NORWEGIAN AIR SHUTTLE ASA
ANNUAL REPORT 2013
WWW.NORWEGIAN.COM/ANNUALREPORT2013
PLEASE NOTE THAT THIS PDF VERSION STRICTLY CONTAINS INFORMATION REQUIRED BY LAW.
THE FULL ANNUAL REPORT IS AVAILABLE ONLINE AND CONTAINS ADDITIONAL INFORMATION SUCH AS CEO’S
REMARKS TO THE YEAR THAT HAS PASSED AND THE STRATEGY AS WELL AS GRAPHICAL PRESENTATIONS,
IMAGES AND MULTIMEDIA CONTENT.
Board of Directors' report
Norwegian annual report 2013
Norwegian Air Shuttle ASA, commercially branded "Norwegian", is a public low-cost airline listed on the Oslo Stock
Exchange. The Group operates both scheduled services and additional charter services. Norwegian is the second
largest airline in Scandinavia, the third largest low-cost airline in Europe, and has a route portfolio stretching across
Europe into North Africa and the Middle East, as well as Thailand and the US. With competitive prices and customer-
friendly solutions and service, the Group has experienced significant growth in recent years.
The Group has its headquarters in Fornebu outside Oslo, as well as other offices at Oslo Gardemoen Airport and in
Tromsø. Norwegian Air Shuttle Sweden AB has offices at Stockholm Arlanda Airport, and Norwegian Long Haul AS, Call
Norwegian AS, NAS Asset Management Norway AS and Norwegian Finans Holding ASA have office addresses in
Fornebu.
Norwegian Air Shuttle ASA has established aircraft bases in Norway, Sweden, Denmark, Finland, Spain and the United
Kingdom.
In 2013 the Group initiated a restructuring of the organization. The background for the restructuring is to optimize the
airline operation, and set a new corporate structure in order to position the company for further international growth.
Two fully owned subsidiaries will be established, each with their own air operator's certificate (AOC) - one in Norway
and one in the EU. In line with legal developments in Europe, fully owned country-specific resource companies will be
established.Additionally, specific activities of the airline's commercial activities are further reorganized and established
in separate new entities including, but not limited to, Norwegian Holiday, Norwegian Cargo as well as brand and
marketing activities. A key consideration has been to build a structure which maintains Norwegian's flexibility and
adaptability despite growing size and entry into new markets in Europe, and across continents. The restructuring has
included the establishment of new legal entities, reorganizing and relocation of key personnel and decision making
authority, rights and assets to the relevant entities at their respective legal locations.
Flight Safety
The Group has not registered any serious accidents or incidents to either passengers or crew involving the operation
of aircraft since the Group was founded in 1993.
The Group’s flight safety office is integrated within the quality department, which reports directly to the respective
accountable manager. The department’s primary objective is to work proactively to promote flight safety throughout
the organisation. Flight safety is covered in the crew’s training programmes, together with training in security related
issues.
The Group analyses information from Flight Data Recorders installed in Norwegian’s aircraft on an on-going basis.
These analyses are carried out in order to ensure that the aircraft are handled and flown according to current
regulations and limitations.
Crew members, maintenance personnel and handling agents are also required to use a web- based reporting system
to log irregularities. These reports are a valuable tool for statistical analysis and trend monitoring.
The aircraft are subject to a stringent maintenance programme based on the manufacturers’ recommendations and
existing rules and regulations
Social Responsibility Report
Norwegian’s corporate responsibility strategy is primarily based on how Norwegian as an airline can contribute to less
pollution and emissions by flying new and fuel efficient aircraft, as described in more detail below. The single most
important thing an airline can do in order to make aviation more environmentally friendly is investing in new aircraft.
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Our Code of Ethics give directions for a sound working environment and highlights the Group’s guidelines for human
rights, prevention of corruption, employee rights and safety for all – both our customers and employees – social
conditions and external environment. Norwegian also has a dedicated corporate cooperation with UNICEF on account
of the organisation’s overall focus on children’s rights.
Norwegian has for several years partnered with the humanitarian organisation UNICEF through a Signature
Partnership.
A Signature Partnership is initiated through the administration of a company’s top-level management.
A Signature Partnership is the highest form of partnership UNICEF Norway offers corporate clients.
Norwegian is dedicated to working with UNICEF on account of its overall focus on children’s rights.
UNICEF is mandated by the United Nations General Assembly to advocate for the protection of children’s rights, to
help meet their basic needs and to expand their opportunities to reach their full potential. UNICEF maintains that the
survival, protection and development of children are universal development imperatives that are integral to human
progress.
This is how Norwegian supports UNICEF
Norwegian's support to UNICEF consists of travel funding and fundraisers. In addition, all Norwegian employees
donate their company Christmas presents to UNICEF.
Norwegian's CEO Bjørn Kjos receives many requests to speak at events and give lectures. Neither Bjørn Kjos nor
Norwegian charge for this, however, through our partnership with UNICEF, we ask organisations and businesses to
transfer 20,000 NOK when Bjørn Kjos holds a lecture. We hope businesses see this as an opportunity to help
support an international organisation that works for children's rights.
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 throughout the year and therefore contributed 1.3 million NOK to the
world's children.
Norwegian had its tenth anniversary on 1st September 2012 and marked the day with a grand jubilee concert at
Fornebu. Concert proceeds of 1 million NOK were donated to UNICEF.
Norwegian encourages its employees to engage in UNICEF through internal activities on the company’s intranet.
Norwegian also has two dedicated “Norwegian Inspirators” who take responsibility to spread the UNICEF story
throughout the company.
Norwegian has a zero tolerance policy for corruption and every employee is responsible for reporting suspicious
behaviour to his or her superior. The company has never had any reported or suspected occurrences of corruption.
Norwegian advocates diversity, something that reflects our growth in Europe, Asia and the United States. Norwegian
employs people from several different countries, with a multitude of backgrounds. We believe that diversity creates a
better working environment.
Norwegian’s main stakeholders include our passengers, employees, owners, authorities and the media.
Organisation, Working Conditions and the Environment
Norwegian has a long-term focus on creating an attractive workplace. An important success factor for Norwegian is
maintaining a workforce of highly motivated and skilled employees and leaders. Our goal is to offer unique
opportunities to our employees and a company culture that helps us to attract and retain the best people in the
industry, regardless of who they are and where we do business. Creating effective arenas for learning and professional
development at all levels of the organisation is a priority at Norwegian.
At the end of 2013 the Group employed a total of 3,965 FTEs (full-time equivalents) including apprentices and hired
staff. The number of employees is expected to increase in 2014 in accordance with the Group’s planned expansion.
The Group has established bases in London, Madrid, Barcelona, Tenerife, Alicante, Bangkok, New York, Fort
Lauderdale and is currently in the process of opening additional new bases abroad.
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The apprentice programme in Norway continued in 2013 and by the end of the year comprised 140 apprentices.
During their training – which also included stays in Berlin, London and Las Palmas – the apprentices held internships
while working abroad in countries where Norwegian operates. A further intake of apprentices is planned in 2014. All
the candidates which graduated in 2013 successfully completed and passed their exams, which were conducted in
conjunction with Akershus County Council. The labour unions are also actively included in planning of the apprentices’
curriculum.
Many graduates who passed the examination in 2013 have now attained positions in the Group. Graduates of the
programme also visit schools and colleges to promote the programme and help recruit new apprentices. This has been
a focus area in 2013 and the programme now provides a steady stream of candidates to fill permanent positions.
Norwegian’s human resources policy is intended to be equitable, neutral and non-discriminatory, regardless of
ethnicity and national background, gender, religion, or age.
The Group has reviewed and updated its ethical guidelines, which emphasise the company’s personnel policies. The
Group has described its Corporate Governance policies in a separate section of the Annual Report.
Important HES activities (Health, Environment and Safety) are conducted in compliance with labour laws and the
Group’s guidelines. Illness absenteeism in 2013 was 7.4 per cent, a decrease compared to 2012. Actively monitoring
HES, corporate health insurance policies and continuing cooperation with protective services will insure that illness
absenteeism remains a priority.
Norwegian Air Shuttle ASA is a member of NHO Aviation, which is a member of NHO (Confederation of Norwegian
Enterprise). The 2013 collective salary review was conducted through local collective bargaining with most unions.
Moderate changes in wages and efficiency were achieved with these unions.
External Environment
Flight operations are inherently dependent on fossil fuels and also generate noise. However, the Group’s current
aircraft fleet operates well within the levels and restrictions imposed by national and international regulations. During
2013 the Group consumed approximately 735,006 tonnes of Jet A-1 fuel which is equivalent to 87 grams of CO2 per
passenger per kilometre or 67 grams of CO2 per seat per kilometre, a reduction of 2 per cent from last year.
The Group is in the process of renewing its short-haul aircraft fleet, replacing the Boeing 737- 300 aircraft with Boeing
737-800s which will further reduce emissions per passenger per kilometre.
The Boeing 737-800 is among the most environmentally-friendly aircraft in production today; the 737-300s which are
being replaced emit approximately 23 per cent more CO2 per seat. The Group had a total of 72 Boeing 737-800 in
operation by year-end with another 60 on firm order.
Norwegian has firm orders for an additional 200 single-aisle aircraft, 100 Boeing 737 MAX8 and 100 Airbus A320neo,
both of which reduce CO2 emissions by 30 per cent compared to the 737- 300. The order will secure Norwegian the
most environmentally-friendly aircraft fleet in the world.
The Group operates the Boeing 787-8 Dreamliner for its long-haul operations, which is the most fuel and noise
efficient long-haul equipment available. By year-end the Group had three such aircraft in operation and another 11 on
firm order; five 787-8 and six of the stretched 787-9. The aircraft type combines a revolutionary composite material
design with new engines, which together reduce consumption and emissions by 20 per cent compared to the most
efficient comparable aircraft type in operation today.
The Group’s business model promotes high load factors and higher capacity per flight, which makes Norwegian’s
operations more environmentally sustainable as emissions per passenger are lower. The company’s emissions per
passenger kilometre are well below the industry average and less than many forms of land and sea-based
transportation.
The Board believes the Group has complied with all requirements and recommendations with regard to its impact on
the external environment, and that the Group takes all possible steps to minimise emissions and other negative effects
on the environment.
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Aircraft Maintenance
The Boeing 737 fleet is operated by the parent company (NAS) and its fully-owned subsidiary Norwegian Air Norway
(NAN). The Boeing 787 fleet was operated by the fully-owned subsidiary Norwegian Long Haul (NLH) in 2013, whose
operations will be transferred to the fully-owned company Norwegian Air International (NAI) during 2014. Each
individual operator has its own Air Operator Certificate (AOC), each with individual civil aviation authority oversight
and approval. Each AOC must have a civil aviation authority approved maintenance organisation and maintenance
programme.
NAS and NAN manage their maintenance operations from their technical bases at Oslo Gardermoen Airport. NLH
manages its maintenance operations from its technical base in Fornebu, Norway.
Line maintenance is performed by NAS for both NAN and NAS at Oslo Gardemoen Airport, Stavanger Sola Airport,
Bergen Flesland Airport, Trondheim Værnes Airport, Stockholm Arlanda Airport and Copenhagen Kastrup Airport. Line
maintenance for NAN and NAS are contracted to other external suppliers outside Scandinavia.
Continuing airworthiness activities for NLH are sub-contracted to Boeing Fleet Technical Management (Boeing FTM).
Control and oversight of the activities is performed by Norwegian Long Haul Maintenance operations in addition to the
civil aviation authorities.
Major airframe as well as workshop maintenance is performed by external sources subject to approval by the
European Aviation Safety Agency (EASA) and by the national aviation authorities (“Luftfartstilsynet”)
Airframe maintenance for NAN and NAS is currently carried out by ATC Lasham in the UK and Lufthansa Technik in
Budapest, Hungary. Engine and component workshop maintenance is undertaken by Lufthansa Technik, MTU and
Boeing. Airframe maintenance for NLH is currently carried out by Nayak, KLM and Mack II.
Engine maintenance is currently carried out by Rolls Royce UK.
All maintenance, planning and follow-up activities, both internal and external, are performed in accordance with both
the manufacturers’ requirements and additional internal requirements, and are in full compliance with international
authority regulations. The company carries out initial quality approval and also continuously monitors all maintenance
suppliers.
All supplier contracts are subject to approval and monitoring by the national aviation authorities.
Significant Changes in Accounting Principles
The IFRS accounting principles, as adopted by the EU, have been followed in preparing the financial statements for
2013. The Group has implemented new or amended/revised IFRS approved by EU and which took effect at the start
of the 2013 financial year. The changes have not had any material impact on the Group.
Comments to the Consolidated Income Statement
The Group had a total operating revenue and income of NOK 15,580 million (12,859) in 2013. Compared to last year,
the Group’s total revenue growth was 21 per cent. NOK 13,381 million (11,201) of the revenues was related to ticket
revenues, NOK 1,758 million (1,405) to other passenger-related revenues, while NOK 372 million (235) was relatedto
freight, third-party products and other income. Other income includes gains from the sale of tangible assets. The
increase of sales is primarily related to the 32 per cent growth in production from 2012 to 2013. The load factor
remained stable compared to the same period last year. The ticket revenue per available seat kilometre (RASK) for
2013 was NOK 0.39, compared to NOK 0.43 last year, a decrease of 10 per cent. Ancillary revenues rose by 6 per cent
to NOK 87 per PAX (82) in 2013 compared to 2012.
Operating costs (including leasing and excluding depreciation and write-downs) amounted to NOK 14,080 million
(12,070) in 2013. The unit cost was NOK 0.42 in 2013 compared to NOK 0.45 last year. The unit cost for fuel
decreased by 7 per cent while the unit cost excluding fuel decreased by 7 per cent. The unit cost excluding fuel was
NOK 0.29 in 2013 compared to NOK 0.31 last year. Net profit before depreciation and write-downs (EBITDA) for the
Group was NOK 1,500 million (789) in 2013, resulting in an EBITDA margin of 9.6 per cent.
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Financial items in 2013 resulted in a loss of NOK 578 million, compared to a gain of NOK 187 million in 2012. NOK 473
million in net foreign exchange losses (gain of 273) is offset by gains on financial instruments included in operating
profits. With regard to accounting for the prepayments on purchase contracts with aircraft manufacturers, NOK 86.0
million (73.5) in interest costs were capitalised in 2013.
In 2007 the Group started Bank Norwegian, which is 100 per cent owned by Norwegian Finans Holding ASA, in which
the Group has a 20 per cent stake. The Group’s share of the bank’s net profit resulted in a net gain of NOK 46.6
million (32.8) in the consolidated profit and loss.
Earnings before tax in 2013 were NOK 437 million (623) and earnings after tax were NOK 322 million (457). Earnings
per share amounted to NOK 9.15 per share (NOK 13.08).
Comments to the Consolidated Balance Sheet and Cash Flow Statement
The Group’s total assets had increased by NOK 2,843 million to NOK 14,762 million at year-end 2013. The book value
of aircraft increased by NOK 1,947 million during the year; while prepayments and capitalised interests on the Boeing
purchase contract was reduced by NOK 329 million compared to 2012. Trade and other receivables increased by NOK
527 million on 2012.
At the balance sheet date, the Group had a cash balance of NOK 2,166 million (1,731).
Total borrowings increased by NOK 985 million to NOK 6,512 million (5,527), mainly related to the purchase of new
aircraft.
The Group’s cash flow from operations was NOK 2,379 million (2,022) in 2013. The net cash flow from operating
activities consists of the profits before tax of NOK 437 million; add back of depreciation and other expenses without
cash effects of NOK 604 million with add back of interests on borrowings NOK 296 million included in financial
activities. Changes in working capital mainly due to traffic growth amounted to NOK 1,042 million. During 2013 the
Group paid NOK 0 million in taxes.
The net cash flow used for investment activities was NOK -2,128 million (-2,765), of which the prepayments to aircraft
manufacturers constituted NOK -1,460 million. Purchases of new Boeing 737-800s and a 787-8 Dreamliner and
intangible assets amounted to NOK -586 million.
The net cash flow from financial activities in 2013 was NOK 184 million (1,369). Proceeds from long-term debt of NOK
2,310 million are related to the financing of new aircraft and PDP financing.
The Group focusses heavily on liquidity planning and the Board is confident in the Group’s financial position at the
beginning of 2014.
Capital structures
The Group’s total equity was NOK 2,750 million (2,421) at 31 December and its equity ratio was 19 per cent (20 per
cent). Equity increased by NOK 326 million due to profits for the period of NOK 322 million and a share issue of NOK 9
million related to the employees’ option programmes. Other changes in equity amounted to NOK 1.8 million.
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 interest-bearing debt was NOK 4,346 million at 31 December 2013, compared to NOK
3,796 million in 2012. The Group’s gross interest-bearing liabilities of NOK 6,512 million (5,527) mainly consisted of
financing for our aircraft amounting to NOK 5,761 million, a bond loan with a net book value of NOK 594 million, and a
Pre-Delivery Payment syndicated credit facility of NOK 147 million. Other long-term interest-bearing liabilities including
financial lease liabilities amounted to NOK 11 million.
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Risks
Risk management in the Group is based on the principle that risk evaluation is an integral part of all business
activities. Policies and procedures have been established to manage risks. The Group’s Board of Directors regularly
reviews and evaluates the overall risk management systems and environment within the Group. The Group faces
many risks and uncertainties within the global marketplace. We are facing challenging economic and market
conditions and we may not succeed in reducing the unit cost sufficiently to compensate for weakening consumer and
business confidence in our key markets. Price volatility may have a significant impact on the Group’s reported and
operating results. Deterioration in the Group’s financial position could increase our borrowing costs and cost of capital.
We face an ongoing risk of counterparty default. The Group’s reported results and debts denominated in foreign
currencies are influenced by developments in currency exchange rates and in particular the US dollar and Euro.
The Group’s main strategy for mitigating risks related to volatility in cash flows is to maintain a solid financial position
and strong credit rating.
Credit risks are managed on a Group basis. Credit risks arise from deposits with banks and financial institutions, as
well as credit exposure to commercial customers. The Group’s policy is to maintain credit sales at a minimum level.
Sales to private customers are settled by using credit card companies. The risks arising from receivables on credit card
companies or credit card acquirers are monitored closely.
The management monitors rolling forecasts of the Group’s liquidity reserves, cash and cash equivalents on the basis of
expected cash flows. In addition, the Group’s liquidity management policy involves projecting cash flows in major
currencies and evaluating the level of liquid assets required to monitor balance sheet liquidity ratios against internal
and external regulatory requirements and maintaining debt financing plans.
Following the acquisition of aircraft with future deliveries, the Group will have ongoing financing activities. The Group’s
strategy is to diversify the financing of aircraft through sale-and- leaseback transactions and term loan financing
supported by the export credit agencies in the United States and EU.
In order to protect margins against fluctuations in the price of fuel, our expected fuel consumption is hedged to some
extent. The Group also uses derivatives to reduce its overall financial and commercial risk exposures. Forward US
dollar currency contracts have been used to hedge USD exposures.
Prospects for 2014
The demand for travelling with Norwegian and advance bookings have been satisfactory entering the first quarter of
2014. Norwegian will continue to take advantage of its increasing competitive power realised through continuous cost
efficiency, and from introducing larger aircraft with a lower operating cost. Going forward, the company expects
increased competitive pressure in the Nordic market place.
In addition to its bases in the Nordic countries, Norwegian currently operates short-haul sectors from four operational
bases in Spain (Malaga, Alicante, Las Palmas and Tenerife) and one base in London. New bases in Madrid and
Barcelona are planned to become operational during the spring.
Norwegian is predicting production growth (ASK) of 40 per cent for 2014, including the long haul production. The
growth in short haul production is mainly from increasing the fleet by adding 737-800s and through increasing the
average sector length. Norwegian may decide to adjust capacity in order to optimise the route portfolio depending on
the development in the overall economy and in the marketplace.
Assuming a fuel price of USD 950 per tonne and USD/NOK 6.00 for the year 2014 (excluding hedged volumes) and
with the currently planned route portfolio, the company is targeting a unit cost (CASK) in the region of NOK 0.40 for
2014.
Despite technical and operational issues related to the start-up of the long haul operation, the establishment of the
long haul operation has developed according to plan. The introduction of routes for the summer season of 2014 has
been well received by the market. Long-haul production will grow in accordance with the phasing in of aircraft and the
company will have seven Boeing 787 by the end of 2014.
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Bjørn H. Kise Ola Krohn-Fagervoll
(Chairman of the Board) (Deputy Chairman)
Liv Berstad Marianne Wergeland Jenssen
(Board Member) (Board Member)
Thor Espen Bråten Kenneth Utsikt
(Employee Representative) (Employee Representative)
Linda Olsen Bjørn Kjos
(Employee Representative) (Chief Executive Officer)
Norwegian has established and prepared for an organisational structure which secures cost- efficient international
expansion and necessary traffic rights for the future.
The Board confirms that the going concern assumption is valid and the financial statements have been prepared on a
going concern basis.
Allocation of the Year’s Result
The net profit for the Group was NOK 322 million. The net profit for the Parent Company Norwegian Air Shuttle ASA
was NOK 635 million, which the Board proposes be transferred to retained earnings. The Board recommends no
dividend distribution for the 2013 operating year in accordance with the company’s corporate governance policies.
Fornebu, 26 March 2014
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Corporate Governance
Norwegian annual report 2013
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 circumstance jeopardize safety and quality.
How we understand the concept
The Group's core values and corporate Code of Ethics are the fundamentals of Norwegian’s corporate
governance. Corporate governance deals with issues and principles associated with the distribution of roles
between the governing bodies of a company, and the
responsibilities and authorities assigned to each body.
Good corporate governance is distinguished by responsible interaction between the owners, the Board and the
management in a long-term, productive and sustainable perspective. It calls for effective cooperation, which
means a defined division of responsibilities and roles between the shareholders, the Board and the management,
and also respect fo
r the Group's other stakeholders as well as open and honest communication with the
communities in which the Group operates.
Code of Ethics
Everyone has a joint responsibility to create a good working environment and develop a sound corporate culture
marked by openness and tolerance. We promote an environment free from any discrimination, be it religion, skin
colour, gender, sexual orientation, age, nat
ionality, race or disability. The work environment shall be free from
bullying, harassment or similar. We do not tolerate any behaviour that can be perceived as degrading or
threatening.
When engaging in businesses with third party suppliers, Norwegian will, whenever possible, ensure that the
suppliers adheres to international rules of ethical behaviour and trading standards.
Norwegian is firmly oppose
d to all forms of corruption. Norwegian is against any type of involvement in illegal
influencing of decision makers, either directly or through middlemen.
Norwegian’s corporate responsibility strategy is primarily based on how Norwegian as an airline can contribute to
less pollution and emissions by flying new and fuel efficient aircraft. Our Codes of Ethics provides the directions
for a good working
environment and highlights the Group’s guidelines for human rights, preventing corruption,
employee rights and safety for all – both for our customers and employees. Norwegian has a dedicated corporate
cooperation with the humanitarian organization; UNICEF.
Environment
Norwegian is committed to actively engage in and support a sustainable environmental policy, and to continue to
reduce emissions from
aviation. By renewing the fleet, emissions are reduced and passengers are offered new
and more comfortable aircraft. Norwegian has a clear goal of reducing emissions per flown passenger by 30 per
cent in the period 2008 – 2015. Norwegian also undertakes a variety of other measures to minimize its
environmental impact. All employees should focus on how they can contribute to a better environment in t
heir
daily work. Read more about our strategy here.
Human Worth
Everyone at Norwegian has a joint responsibility to create a good working environment and develop a sound
corporate culture marked by openness and tolerance. Norwegian supports the international human rights as
outlined by the UN declaration and conventions. No one shall in any way cause or contribute to the violation or
circumvention of human rights. We place great importance on ensuring
compliance with employees’ basic human
rights as outlined in the International Labor Organization's core conventions. Equality must be guaranteed
between men and women in terms of employment, working conditions, career opportunities and remuneration.
Partnership with UNICEF
Norwegian has decided to partner with humanitarian organization UNICEF through a Signature Partnership.
• A Signature Partnersh
ip is initiated by a company's top management
• A Signature Partnership is the highest form of partnership UNICEF Norway offers corporate clients
• Norwegian is dedicated to working with UNICEF because of its overall focus on children's rights
UNICEF is mandated by the United Nations General Assembly to advocate for the protection of children's rights,
to help meet their basic needs and to expand the
ir opportunities in order to reach their full potential. UNICEF
insists that the survival, protection and development of children are universal development imperatives that are
integral to human progress. Norwegian's support to UNICEF consists of travel fundings and fundraisers. In
addition, all Norwegian employees donate their company Christmas presents to UNICEF.
In line with the Norwegian Code of P
ractice for Corporate Governance, a review of the major aspects of
Norwegian Air Shuttle ASA’s governance structure follows below.
Business
Norwegian’s business is clearly defined in paragraph 3 of its articles of association, which states that “The Group’s
objective is to be engaged in aviation, other transport and travel-related 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 services and
services related to credit cards. Participation in such activities as mentioned may take place through co-operation
agreements, ownership interests or by any other means.”
The Group has clear goals and strategies for
its business. These are discussed in the Group´s Quality Manual and
are also made available to the public in the Annual Report and on the Group’s website
http://www.norwegian.com
Equity and Dividends
The Group’s equity at year-end 2013 was MNOK 2,750 equivalent to an equity ratio of 19%. The Board deems
this to be adequate considering the Group’s strategy and risk profile.
The Board of Directors recommend to not distribute dividends as it is considered to be in the best interest of the
shareholders to retain funds for investments in expansion and other investment opportunitie
s as stated in the
articles of association, thereby enhancing profitability and shareholder value. Dividends should under no
circumstance be paid if equity is below what is considered to be an appropriate level. One Financial Covenant to
the bond agreement entered into in April 2012; restrict dividend payments until maturity of the bond in April
2015, to 35% of the net profit after taxes (on a consoli
dated basis) of the Group based on the audited accounts
for the previous accounting year.
Due to Norwegian’s high growth rate, competitive position and associated need for flexibility, the General
Assembly has decided to deviate from the Norwegian code of practice for corporate governance’s
recommendation with respect to capital increase. Mandate to increase the company’s share capital are granted to
the Board of Director for a two year period and can be utilized for commercial possibilit
ies and employee
incentive program. The mandate granted to the Board is limited to a total of 3,516,213 shares.
The General Assembly 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 Meeting’s resolution. The mandate granted to the Board is limited
to a total of 3,516,213 shares. The Code of Practice recommends that
a mandate granted to the Board of
Directors to acquire treasury shares should be limited in time to not later than the date of the next General
Assembly.
Equal Treatment of Shareholders and Transactions with Close Associates
Norwegian Air Shuttle ASA has only one class of shares.
Transactions are generally carried out through stock exchanges. Buy-backs of own shares are carried out at
market prices. Em
ployee share allocations are granted at a discount to market value.
Material transactions between the Group and key stakeholders, in particular the shareholders, the members of the
Board 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 consolida
ted
accounts. At present, the Chairman is a partner of the law firm Simonsen VogtWiig, which is the legal advisor to
Norwegian Air Shuttle ASA. Norwegian has leased its head office from Fornebu Næringsutvikling 1 AS which is
controlled by the Chairman and the CEO. In cases where members of the Board of Directors or the Executive
Management have other direct or indirect material interests in transactio
ns entered by the Group, this is stated in
the notes to the consolidated accounts.
Norwegian’s Codes of Ethics includes guidelines for handling possible conflicts of interest. The code applies to all
board members and Norwegian employees. In addition the Board has drawn up specific procedures for handling
of Conflicts of Interest for Board members and members of Corporate Management Board.
Freely Trade
d Shares
There are no restrictions on trading of the Company’s shares in the articles of association or elsewhere.
General Assembly
The Board of Directors has ensured that the shareholders may exercise their rights at the General Assembly,
making the summons and related documentation available on the website. At least three weeks written notice
must be given to call the Annul General Assembly. The rele
vant documents, including the Nominating
Committee's justified slate of nominees when new members are up for election 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 Meeting. The
general meeting in May 2013 decided that “An Extraordinary General Meeting may be called with fourteen days’
notice if the Board decides that th
e shareholders may attend the General Meeting with the aid of electronic
devices, cf. Section 5-8a of the public Limited Companies Act”. The shareholders’ deadline for the notice of their
intended presence is three days before the General Assembly, and the shareholders may be present and vote by
proxy. The Board of Directors, Election Committee and the auditor are required to be present. The manageme
nt is
represented by the Chief Executive Officer and the Chief Financial Officer and other key personnel on specific
topics. The minutes of the General Assembly are available on the Group's website.
Election Committee
The Election Committee's task is to nominate candidates to the General Assembly for the shareholder-elected
directors' seats. The articles of association state that the committee shall ha
ve four members, and the chairman of
the committee is the Chairman of the Board. The remaining three members are elected by the General Assembly
every second year. The next election is due in 2014.
The current Election Committee consists of the Chairman of the Board, one employee and two external members
representing major shareholders in the Company.
The guideline for the Election Committee is included in the company’s Articles of Association and was last
approved by the General Meeting in May 2011.The Board of Directors recommends deviating from the Code of
Practice for Corporate Governance as
the Chairman of the Board is a permanent member of the committee. This is
to ensure that nominees meet the requirements for expertise, capacity and diversity set forth by the board
members.
None of the Committee's members represents Norwegian's management. The majority of the members are
considered independent of the management and the Board. The composition of the Election Committee is
regarded as re
flecting the common interests of the community of shareholders.
Corporate Assembly and Board of Directors, Composition and Independence
Norwegian Air Shuttle ASA has, in agreement with the employee unions and as warranted by Norwegian law, no
corporate assembly. Instead, the Company has three employee representatives of the Board of Directors.
According to the articles of association the Board must co
nsist of between six and eight members. There are
currently seven members.
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 experiences from the transport sector and other competitive consumer sectors, relevan
t
network connections and experiences from businesses, finance, capital markets and marketing. The Chairman and
Deputy Chairman are elected by the Board. The Board members are elected for a period of two years.
The majority of the shareholder-elected members of the Board are considered autonomous and independent of
the Company’s executive personnel, and material business contacts. At least two of the
members of the Board
which are elected by shareholders, are considered autonomous and independent of the Company’s main
shareholder(s). Among the shareholder-elected directors, there are two men and two women which is a 50%
gender share.
The CEO is not a member of the Board of Director.
The Work of the Board of Directors
The Board of Directors’ work is in accordance with the rules of the 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 issues such as objectives, strategies and implementations are addressed.
The Board of Directors issues instructions for its own work.
There is a clear division of responsibilities between the Board and the Executive Management. The Chairm
an is
responsible for ensuring the Board's work is conducted in an efficient, correct manner and in accordance with the
Board's terms of reference. The CEO is responsible for the Group's operational management. The Board has drawn
up special instructions for the CEO.
If the chairperson of the Board of Directors is or has been actively engaged in a given case, another board
member will normally led disc
ussions concerning that particular case.
The Audit Committee was established by the General Assembly in 2010. The Board of Directors recommends
deviating from the Code of Practice for Corporate Governance as the Board of Directors acts as the Company’s
audit committee. This is to ensure that nominees meet the requirements of expertise, capacity and diversity set
forth by the Board members.
The Board of
Directors conducts an annual self-assessment of its work competence and cooperation with
management and a separate assessment of the Chairman.
Risk Management and Internal Control
The management draws up monthly performance reports that are sent to and reviewed by the Board of Directors.
Moreover, financial reports, risk reports and safety reports are drawn up, all of which are subject to review at
Board meetings.
The Board ensures sound internal controls and systems for risk management through, for example, annual Board
reviews of the most i
mportant risk factors and internal controls.
Remuneration of the Board of Directors
Based on the consent of the General Assembly, 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.
Comprehensive information on remuneration and incentive programs is available in the notes of
the consolidated
accounts.
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 immediately and if the transaction is of a substantial nature this
is 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.
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 shareholders is also published on the Group’s website. The Group holds regular
investor meetings and public interim results presentations, and has an investor relations department.
Norwegian has separate instructions for investor relations on communication with investors and ho
w price-
sensitive information shall be treated. The Board of Directors has prepared guidelines for the Group’s contact with
shareholders outside the General Meeting.
The Board considers that these measures enable and ensure continuous informative interactions between the
Company and the shareholders.
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 of such an event. In the case of a take-over bid the Board will refrain from taking any
obstructive action unless agreed upon by the General Assembly. The Company’s bond issue has a change of
control clause that allows bondholders to call for rede
mption of the bonds at 101% of par in the event of a
change of control.
Auditor
The Auditor annually submits the main features of the audit plan for the Group to the Audit Committee.
The Auditor participates in the meetings of the Board of Directors that deal with the annual accounts. At these
meetings the Auditor reviews any material changes in the Group’s accounting principles, comments on any
materia
l estimated accounting figures and reports all material matters on which the auditor and management may
disagree, and identify weaknesses in and suggest improvements to the company’s internal controls.
The CEO and the CFO are present at all meetings with the Board of Directors and the Auditor. At least one
meeting a year will be held between the auditor and the Board without the presence of the CEO or other members
of executive management. The management and the Board of Directors evaluate the use of the Auditor for
services other than auditing.
The Board receives annual confirmation from the Audito
r that the Auditor continues to meet the requirement of
independence.
The Board of Directors reports the remuneration paid to the Auditor at the Annual General Assembly, including
details of the fee paid for audit work and any fees paid for other specific services.
NORWEGIAN AIR SHUTTLE ASA - GROUP
Consolidated Financial Statements 2013
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(NOK 1,000) 2013 2012
Total revenues 15,511,218 12,841,191
T
o
t
a
l
r
e
v
e
n
u
e
s
15,511,218 12,841,191
(NOK 1,000) 2013 2012
Total operational expenses 11,370,596 9,131,424
(NOK 1,000) 2013 2012
Total 2,478,295 2,068,202
2013 2012
Total 3,507 2,705
NORWEGIAN AIR SHUTTLE ASA
Financial statements 2013
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10/04/14 16:50Norwegian Annual Report 2013 | Responsibility Statement
Page 1 of 2http://norwegian2013dev.cust.limecms.no/responsibility-statement
Responsibility Statement
Norwegian annual report 2013
We confirm, to the best of our knowledge, that the financial statements for the period 1 January to 31 December 2013
have been prepared in accordance with current applicable accounting standards, and give a true and fair view of the
assets, liabilities, financial position and profit or loss of the entity and the group taken as a whole, as well that the Board
of Directors’ Report includes a true and fair review of the development and performance of the business and the position
of the entity and the group, together with a description of the principal risks and uncertainties facing the entity and the
group.
Fornebu, 26 March 2014
Bjørn H. Kise (Chairman of the Board) Ola Krohn-Fagervoll (Deputy Chairman)
Liv Berstad (Board Member) Marianne Wergeland Jenssen (Board Member)
Thor Espen Bråten (Employee Representative) Kenneth Utsikt (Employee Representative)
Linda Olsen (Employee Representative) Bjørn Kjos (Chief Executive Officer)
