Annual Report 2023

04 Letter from the CEO

09 Board of Directors’ Report

32 Corporate Governance

38 Corporate Social

Responsibility

44 Financial Statements

Contents

Letter from the CEO

UK AOC, and at the height of the summer season

Norse was the largest long-haul operator to the

US from London Gatwick airport serving seven US

destinations.

The ramp-up required significant investments

in people, training and infrastructure, etc. and

therefore the first half of 2023 was loss-making.

In the second half of the year Norse became

fully operational with the entire fleet generating

revenue. Ten aircraft in own operations and five

Our core business model remains the same, to be

a leading great value, low-cost, long-haul airline,

with a particular focus on the transatlantic market.

We operate an ultra-modern and uniform fleet of

Boeing 787 Dreamliners, the most environmentally

friendly and cost-effective aircraft in class.

We fly non-stop, direct flights between major

cities, reducing complexity and overheads and

therefore costs. We offer flexible, a la carte ticket

options where customers don’t have to pay for

54

In the past year our Norse Premium cabin has been

ranked as one the top five premium cabins among

airlines world-wide and has received positive

reviews from journalists in all markets noting the

generous leg room, recline and exceptional service

from our dedicated cabin crew. The Norse Premium

cabin has become popular among both leisure and

smart business travellers seeking great value for

money. In Q4 the Company introduced an improved

operations during the traditionally challenging

winter period. Our expertise in this area achieved

global recognition when Norse became the

first operator to land a Boeing 787 Dreamliner

in Antarctica, chartered by the Norwegian

Polar Institute to carry scientists, supplies and

equipment to the blue ice surfaced Troll Airfield.

I am pleased to see that demand for Norse charter

operations has continued to increase month on

month including longer term agreements with

We continue to value positive and productive

relationships with labor unions and our ambition is

to provide long term job security in a sustainable

and profitable company.

In November, the Company completed a private

placement of new equity capital in the USD

equivalent gross amount of USD 55 million. The

private placement was followed by a repair offering

in January of another USD 6.5 million of new

equity capital to the company. During the same

and assets are perceived as attractive, and that

the company is positioned to engage further. The

Board of Directors therefore decided to engage

Seabury Securities UK Limited as strategic

advisors to explore and guide the airline’s future

strategic directions. These discussions continue

with the potential to create new partnerships,

generate new revenue initiatives and provide

cost synergies.

Building any business is hard work, and in our drive

routes have now started to mature combined

with the launch of in demand new seasonal

destinations. We look forward to a busy and

profitable summer ahead.

I would like to thank my Team Norse colleagues,

our shareholders, union partners, airports,

authorities, travel and tourism organizations,

aircraft lessors and other suppliers for their

support as we continue to build an airline with a

global footprint while benefitting local economies,

Bjørn Tore Larsen

CEO and Founder

76

Board of

Directors’ Report

About Norse Atlantic Airways

Norse Atlantic Airways (“Norse”) is an affordable

long-haul airline established in 2021 that serves

the transatlantic market with modern, fuel-efficient

Boeing 787 Dreamliner’s. Norse’s headquarters

are located in Arendal, Norway. Norse holds a

subsidiaries in Norway, the UK, and the USA. Norse

Atlantic ASA and its subsidiaries combined, are

commonly referred to as “Norse”, “Norse Atlantic

Airways”, or the “Company”.

The Norse fleet consists of 15 aircraft, with 10

aircraft under own operations and five aircraft on

sublease to a third party as of 31 December 2023.

The Company expects to operate 12 aircraft during

peak summer 2024 and 15 by summer 2025. Norse

commenced its commercial operations in June 2022,

98

Book equity (89.7) 10.5

Cash and cash equivalents 54.8 69.7

Number of flights 4,002 1,451

Number of operating destinations at period end 13 7

Average stage length (km) 6,426 5,534

ASK¹ (millions) 8,672 2,716

RPK¹ (millions) 6,448 1,693

Number of passengers 979,913 295,839

Load factor¹ 74% 62%

Airfare per passenger (USD)¹ 304 215

CASK cash adjusted (US cents)¹ 3.91 4.81

CASK excl. fuel (US cents)¹ 4.87 6.94

CASK (US cents)¹ 6.63 9.22

Total number of aircraft in fleet at period end 15 15

Total number of aircraft in operation at period end 10 4

Total number of aircraft subleased out at period end 5 5

¹ = Non-IFRS alternative measures are explained and/or reconciled in the notes to the financial statements

The Company provides two main passenger

quality product. Norse focuses on thick, profitable

transatlantic routes where there is high passenger

demand. Norse does charter and ACMI (Aircraft,

Crew, Maintenance and Insurance) charters for

third parties, with a focus on providing such

services at times when demand for scheduled

traffic is lower on routes Norse services on its

scheduled network business.

Norse is able to offer affordable tickets due to its

low cost base, including having secured one of the

enables Norse an unprecedented opportunity to

establish a best-practice and cost-efficient airline

without prior financial restraints. The Company as

at 31 December 2023 has no external financing,

apart from the leases with favourable and flexible

terms. Refer to report’s section of Significant events

subsequent to year-end for information on new loan

secured after year-end.

The Group’s pricing strategy focuses on providing

an unbundled affordable entry level fare and

the fourth quarter of 2023. Norse Premium Class

includes upgraded meal options, priority check-

in and boarding, on-board amenities like pillows

and blankets, and seats with an industry-leading

43-inch pitch. Norse Premium Class aims to offer

customers superior value compared to competing

business class products, by offering an equivalent

travel experience at an attractive price.

Norse culture

Norse believes that our Company culture – Team

and Norway. The Norse values – Inclusiveness,

Ownership and Kindness – have been created by

the Norse employees for the Norse employees

and continue to be the core to our operations and

decision making.

Industry and market

overview

The long-distance market is estimated to constitute

more than 90% of the total airline market, according

global aviation market to be a unique opportunity for

the Company, by having secured what the Company

considers to be attractive lease terms for its aircraft,

capitalizing on the recovery that the Company has

started to witness in the aviation market. According

to IATA, the aviation market for travel between

Europe and North America has by July 2023

recovered to 2019 levels.

Norse has leased out five aircraft to another

have been generating revenue since 1 July 2023,

whereof 10 aircraft are operated inhouse (including

one operational spare) and five on sublease. Two

aircraft return to Norse during Q2 2024 and the

remaining three in Q2 2025, at which point they

will commence operations for Norse. The Company

expects to operate 12 aircraft during summer 2024

and 15 by summer 2025.

A key point in Norse’s network is JFK airport

in New York, at which the Company has been

to secure five daily slot pairs at London Gatwick

for the summer 2023 season at no cost to the

airline. Paris is another key network point for

the Company, though it has chosen to enter the

market cautiously by commencing operating one

aircraft from Charles de Gaulle airport in summer

2023, flying to New York. By summer 2024 the

Company expects to be operating two aircraft

from Paris, serving Los Angeles, Miami and New

York. Together with other untested markets, the

The transatlantic market is dominated by three

large airline alliances – SkyTeam, Oneworld, and

Star Alliance – who by 2023 have 86% market

share, up from 81% pre-Covid (see chart 1, below)

In 2019, 7.6% of the market was provided by

Low-Cost Carriers (“LCC”), of which over 93% of

the LCC traffic was provided by one carrier who

has since exited the market. Due to the exit of

this carrier, the total market share of low-cost

Chart 1: Transatlantic market share measured by flown passenger numbers. Source: Sabre Market Intelligence Source: OAG Schedules Analyser. Important to highlight that some routes only started in the middle (e.g., LON-LAX and LON-SFO) or at

Source: OAG Schedules Analyser.

less revenues than expected.

When it comes to outlook for 2024, we see that

air cargo rates are developing positively during

the first months of 2024 from most of the global

regions, especially from Asia Pacific and from

Middle East & South Asia, strengthened by the

ongoing disruptions to container shipping (red

sea) and elevated demand for cross-border

e-commerce shipments. Overall market demand

develops positively during this period from most

sector.

Norse is a niche carrier with a marginal market

share, and we need to adapt to the given market

conditions to secure our revenue. Due to increased

sales focus and close performance follow-up, in

2024 we aim at improving our performance in the

cargo area compared to that of 2023, both in terms

of tonnage, rates, and overall revenue.

The charter/ACMI market (Aircraft, Crew,

Maintenance, and Insurance) is growing due to the

efficient models. This trend benefits ACMI leasing

as airlines turn to leasing to meet market demands

without significant capital outlays. Airlines or

tour operators gain cost savings and enhanced

operational efficiency. The global demand for air

travel is increasing and is expected to have an

annual growth rate of 9% in the period 2024-2030.

The ACMI and charter market has exhibited

sustained activity throughout the winter season

of 2023/2024 across various regions. Notably, a

Several factors have been instrumental in driving

the demand for ACMI services on a global scale,

such as challenges associated with Pratt & Whitney

GTF engines, scarce availability of aircraft for

dry lease accompanied by escalated lease rates,

scheduled maintenance activities, which intersect

with the aforementioned supply chain challenges,

elevated rates of pilot attrition, delays in aircraft

deliveries and seasonal fluctuations in demand.

Within the European market, our competition

markets for our competitors include the Middle

East, South America, and the Asia Pacific region.

Given trends and the overall availability within

the market, ACMI customers are increasingly

willing to deviate from their typical aircraft types

and product specifications, opening up the ACMI

market further to Norse. Norse’s current share of

the relevant market is below one per cent, and

the market in which Norse can realise its further

potential therefore is significant.

Terje Bodin Larsen Aase Mikkelsen Timothy Sanger

Chairman Member of the Board Member of the Board

inflationary adjustments during the lease term.

Such fixed lease terms are highly favourable

compared to current market rates for the aircraft

type and stand as a notable advantage compared

to prevailing market rates for similar aircraft.

Norse Atlantic strategically leases five aircraft to

another airline, allowing for a gradual phasing-in

of the total fleet of 15 aircraft while generating

aircraft from peak summer 2024 and expanding to

15 by summer 2025.

Now in its second year of operation following first

flight in June 2022, Norse has steadily expanded

its footprint and brand recognition, bolstered by a

strong social media following and favourable media

reviews across markets. Our ethos of facilitating

travellers’ exploration with Norse through value

fares and exceptional onboard offerings resonates

strongly with customers across Europe and the

Atlantic. Year-to-date revenue from segments

sold have increased substantially compared to the

defined by the Board of Directors.

The Company’s Articles of Association are publicly

available under the Investor Relations section of

Company’s website www.flynorse.com.

The Board of Directors will ensure that Norse has a

capital structure that is suited for the Company to

realize its strategies and reach its goals under an

appropriate risk profile. Being a company still in its

build-up phase, the Company’s capital is focused

on being deployed into the establishment and

the growth of the Company’s business activities,

provide authorization to the Board of Directors

to issue new shares of the Company, or for the

Company to re-purchase its own shares. As per

31 December 2023, the Board of Directors had a

3332

2023 private placement of new shares to the

Company. The General Meeting may provide the

Board of Directors with a general authorization,

limited in time and number of shares, to issue new

shares to the Company, when the General Meeting

finds this to be in the best interest of the Company.

occur, the Articles of Association provide certain

rules on compulsory sale and purchase of the

Company’s shares held by shareholders not being

EEA nationals.

The Public Limited Liability Companies Act’s fifth

chapter provides rules on the governing of the

of Association the Nomination Committee shall

have two to four members elected by the General

Meeting. The Nomination Committee currently

has three members, and the General Meeting has

found it appropriate for the Nomination Committee

to currently be headed by the Chair of the Board of

Directors. The General Meeting has provided the

Nomination Committee with instructions on their

mandate, guidelines for their work and rules of

procedure etc. It is for the Nomination Committee

section of Company’s website www.flynorse.com.

Act and established by common Norwegian

business practice. The Company and the unions

have agreed to establish an election committee

and are in the process of electing employee

representatives to the Board of Directors, elected

by and among the employees, expecting such

representation to be implemented on or around

the next Annual General Meeting, scheduled to

number of members should be three to seven. As

mentioned above, the General Meeting however,

has established instructions for the Nomination

Committee providing such guidance.

of Directors appoints the Chief Executive Officer

of the Company. Currently, there is no formal Rules

of Procedure set forth for the Board of Directors,

but rules of procedures/instructions for the Board

The Board of Directors aims to align its work in

accordance with good practices of work by the

Board of Directors.

The Company has established an Audit Committee

with members being elected by and among the

issued instructions for the work to be performed by

the Audit Committee. The instructions say that the

Audit Committee shall have at least two members.

controls are established as appropriate, taking

into account the size and the risk of the business

activities, and the implementation of an internal

audit function is being evaluated as part of this.

Through its Board of Directors, the Company has

adopted an anti-bribery and -corruption policy.

Furthermore, the Company through its Board

of Directors has adopted a code of conduct for

employees and a supplier code of conduct.

The Audit Committee on behalf of the Board

the Audit Committee. The Audit Committee meets

as a minimum every quarter for the review of the

Company’s quarterly financial reports, in relation

to the review of the Company’s annual report,

and in between such meetings whenever deemed

required. The Audit Committee should meet with

the management of the Company and with the

Company’s elected auditor at least yearly, whereas

the common practice is for representatives of

the management and the auditor to attend every

3534

meeting of the Audit Committee. During the

It is for the Nomination Committee to make

proposals to the General Meeting on election of

members to the Board of Directors, and also on

the remuneration of the Board of Directors and

any sub-committees to the Board of Directors.

Members of the Board of Directors are currently

not entitled to any options under the Company’s

long-tern share option program. Disclosure

May 2023. Detail on the long-term share option

program is provided in note 5.2 to the Consolidated

Financial Statements. Detail on the remuneration

of executive personnel is provided in note 6.1 to

the Consolidated Financial Statements. Detail on

shares and options held by executive personnel is

provided in note 19.2 to the Consolidated Financial

Statements. The Guidelines on remuneration for

executive personnel are publicly available under

the Investor Relations section of Company’s

Company’s Chief Financial Officer serves in the

function of investor relations. The investor relations

function maintains regular contact with company

shareholders, potential investors, analysts and

the financial markets in general, and the Board

of Directors is updated on these activities on a

under the Investor Relations section of Company’s

website www.flynorse.com.

Norse does currently not have any specific written

will however not seek to hinder or obstruct any

takeover bid for the Company. If an event of a

take-over bid should occur, the Board of Directors

will comply with relevant legislation and regulations

and consult the recommendations in the NUES

Code of Practice. The Board of Directors may seek

advice from external advisors, e.g. for questions

on legal matters and valuations. Based on the

evaluations made, the Board of Directors will either

recommend that shareholders accept the bid or

Norse has elected RSM Norge AS in the role as its

independent registered public accounting firm, i.e.,

its external auditor. The elected external auditor

is independent in relation to Norse and has been

elected by the General Meeting of Norse. The

external auditor has been engaged to audit and to

issue a report in accordance with law, regulations,

and auditing standards and practices generally

reporting of the Consolidated financial statements

under the regulations of the European Single

Electronic Format (ESEF). The external auditor’s

opinion on the Consolidated financial statements

is presented as part of this Annual Report. The

external auditor is also engaged by the Company

in reviewing, but not expressing any formal opinion

on, the interim financial reports of the Company.

The external auditor is engaged in communication

with management, the Board of Directors and with

the Audit Committee such as advised by applicable

3736

Corporate

Responsibility

us. That is why we believe that cooperating and

partnering with local organizations and authorities

will benefit the communities with which we

interact. Our planes are named after the iconic

national parks of our destination countries.

Collaborating with national parks may be a key

aim is to collaborate closely with these parks,

including initiatives such as employee volunteering.

Working environment,

equality and non-

discrimination

Being an airline, safety is a primary focus for Norse,

and the Company has in place health and safety

violation of law or other reprehensible conduct,

conduct contrary to the Code of Conduct or other

internal policies or procedures, and/or conduct

contrary to ethical norms that are widely accepted

in society, for example dangers to life and health,

unsafe working environment, or personal data

breach. As part of Norse’s safety regulations, the

business. We encourage union representation as

we believe this contributes to a fruitful employee-

employer relationship. Our unique Norse culture

aims to empower all employees to utilize their

the benefit of our customers, shareholders and

work environment. To guide us in our journey

towards becoming the Explorer’s Airline, Team

3938

Compliance with

code of conduct is advocated towards all material

suppliers and business partners. Specific additional

requirements are made in contracts with suppliers

and business partners such as relevant for the

jurisdiction and type of service in question.

Anti-corruption and

regulations in the field and practice a zero-

tolerance policy towards corruption and bribery.

The Company’s has established an anti-bribery and

-corruption policy such as adopted by the Board

Norse recognises the environmental impact

of aviation, which represents approximately 2

percent of global emissions. In alignment with our

commitment to sustainability, we are dedicated to

reducing our carbon footprint while simultaneously

fostering economic growth and job creation. Our

approach centres on the utilisation of a modern

fleet of Boeing 787 Dreamliners, designed to

optimise fuel efficiency and minimize emissions,

committed to transpose to sustainable aviation

fuels as they become commercially viable.

Additionally, we operate direct flights exclusively,

utilising our fleet of Boeing 787 Dreamliners

renowned for their carbon emission efficiency.

Our aircraft accommodate more passengers

than competing carriers due to their higher

density cabins while maintaining a comfortable

and spacious customer experience, resulting in

best-in-class carbon emissions per passenger on

incentivise climate action, including support for

sustainable aviation fuels.

In quantifying our environmental impact, Norse

estimates that our Boeing 787-9 aircraft,

configured with 338 seats, boasts a fuel

consumption per seat of 2.08 litres per 100

kilometres. This efficiency surpasses estimates for

comparable aircraft*, underscoring our dedication

to reducing fuel costs and emissions while

advancing our sustainability goals.

Boeing 787-9 (standard) 2013 304 9,208 km 2.31 L/100km

Airbus A350-900 2013 315 9,208 km 2.39 L/100km

Boeing 777-9X 2020 395 13,300 km 2.42 L/100km

Airbus A330-900 2017 300 8,610 km 2.48 L/100km

Airbus A350-1000 2016 367 10,243 km 2.58 L/100km

Airbus A330-800 2017 248 8,610 km 2.75 L/100km

Boeing 787-8 2011 243 8,610 km 2.77 L/100km

Boeing 747-8 2011 467 11,000 km 2.82 L/100km

Boeing 777-300ER 2003 382 10,199 km 2.90 L/100km

Boeing 777-200ER 1996 301 11,000 km 3.08 L/100km

Source: Various sources, all summarized at https://en.wikipedia.org/wiki/Fuel_economy_in_aircraft

and approved by the regulators, namely: ICAO

‘CORSIA’, EU ‘ETS’ and the UK ‘ETS’. Subsequently,

the annual emissions reports covering all 2022

flights were prepared, independently verified and

submitted. Carbon allowances were purchased

for surrender in April 2023. A total of 4,237 EU

ETS allowances were purchased amounting to

Euro 389,253 and 3,618 UK ETS allowances

were purchased amounting to GBP 287,483. The

carbon offsetting requirements in relation to 2022

and accumulating 2023 CORSIA emissions.

Norse has implemented the EU Taxonomy

disclosure such as set forth by the EU Regulation

2020/852 and the Delegated Acts. The regulation

establishes the criteria to determine whether an

economic activity qualifies as environmentally

sustainable. The EU Taxonomy delegated

acts define specific activities that potentially

could be sustainable (eligible activities). If the

activity contributes substantially to one or more

is sustainable (eligible-aligned).

aircraft, and hence 98% of the Company’s activity

measured in size of revenue, are defined as

eligible activities. The only economic activity of the

Company being a non-eligible activity, is that of

rendering maintenance services to other airlines.

The abovementioned eligible activities of Norse

have mostly the same technical screening

criteria in deciding substantial contribution to

environmental objectives. None of the activities

do currently meet the screening criteria and are

hence classified as eligible-non-aligned. The

Company’s current fleet of aircraft may in principle

meet the technical screening criteria of all of the

OpEx to be reported on for the entity’s economic

activities in accordance with mandatory reporting

templates. Following the above, under these KPIs,

currently no Turnover, CapEx or OpEx is allocated

to sustainable activities such as they are defined

under the EU Taxonomy.

Refer to note 23 for further details on the EU

Taxonomy and reporting on KPIs.

Transparency Act

The Company is obliged and committed to

comply with the Norwegian Act on enterprises’

transparency and work on fundamental

on the Company’s website once approved by the

yearly statement in June 2023, and will publish an

updated statement no later than 30 June 2024.

4342

Financial Statements

50 Notes to the Consolidated

Financial Statements

94 Notes to the Parent Company

Financial Statements

Revenue 4 439,436 104,269

Fuel, oil and emission costs (152,527) (61,793)

Airport charges and handling (67,153) (19,537)

Technical maintenance (66,493) (20,482)

Other operating costs (33,999) (2,687)

Marketing and distribution costs (23,343) (6,211)

Administrative costs 7 (14,143) (9,419)

Total Operating exps excl. leases, dep & amort. (457,417) (164,591)

Operating profit before leases, dep & amort. (EBITDAR) (17,980) (60,323)

Variable aircraft rentals (33,139) (27,263)

Depreciation and amortization 11, 12 (84,103) (58,517)

Diluted earnings per share (USD)

of Comprehensive Income

of Financial Position

4746

Non-current assets

Aircraft and other tangible assets 11 898,856 939,997

Intangible assets 12 3,324 2,801

Aircraft lease deposits 13 16,048 15,596

Other current assets 13, 17 22,770 9,040

Cash and cash equivalents 13, 18 54,830 69,709

Total current assets 147,631 117,202

Total assets 1,083,136 1,090,240

Equity and liabilities

Equity

Share capital 19 62,954 29,945

Share premium 198,065 162,560

of Cash Flows

Share-based payments to employees 5.2 309 -

Income taxes paid 10 (144) -

Net operating cash flows before working capital movements (44,609) (90,862)

Working capital movements 24,051 22,223

Net cash flows from operating activities (20,558) (68,639)

Cash flows from investing activities

Aircraft maintenance assets (3,963) (14,643)

Aircraft preparation investments - (1,603)

Net investments in financial assets - (893)

of Changes in Equity

4948