinguished by responsible inter-
action between the owners, the Board and
the Management in a long-term, produc-
tive and sustainable perspective. It calls for
effective cooperation, which means a de-
fined division of responsibilities and roles
between the shareholders, the Board and
the Management, and also respect for the
Group’s other stakeholders as well as open
and honest communication with the com-
munities in which the Group operates.
In line with the Norwegian Code of Prac-
tice for Corporate Governance, a review of
the major aspects of Norwegian Air Shuttle
ASA’s governance structure follows below.
2. BUSINESS
Norwegian’s business is clearly defined in
paragraph 3 of its articles of association:
“The Group’s objective is to be engaged
in aviation, other transport and travel re-
lated business activities as well as activities
connected therewith. The Group may also
be engaged directly or indirectly in other
forms of Internet-based provision of goods
and services, including car rental, hotel
booking, payment services, financial ser-
vices and services related to credit cards.
Participation in such activities as men-
tioned may take place through co-opera-
tion agreements, ownership interests or by
any other means.”
The Group has clear goals and strategies
for its business. These are presented in the
Groups quality manual and are also made
available to the public in the annual report
and on the website www.norwegian.com.
3. EQUITY AND DIVIDENDS
The Group’s equity at year-end 2015 was
MNOK 2965 equivalent to an equity ratio of
nine per cent. The Board deems this to be
adequate considering the Group’s strategy
and risk profile.
Dividend policy
Norwegian is a growth company with con-
tinuous investment plans. The Board of Di-
rectors recommends not to distribute div-
idends as it is considered to be in the best
interest of the shareholders to retain funds
for investments in expansion and for other
investment opportunities as stated in the
articles of association, thereby enhancing
profitability and shareholder value. Divi-
dends should under no circumstances be
paid if equity is below what is considered
to be an appropriate level. A financial cov-
enant to the bond agreements entered into
in July 2014, November 2014, May 2015
and December 2015 restricts dividend pay-
ments, and repurchase of shares (except for
the benefit of the employees and/or man-
agement and/or directors for any Group
Company) until maturity of the last bond in
December 2019.
Board authorizations
As a consequence of Norwegian’s high
growth rate, competitive position and asso-
ciated need for flexibility, the general meet-
ing has granted the Board a two year autho-
rization to increase the Company’s share
capital by 10 per cent. This mandate can be
used for utilization of commercial opportu-
nities and as an instrument to execute the
employee incentive program. The mandate
granted to the Board is limited to a total of
3516213 shares and is valid until May 2017.
The general meeting has granted the
Board of Directors a mandate to acquire
treasury shares for a period of 18 months
reckoned from the date of the general meet-
ing’s resolution. Further, it is in keeping
with applicable corporate governance pol-
icies that such authorisations are valuated
by the general meeting on an annual basis.
The mandate granted to the Board is lim-
ited to a total of 3516213 shares.
4. EQUAL TREATMENT OF
SHAREHOLDERS AND
TRANSACTIONS WITH CLOSE
ASSOCIATES
Class of shares
Norwegian Air Shuttle ASA has only one
class of shares and all shares have equal
rights in the Company. The articles of asso-
ciation impose no voting restrictions.
Trading in treasury shares
Share buy-back transactions are generally
carried out via stock exchanges. Buy-backs
of treasury shares are carried out at mar-
ket prices. Employee share allocations are
granted at a discount to market value. Nor-
wegian did not purchase or sell any of its
own shares in 2015.
Transactions with related parties
Material transactions between the Group
and key stakeholders, in particular the
shareholders, the members of the Board
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CORPORATE GOVERNANCE
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and the Executive Management, are subject
to the approval of the Board of Directors.
Such transactions are duly noted in the
minutes from the Board meeting and are
also explicitly stated in the notes to the con-
solidated accounts. At present, the Chair of
the Board is partner of the law firm Simon-
sen VogtWiig, who is the legal advisor to
Norwegian Air Shuttle ASA. Norwegian has
leased its head office from Fornebu Næring-
seiendom 1 AS, which is controlled by the
Chair and the CEO. In cases where mem-
bers of the Board of Directors or the Execu-
tive Management have other direct or indi-
rect material interests in transactions en-
tered into by the Group, this is stated in the
notes to the consolidated accounts. Note 26
to the consolidated financial statements de-
scribes transactions with close associates
(related parties). Financial relationships re-
lated to the directors and executive person-
nel are described in note 7 and 15.
Guidelines for directors and executives
Norwegian’s code of ethics includes guide-
lines for handling possible conflicts of in-
terest. The code applies to all board mem-
bers and Norwegian employees. In addition
the Board has drawn up specific procedures
for handling of conflicts of interest for
board members and members of the corpo-
rate management board.
5. FREELY NEGOTIATED SHARES
There are no restrictions on trading of the
Company’s shares in the articles of associa-
tion or elsewhere.
6. GENERAL MEETINGS
The Board of Directors has ensured that
the shareholders may exercise their rights
at the general assembly, making the sum-
mons and related documentation available
on the website.
Notification
At least three weeks written notice must
be given to call the annual general meet
-
ing. The relevant documents, including the
Election committee's justified slate of nom
-
inees when new members are up for elec-
tion or existing ones are up for re-election,
are available at the Group’s website at least
21 days prior to the date of the general meet
-
ing. The general meeting in May 2015 de-
cided that “An extraordinary general meet-
ing may be called with fourteen days’ notice
if the Board decides that the shareholders
may attend the general meeting with the aid
of electronic devices, cf. Section 5-8a of the
public Limited Companies Act”. The share
-
holders’ deadline for the notice of their in-
tended presence is three days before the
general meeting, and the shareholders may
be present and vote by proxy. The Board of
Directors, Election committee and the Audi
-
tor are required to be present. The Manage-
ment is represented by the Chief Executive
Officer and the Chief Financial Officer and
other key personnel on specific topics.
Agenda and execution
The agenda is set by the Board, and the
main items are specified in Article 7 of the
Article of Association.
According to the Company’s Articles of
Association the general meeting shall be
conducted by the Chair. The minutes of
the general meeting are available on the
Group’s website.
7. ELECTION COMMITTEE
The Election committee's task is to nomi-
nate candidates to the general meeting for
the shareholder-elected directors' seats. The
articles of association state that the com
-
mittee shall have four members, and the
Chair of the committee is the Chair of the
Board. The remaining three members are
elected by the general meeting every second
year. The next election is due in 2016.
The guidelines for the Election commit-
tee are included in the Company’s articles
of association and were last approved by
the general meeting in May 2011. To ensure
that nominees meet the requirements for
expertise, capacity and diversity set forth
by the Board members, the Chair of the
Board is a permanent member of the com-
mittee.
As described in the guidelines, the Elec-
tion committee should have contact with
shareholders, the Board of Directors and
the Company’s executive personnel as part
of its work on proposing candidates for elec-
tion to the Board.
Composition
The Election committee currently consists
of the Chair of the Board, one employee and
two external members representing major
shareholders in the Company. The current
composition of the committee was elected
by the annual general meeting on May 14,
2014 and consist of;
●
Geir Tjetland, Portfolio Manager Skagen
Fondene.
●
Inga Lise Len Moldestad, Deputy
Chief Executive Officer Holberg
Fondsforvaltning AS.
●
Sven Fermann Hermansen, Pilot and
shareholder in the Company.
None of the members of the Election com-
mittee represents Norwegian's manage-
ment. The majority of the members are con-
sidered as independent of the Management
and the Board. The composition of the Elec-
tion committee is regarded as reflecting
the common interests of the community of
shareholders.
8. CORPORATE ASSEMBLY AND
BOARD OF DIRECTORS,
COMPOSITION AND
INDEPENDENCE
Norwegian Air Shuttle ASA has, in agree-
ment with the employee unions and as war-
ranted by Norwegian law, no corporate as-
sembly. Instead, the Company has three
employee representatives on the Board of
Directors. According to the articles of asso-
ciation, the Board must consist of between
six and eight members. At year end there
was seven members.
Election of the Board of Directors
The shareholder-elected members of the
Board of Directors have been nominated by
the Election committee to ensure that the
Board of Directors possesses the necessary
expertise, capacity and diversity. The Board
members have competencies in and expe-
riences from the transport sector and other
competitive consumer sectors, relevant
network connections and experiences from
businesses, finance, capital markets and
marketing. The Chair and Deputy chair are
elected by the Board. The Board members
are elected for a period of two years.
The Board’s independence
The majority of the shareholder elected
members of the Board are considered to be
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CORPORATE GOVERNANCE
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autonomous and independent of the Com-
pany’s executive personnel and material
business contacts. At least two of the mem-
bers of the Board, who are elected by share-
holders, are considered autonomous and
independent of the Company’s main share-
holder(s). Among the shareholder-elected
directors, there are one men and two
women. Detailed information on the indi-
vidual director can be found on the website
at www.norwegian.com.
The CEO is not a member of the Board of
Directors.
9. THE WORK OF THE BOARD OF
DIRECTORS
The Board of Directors’ work is in accor-
dance with the rules of Norwegian law.
The Board has an annual plan for its work,
which particularly emphasizes objectives,
strategies and implementations. The Board
holds annual strategy seminars, in which
objectives, strategies and implementations
are being addressed.
Instructions for the Board of Directors
The Board of Directors issues instructions
for its own work.
If the Chair is or has been actively en-
gaged in a given case, another board mem-
ber will normally lead discussions concern-
ing that particular case.
Instructions for the CEO
There is a clear division of responsibilities
between the Board and the Executive Man-
agement. The Chair is responsible for en-
suring that the Board's work is conducted in
an efficient, correct manner and in accor-
dance with the Board's terms of reference.
The CEO is responsible for the Group’s oper-
ational management. The Board has drawn
up special instructions for the CEO.
The Board’s Audit committee
The Audit committee was established by
the general meeting in 2010. To ensure that
nominees meet the requirements of exper-
tise, capacity and diversity set forth by the
Board members, the Board of Directors acts
as the Company’s Audit committee.
The Board of Directors conducts an an-
nual self-assessment of its work compe-
tence and cooperation with the Manage-
ment and a separate assessment of the
Chair.
10. RISK MANAGEMENT AND
INTERNAL CONTROL
The Management issues monthly perfor-
mance reports to the Board of Directors for
review. Quarterly financial reports are pre-
pared and made available to the capital
market in accordance with the reporting
requirements applicable to listed compa-
nies on Oslo Børs. The quarterly financial
reports are reviewed by the Audit Commit-
tee prior to board approval and disclo-
sure. Moreover, financial reports, risk re-
ports and safety reports are drawn up, all of
which are subject to review at board meet-
ings. The Auditor meets with the entire
Board in connection with the presentation
of the interim annual financial statements,
and when otherwise required.
Policies and procedures have been estab-
lished to manage risks. The Group’s Board
of Directors reviews and evaluates the over-
all risk management systems and environ-
ment in the Group on a regular basis. The
Board ensures sound internal controls and
systems for risk management through, for
example, annual board reviews of the most
important risk factors and internal con-
trols. Risk assessment and the status of the
Group’s compliance and corporate social
responsibility are reported to the Board an-
nually. The Group’s financial position and
risks are thoroughly described in the Board
of Directors’ Report.
11. REMUNERATION OF THE BOARD
OF DIRECTORS
Based on the consent of the general meet-
ing, it is assumed that the remuneration
of board members reflects the respective
members’ responsibilities, expertise, time
commitments and the complexities of the
Group’s activities.
In cases where board members take on
specific assignments for the Group, which
are not taken on as part of their office, the
other board members must be notified im-
mediately and if the transaction is of a sub-
stantial nature this will be explicitly stated
in the notes to the consolidated accounts.
Details of the remuneration of individual
board members are available in the notes to
the consolidated accounts.
12. REMUNERATION OF EXECUTIVE
PERSONNEL
The Board’s statement on management
compensation policy is prepared in accor-
dance with the public limited companies
act 6-16a and includes the Company’s share
option program, if any. The statement is
presented at the annual general meeting.
The principles of leadership remuner-
ation in Norwegian Air Shuttle ASA are to
stimulate a strong and lasting profit ori-
ented culture. The total compensation level
should be competitive, however, not market
leading compared to similar organizations.
The Board determines the remuneration of
the CEO, and the guidelines for remunera-
tion of the Executive Management. The re-
muneration of the Board and the Executive
Management must not have negative ef-
fects on the Group, nor damage the reputa-
tion and standing of the Group in the pub-
lic eye
The Executive Management has not
been given any specific rights in case of ter-
minated employment.
Details of the remuneration of individ-
ual members of the Executive Management
are available in the notes to the consoli-
dated accounts.
13. INFORMATION AND
COMMUNICATIONS
Norwegian has established guidelines for
the Company’s reporting of financial and
other information based on transparency
and with regard to the requirement of equal
treatment of all parties in the securities
market.
A financial calendar is prepared and
published on the Group’s website and is
also distributed in accordance with the
rules of the Public Companies Act and the
rules applicable to companies listed on the
Oslo Stock Exchange.
Information distributed to the share-
holders is also published on the Group’s
website. The Group holds regular investor
meetings and public interim results presen-
tations, and has an investor relations de-
partment.
Norwegian has separate instructions for
investor relations regarding communica-
tion with investors and how insider infor-
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CORPORATE GOVERNANCE
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mation shall be treated. The Board of Direc-
tors has prepared guidelines for the Group’s
contact with shareholders outside the gen-
eral meeting.
The Board considers that these measures
enable and ensure continuous informative
interactions between the Company and the
shareholders.
14. TAKEOVERS
There are no limitations with respect to
the purchases of shares in the Company.
In the event of a take-over bid the Board of
Directors will act in the best interest of the
shareholders and in compliance with all the
rules and regulations applicable for such
an event. In the case of a take-over bid, the
Board will refrain from taking any obstruc-
tive action unless agreed upon by the gen-
eral meeting. The company’s bond issue
has a change of control clause that allows
bondholders to call for redemption of the
bonds at 101 per cent of par in the event of a
change of control.
15. AUDITOR
The Auditor annually presents the main
features of the audit plan for the Group to
the Audit committee once a year.
The Auditor participates in the meetings
of the Board of Directors that deal with the
annual accounts. At these meetings the Au-
ditor reviews any material changes in the
Group’s accounting principles, comments
on any material estimated accounting fig-
ures and reports all material matters on
which there has been a disagreement be-
tween the Auditor and the Executive Man-
agement of the Company.
The Auditor presents a review of the
Group’s internal control procedures at least
once a year to the Audit committee, includ-
ing identified weaknesses and proposals for
improvements.
The Auditor participates in meetings
with the Audit committee and present the
report from the Auditor that addresses the
Group’s accounting policy, risk areas and
internal control routines.
The CEO and the CFO are present at all
meetings with the Board of Directors and
the Auditor, except for one meeting a year,
in which only the Auditor, the Board and
the Audit committee are present. The Man-
agement and the Board of Directors evalu-
ate the use of the Auditor for services other
than auditing.
The Board receives annual confirmation
that the Auditor continues to meet the re-
quirement of independence.
The Board of Directors reports the remu-
neration paid to the Auditor at the annual
general meeting, including details of the
fee paid for audit work and any fees paid for
other specific services.
NORWEGIAN ANNUAL REPORT 2015
CORPORATE GOVERNANCE
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THE BOARD OF DIRECTORS
Bjørn H Kise
Chair
Mr Bjørn H Kise (born 1950) has
more than 25 years of experi
-
ence of legal practice with the
law firm Vogt Wiig AS where he
is also a partner. He is (since
1997) admitted to the Supreme
Court. Mr Kise has a Law De
-
gree from the University of
Oslo. Mr Kise is one of the
founding partners of Norwe
-
gian Air Shuttle and has been a
Board member since 1993. He
was chair of the Board in the
period 1996-2002. Mr Kise also
holds a number of board ap
-
pointments in large and medi-
um-sized companies in Norway
and abroad. As of December
31, 2015, Mr Kise holds 723 901
shares in the Company and has
no stock options. He is a Nor
-
wegian citizen. He has been
elected for the period 2014-
2016 and he represents Nor
-
wegian’s principal shareholder
HBK Invest AS.
Liv Berstad
Deputy chair
Ms Liv Berstad (born 1961) is to-
day the Managing Director for
the clothing company KappAhl
in Norway. Ms Berstad has ex
-
tensive experience from re-
tail trade in the Nordic region,
mainly from construction ma
-
terial, fashion and cosmetics.
She joined KappAhl as their Fi
-
nancing Manager in 1990 and in
1996 she was made the Manag
-
ing Director. She is a Business
economist from BI Norwegian
School of Management and has
been a Board member since
2005. Ms Berstad also holds
directorships at Expert.
As of December 31, 2015, Ms
Berstad holds no shares in the
Company and has no stock op
-
tions. She is a Norwegian citi-
zen. She is elected for the pe-
riod 2015-2017 and is an inde-
pendent board member.
Ada Kjeseth
Director
Ms Ada Kjeseth (born 1949) has
been CEO of Tekas Shipping AS
since 2006. She has also been
CEO and is now executive chair
of Tekas AS, a family invest
-
ment company, and has held
various leading roles as man
-
aging director, CEO and CFO in
companies like Visma Services
ASA, Visma Services Norway
AS, ØkonomiPartner AS and
AS Nevi. Ms Kjeseth was edu
-
cated at The Norwegian School
of Economics. Ms Kjeseth has
extensive experience from sev
-
eral boards. She is chair of the
Board of OBOS Skadeforsikring
AS and TEKAS AS and member
of the Board of Bertel O. Steen
Holding AS and Raget AS. As of
December 31, 2015, Ms Kjeseth
holds no shares in the Com
-
pany and has no stock options.
She is a Norwegian citizen. She
has been elected for the pe
-
riod 2015-2017 and is an inde-
pendent board member.
Christian Fredrik Stray
Director
Mr Christian Fredrik Stray (born 1978)
is founder and has been CEO of Ap
-
riori Consulting since 2015 where he
is currently developing two new Nor
-
wegian medtech companies (HyPro
AS and Joint Biomed AS) as interim
CEO. Prior to this he has several
years of experience from the global
medical device company Biomet.
From 2008-2011 he held the posi
-
tion as managing director of Biomet
Norge and from 2011-2014 as re
-
gional vice president of Biomet Nor-
dic. Mr Stray holds a Bachelor of Sci-
ence in Biomedical Engineering &
Pre Med and an executive MBA from
ESCP-EAP (Paris) and the Norwe
-
gian School of Management (BI). Mr
Stray has and has had several board
appointments for companies both
in Norway and Scandinavia primar
-
ily within the medical industry. As of
December 31, 2015, Mr Stray holds
no shares in the Company and has
no stock options. He is a Norwegian
citizen. He has been elected for the
period 2015-2017 and is an indepen
-
dent board member.
Changes in the Board of
Directors:
Ms Benedicte Schilbred
Fasmer and Mr Ola
Krohn-Fagervoll
were replaced by Ms
Ada Kjeseth and Mr
Christian Fredrik Stray
at the Annual General
Meeting in May 2015.
NORWEGIAN ANNUAL REPORT 2015
BOARD AND MANAGEMENT
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Thor Espen Bråten
Director, employee
representative
Mr Thor Espen Bråten (born
1959) joined Norwegian in 2005
and works as a captain. Bråten
has held management posi
-
tions ranging from base man-
ager to managing director for a
number of regional and inter
-
national airlines. He also has
extensive experience from air
-
craft acquisitions lease and air-
craft remarketing. He received
his airline pilot training in Nor
-
way and Sweden. Mr Bråten has
been an employee representa
-
tive since 2009. As of Decem-
ber 31, 2015, Mr Bråten holds
738 shares in the Company and
has no stock options. He is a
Norwegian citizen. He has been
elected for the period 2012-
2014, but will stay until new
employee representatives have
been elected. Mr Bråten is an
independent board member.
Linda Olsen
Director, employee
representative
Ms Linda Olsen (born 1985)
joined Norwegian in Febru
-
ary 2006 and is currently se-
nior advisor and team leader
for escalated cases in cus
-
tomer relations. Ms Olsen is
a legal office assistant and
has studied tourism manage
-
ment in Australia. Ms Olsen
is also on the Board of HK, a
union started in cooperation
with the Norwegian Union for
Commerce and Office Em
-
ployees and she has been
an employee representative
since 2009. As of December
31, 2015, Ms Olsen holds no
shares in the Company and
has no stock options. She is
a Norwegian citizen. She has
been elected for the period
2012-2014, but will stay un
-
til new employee represen-
tatives have been elected.
Ms Olsen is an independent
board member.
Kenneth Utsikt
Director, employee
representative
Mr Kenneth Utsikt (born 1976)
is cabin crew administrator
in Norwegian. He has worked
for Norwegian since 2004
and was the leader for Nor
-
wegian Cabin Union from
2009-2012. He has been
elected in Enebakk munici
-
pality since 1999 and has held
numerous local positions as
a politician. Prior to joining
Norwegian. Mr Utsikt worked
in the service industry. Mr
Utsikt has been an employee
representative since 2009.
As of December 31, 2015, Mr
Utsikt holds 451 shares in the
Company and has no stock
options. He is a Norwegian
citizen. He has been elected
for the period 2012-2014, but
will stay until new employee
representatives have been
elected. Mr Utsikt is an inde
-
pendent board member.
NORWEGIAN ANNUAL REPORT 2015
BOARD AND MANAGEMENT
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
THE MANAGEMENT TEAM
Bjørn Kjos
Chief Executive Officer
Mr Bjørn Kjos (born 1946) has
been the Chief Executive Of
-
ficer of Norwegian since Oc-
tober 2002. He is one of the
founding partners of Norwe
-
gian Air Shuttle and was the
chair of the Board between
1993 and 1996. Mr Kjos was
also chair during the start-up
period of the Boeing 737 op
-
eration from June-Septem-
ber 2002. He was granted the
right of audience in the Su
-
preme Court in 1993. Mr Kjos
was a fighter pilot in the 334
squadron for six years and is
a law graduate from the Uni
-
versity of Oslo. As of Decem-
ber 31, 2015, he holds 7 443 315
shares in the Company and has
no stock-options. Mr Kjos is a
Norwegian citizen.
The top management
at Norwegian
Group consists of
representatives from
our Scandinavian
and international
operations.
Changes in the Group
management:
The Group management was
expanded during 2015 to
include Mr Tore Jenssen (CEO
Norwegian Air International
Ltd. as well as Chief
Operating Officer for Arctic
Aviation Assets Ltd.) and
Mr Edward Thorstad (Chief
Customer Officer).
Frode E. Foss
Chief Financial Officer
Mr Frode E Foss (born 1968)
has been the Chief Financial
Officer of Norwegian since
he joined the Company in its
start-up year in 2002 and is a
member of the Board of Di
-
rectors of Norwegian Finance
Holding ASA (Bank Norwegian).
Mr Foss has eight years of ex
-
perience from auditing and
management consulting ser
-
vices with Arthur Andersen
and Ernst & Young. He is a Mas
-
ter of Business Administration
graduate and holds a Masters
of Science Degree in Finance
from the University of Wyo
-
ming, USA. He received his Fi-
nancial Analyst charter in 2002
(CFA). As of December 31, 2015,
he holds 35 000 shares in the
Company and has no stock-op
-
tions. Mr Foss is a Norwegian
citizen.
Asgeir Nyseth
CEO Norwegian UK Ltd.
Mr Asgeir Nyseth (born 1957)
started as Norwegian’s Chief
Operational Officer in 2006
and CEO of Norwegian’s long
haul operation in 2013. Mr
Nyseth has extensive experi
-
ence as an aeronautics engi-
neer from both Lufttransport
and Scandinavian Airlines. He
was the Technical Director of
Lufttransport for a period of
three years and was made the
CEO of Lufttransport in 2000.
Mr Nyseth conducted officer
training school and technical
education at the Norwegian
Air Force. As of December 31,
2015, he holds 12 342 shares
in the Company and has no
stock-options. Mr Nyseth is a
Norwegian citizen.
Geir Steiro
Chief Operating Officer
Mr Geir Steiro (born 1957) be-
gan working for Norwegian in
2013 as Technical Director and
was shortly after appointed
COO taking over the respon
-
sibility for the Company’s 737
operation. Before he came to
Norwegian Mr Steiro worked at
Aker Solutions Subsea AS and
has previous experience from
NSB and SAS. He has worked
in the technical department
of several airlines and has held
several managerial positions.
Mr Steiro has a degree in me
-
chanical engineering. He is a
certified aircraft mechanic and
has completed several man
-
agement courses. As of De-
cember 31, 2015, he holds no
shares in the Company and has
no stock-options. Mr Steiro is a
Norwegian citizen.
Anne-Sissel Skånvik
Chief Communications Officer
Ms Anne-Sissel Skånvik (born 1959)
has more than 30 years of expe
-
rience working with corporate
communications and journalism.
Ms Skånvik was the Deputy Direc
-
tor General in The Ministry of Fi-
nance between 1996–2004. She
has years of experience from Sta
-
tistics Norway (SSB) and as a jour-
nalist for various news media. She
joined Norwegian in 2009 from a
position as Senior Vice President
at Telenor ASA where she was re
-
sponsible for corporate commu-
nications and governmental rela-
tions. She has a Masters Degree
in Political Science (”Cand. Polit”)
from the University of Oslo and
a degree in journalism. As of De
-
cember 31, 2015, she holds no
shares in the Company and has
no stock-options. Ms Skånvik is a
Norwegian citizen.
NORWEGIAN ANNUAL REPORT 2015
BOARD AND MANAGEMENT
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:36 all rigths reserved © 2016 teigeNs desigN
Thomas Ramdahl
Chief Commercial Officer
Mr Thomas Ramdahl (born 1971)
has been Norwegian’s Director
of Network Development and
part of the Company’s com-
mercial management team
sinc
e 2008 before becom-
ing Chief Commercial Officer
in 2
014. He has long and var-
ied experience in the aviation
ind
ustry and has previously
worked for SAS and Braathens
where he has held positions in
Revenue Management, Route
Management and Charter.
Mr Ramdahl has a Bachelor’s
Degree from the Norwegian
School of Business (BI). As of
December 31, 2015, he holds
no shares in the Company and
has no stock-options. Mr Ram
-
dahl is a Norwegian citizen.
Gunnar Martinsen
Chief Human Resources Officer
Mr Gunnar Martinsen (born
1949) was part of the Norwe-
gian start-up team in 1993 and
jo
ined Norwegian Air Shuttle
ASA in 2002 as Senior Vice Pres-
ident, Human Resources and
Or
ganizational Development. Mr
Martinsen has extensive experi-
ence from organizational devel-
opment and human resources
fr
om several industries among
others as a management con-
sultant. Prior to his position in
No
rwegian he has held HR lead-
ership roles in different com-
panies such as Busy Bee of Nor-
way and Radisson SAS. Mr Mar-
tinsen is Chair of the Board in
C
a
bin Services Norway AS and
Cabin Services DK Aps. He is
also Member of the Supervisory
Council in Bank Norwegian. Mr
Martinsen has a degree from BI
Norwegian School of Manage
-
ment. As of December 31, 2015
he
holds 9 519 shares in the
Company and has no stock-op-
tions. Mr Martinsen is a Norwe-
gian citizen.
Frode Berg
Chief Legal Officer
Mr Frode Berg (born 1968)
has been Chief Legal Officer
of Norwegian since Febru-
ary 2013. He has practiced law
si
nce 1997 and was as a part-
ner of law firm Simonsen Vogt
Wi
ig from 2007. As a lawyer Mr
Berg’s main fields have been
corporate law, transactions
and international contracts.
He was legal advisor to Norwe
-
gian during the start-up phase
as w
ell as during the establish-
ment of Bank Norwegian. Mr
Be
rg holds a Law Degree and a
Bachelor Degree in Economics
from the University of Tromsø,
Norway, and a Master’s Degree
(LL.M) from the University of
Cambridge, England. As of De
-
cember 31, 2015 he holds no
sh
ares in the Company and has
no stock-options. Mr Berg is a
Norwegian citizen.
Dag Skage
Chief Information Officer
Mr Dag Skage (born 1972) has
been Chief Information Offi-
cer at Norwegian since Octo-
ber 2014. Before that he was
Ex
ecutive Director within Ernst
Young’s IT advisory unit. He has
also previous consulting- and
management experience, in-
cluding BearingPoint and An-
dersen Business Consulting.
M
r
Skage has extensive expe-
rience in the consulting indus-
try, particularly IT manage-
ment, portfolio management,
so
urcing- and change manage-
ment. He holds a Master of Sci-
ence in Business from the Nor-
wegian Business School («BI»)
wi
th additional education in IT
Management and Project Man-
agement (Master of Manage-
ment from the Norwegian Busi-
ness School («BI»)). As of De-
cember 31, 2015 he holds no
s
h
ares in the Company and has
no stock-options. Mr Skage is a
Norwegian citizen.
Tore Jenssen
CEO Norwegian Air
International Ltd.
Mr Tore Jenssen (born 1978) is
Chief Executive Officer for our
Irish airline operations (NAI)
and Chief Executive Officer of
our full owned asset company,
Arctic Aviation Assets (AAA). He
has been at Norwegian since
2007 when he was hired as cost
controller for the technical de
-
partment. From 2010 Mr Jens-
sen worked as asset manager
an
d in 2013 he moved to Ireland
and became chief operating of-
ficer for Arctic Aviation Assets
Ltd
., a position he still holds to-
day as well as being Chief Ex-
ecutive Officer of NAI. Before
he
started his career at Norwe-
gian he worked for Grilstad. Mr
Je
nssen has a Business Degree
from Bodø Graduate School of
Business. As of December 31,
2015 he holds no shares in the
Company and has no stock-op
-
tions. Mr Jenssen is a Norwe-
gian citizen.
Edward Thorstad
Chief Customer Officer
Mr Edward Thorstad (born
1969) is Chief Customer Offi-
cer at Norwegian. He has been
pa
rt of commercial manage-
ment and led the Norwegian's
cu
stomer services department
since 2005. Mr Thorstad has
worked in aviation since 1996
and before that he worked
for Delta Air Lines where he
helped build their European
contact center in London. He
has a Bachelor Degree from
University College, London. As
of December 31, 2015 he holds
2385 shares in the Company
and has no stock-options. Mr
Thorstad is a British citizen.
90
NORWEGIAN ANNUAL REPORT 2015
BOARD AND MANAGEMENT
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
DEFINITIONS
ASK
Available Seat Kilometers. Number of avail-
able seats multiplied by the distance flown.
RPK
Revenue Passenger Kilometers. Number of
occupied seats multiplied by the distance
flown.
LOAD FACTOR
RPK divided by ASK. Describes the
utilization of the available seats.
CASK
Cost per available seat kilometer is an
industry-wide cost level indicator often
referred to as “CASK”. CASK is usually
represented as operating expenses before
depreciation and amortization (EBITDA
level) over produced seat kilometers (ASK),
also known as cash operating cost.
Norwegian hedges USD/NOK to counter
foreign currency risk exposure on USD
denominated borrowings translated
to the prevailing currency rate at each
balance sheet date. Hedge gains and losses
are according to IFRS recognized under
operating expenses (“other losses/ (gains))
while foreign currency gains and losses
from translation of USD denominated
borrowings are recognized under financial
items (Net foreign exchange (loss) or gain).
For the above reason CASK excludes losses
and gains from “other losses/ (gains)” to
better reflect the actual cost development.
RASK
Average ticket revenue per ASK. A measure
of how much ticket revenue one single seat
generates on average per kilometer flown.
The RASK reflects load factor contrary
to the commonly used yield which is a
measure of ticket revenue per RpK.
BLH
Block hours is the elapsed time from the
parking brakes are released at the gate of
the origin until they are set at the gate at
the destination.
SECTOR LENGTH
Distance from one destination to another
(one way).
EBITDAR
Earnings Before Interest, Tax,
Depreciation, Amortization and Rent.
EBITDA
Earnings Before Interest, Taxes,
Depreciation and Amortization.
EBIT
Earnings Before Interest and Taxes.
Commonly referred to as operating result.
EBT
Earnings Before Taxes.
NORWEGIAN ANNUAL REPORT 2015
DEFINITIONS
NorwegiaN aNNual report 2015.iNdd • Created: 09.10.2014 • Modified: 08.04.2016 : 10:05 all rigths reserved © 2016 teigeNs desigN
Design/layout: Haugvar AS
Norwegian Air Shuttle ASA
Visiting address:
Oksenøyveien 3
NO-1366 Lysaker
Postal address:
P.O. Box 115
NO-1330 Fornebu
Switchboard: +47 67 59 30 00
Telefax: +47 67 59 30 01
www.norwegian.no
Investor relations contact:
Tore Østby, Vice president investor relations
Tel +47 45 80 48 98 / +47 67 59 31 34
E-mail: investor.relations@norwegian.com
