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Erik Braathen’s Flyr airline started on the first day of operations with a 20 percent increase from the start, compared to the issue price of five crowns. After a few hours of trading, the stock was among the most traded and was up almost 30 percent to 6.49 kroner tops.
Prior to this, investors such as Jan Petter Sissener, Øystein Stray Spetalen and Arne Fredly had contributed money in connection with raising capital at NOK 5 per share.
Later Monday, Principal Owner and President Erik G. Braathen gave a video presentation along with Flyr CFO Brede Huser. They believe that an estimate of ticket prices before the crown is “conservative”, and did not comment on warnings of a price war in the exit of the pandemic.
“Pretty conservative”
In the listing-related prospectus, Flyr states that it has been in contact with about 60 leasing companies in their search for aircraft.
The company will have between 28 and 30 aircraft in the fleet within three years.
Flyr has previously said that it will have a cost advantage because it can book flights with cheap deals in the crown crisis. But it doesn’t help much with the low costs if the income is too low. Several experts have predicted a massacre in the Norwegian hinterland after the crown with an aggressive price war, where there is a risk that Do not players earn money, because the number of competitors on the main routes increases from two to four.
NHH professor Frode Steen noted that in that case, the cash will flow quickly out of the companies, also at Flyr.
Flyr, for its part, expects to have a positive cash flow from operations in year 2, that is, 2022.
Plans state that Flyr has budgeted with ticket prices of just over NOK 600 each, one way, on average. This is a level that is anticipated both this year and in the coming years. It is roughly the same as the income level of various companies before the crown, such as Hungary’s Wizz Air and Britain’s Easyjet. Norwegian and SAS had somewhat higher ticket prices before the crown, but they also had many more international flights at higher price levels.
CFO Huser commented on the level of revenue in the budget on Monday:
“We think we have been quite conservative there,” Huser said.
Braathen did not comment on the danger of a price war when a caller asked what could lead to the company having to raise more money from shareholders.
– We have modeled it on the basis that we will be able to manage with this capital. It has to be if we want to accelerate much faster, but we think this is a good capital base for the activity we anticipate, says Braathen.
Higher prices than Norwegian
They expect a positive operating profit before finance, lease and tax (ebitdar) in year 2, and an ebitdar margin of “at least” ten percent.
Flyr has budgeted with ticket prices of just over NOK 600 per piece, one way, on average. This is a level that is planned for both this year and the next. This will give an income per kilometer sold, the so-called yield, of NOK 0.72 in year 3 (2023). This is significantly higher than what Norwegian has been able to point out on its route network in Norway and abroad.
Norwegian’s performance in 2012, the last year before launching long-haul flights, was NOK 0.55. In 2019, including long distance, it had fallen to 0.41 crowns. Both revenue and cost levels will automatically drop with longer routes compared to shorter routes, but Norwegian has not been profitable for many years and revenues have not been high enough.
Flyr expects to have 7.9 million passengers in year 3, when it expects to reach 28 aircraft in the fleet, and have routes to many destinations in both Norway and southern Europe.
Flyr has made an overview of unit costs on various airlines, compared to himself. Flyr expects to achieve a cost of between SEK 0.40 and 0.45 per seat-kilometer, excluding fuel (CASK without fuel) shortly after take-off. This is the same level that the British low-cost giant Easyjet had before the crown. It’s also comparable to Norwegian, which was somewhat lower before the crown, but also had a significantly longer average duration per flight.
The issue price, ie the price that investors pay per share in raising capital, was set at NOK 5. It costs Flyr a total of 750 million kronor.
Flyr will be based at Oslo’s Gardermoen Airport and the first flight is scheduled for June 1.(Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases via a link, which leads directly to our pages. Copying or other use of all or part of the content may only be done with written permission or as permitted by law. For more terms, see here.
