NORWEGIAN AIR SHUTTLE ASA

ANNUAL REPORT 2021
NORWEGIAN AIR SHUTTLE ASA

2NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

CONTENTSLETTER FROM THE CEO

3

BOARD OF DIRECTOR'S REPORT5

FINANCIAL STATEMENTS

16
CONSOLIDATED

17

PARENT COMPANY

64

ANALYTICAL INFORMATION83

CORPORATE RESPONSIBILITY

86

ENVIRONMENTAL SUSTAINABILITY

92

CORPORATE GOVERNANCE

95

DECLARATION FROM THE BOARD OF DIRECTORS AND CEO

100

AUDITOR'S REPORT

101

BOARD OF DIRECTORS105

MANAGEMENT

108

DEFINITIONS AND ALTERNATIVE PERFORMANCE MEASURES

110

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NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

LETTER FROM THE CEO
2021 presented new hopes and renewed
challenges across the aviation industry due
to the global COVID-19 pandemic.
Norwegian went through a dramatic
positive transformation which culminatedin the business restructuring debt liabilities
and strengthening the financial capital of
the Company. We have now created abusiness that is fit for purpose, ready andable to adapt to an evolving trading
environment as the world begins to once
again look to travel for both leisure andbusiness.

As part of our business plan in 2021, we
pledged to resize our fleet while
introducing flexible leasing options such as
power-by-the-hour. We operated anaverage of between 15 aircraft in the firsthalf of the year, increasing to a peak of 49
in the latter half. This flexibility has allowed
us to robustly protect our financial position
while adapting to market demands. A
business can only survive if it can adapt tochanging market conditions, and I am proud
to say that our agility to react quickly has
been the envy of some of our competitors.

Norwegian reported an operating loss
(EBIT) of NOK 2,786 million, compared to aloss of NOK 23,768 million in 2020. The
Company’s total revenue in 2021 was NOK
5,068 million, a decrease of 44 percent
compared to a year earlier. From April
through to June we operated between eightand 15 aircraft on selected routes.
Throughout the summer and beyond, once
travel restrictions were eased, we operated
33 to 49 aircraft across Europe, ending theyear with 51 aircraft in our fleet.

Norwegian has a proud history of
implementing the latest sustainable
solutions in order to lower emissions acrossour business. These efforts continue today.
From ongoing targeted training for ourcolleagues and pilots to using innovativetechnology and modern fuel-efficient
aircraft both now and in the future, we are
not only reaching our sustainability goals,
but we are also ensuring that one of ourprimary costs, aviation fuel, is reduced.

2021 – THE YEAR THAT DEFINEDTHE NORWEGIAN OF THE
FUTUREThe successful completion of both the
Examinership
andReconstruction
processes in Ireland and Norway, followedby the subsequent capital raise, marked a
new era for the Company. As a result, we
could now focus on the future of ouroperations and return to our core
principles of offering good value andexcellent service. Over the past year, wehave steadily rebuilt our network to key
European destinations as passenger
demand increased. I am especially pleased
that we reopened our bases in Stavanger,
Bergen and Trondheim, welcoming backcolleagues who remained committed to
Norwegian throughout this difficult period.
The bases in Copenhagen and Helsinki werereopened in 2021 as well. We have alsocommenced pilot and cabin crew
recruitment processes across Scandinavia
as we look to strengthen our presence inthese markets. Norwegian remains a vital
contributor
tolocal
Scandinavian
economies from employment opportunities

to supporting tourism and businesses, andwe remain committed to fortifying ourposition across the region.
Passenger demand and bookings steadily
increased over the latter half of the year as
travel restrictions eased. As a result, I wasespecially pleased to be able to remove thetemporary restrictions placed on our
Reward program and fully reopen thescheme to our customers. The importanceofcustomerloyaltycannotbeunderestimated, and we will look tocontinuously
improveourrewardprogramme and products to provide
customers with offers and services thatthey truly value.

NORWEGIAN TODAY – READY
TO FACE NEW CHALLENGESAND SEEK NEW OPPORTUNITIESNorwegian was, as the aviation industry
world-wide in general, exposed to theeffects of the COVID-19 pandemic when
our industry effectively shut down globallyin 2020. Yet, we have defied the negative
predictions of some who assumed that
Norwegian would be a casualty andpotentially no longer in operation. In fact,4

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

the opposite is now true, we have created aCompany that is resilient, focused, agile,lean and efficient.
We have already surpassed many great
milestones, notably reduced our debt
liability and rightsized our fleet andoperations. The challenges that we faced
were surmounted, but my commitment to
Norwegian is not solely focused on the
Company surviving past the impact of the
COVID-19 pandemic. As I look to the future,
I see a path to sustainable and profitable
growth that will benefit our shareholders,
employees, and local economies.
We will continue to invest in our people, ourproduct in the air and on the ground andlook to renew and grow our fleet withmodern more fuel-efficient aircraft. We
will seize opportunities in markets that wecurrently serve and look to expand our
network to other profitable destinations.
Through an improved cost base, increased
seasonal flexibility and a strong balance
sheet, the Company is strongly positioned
to compete head-on with all market
competitors.
Wewillcontinue
implementing lean processes across thebusiness to ensure that we remain ahead of
the competition.
For many of our customers, the desire totravel has been heightened by the events of
the last two years, and Norwegian is now
well placed to be the airline of choice forcustomers seeking value and excellent
service. Demand may once again fluctuate
due to potential future travel restrictions,but we are now better prepared than wehave ever been to face these hurdles headon and provide our customers with aservice and brand that they can count on.

As I proudly reflect on our achievements
over the last year, I would like to thank ourdedicated colleagues, shareholders andsuppliers as we continue to strengthen ourpresence across the Nordics and key
markets.

/s/ Geir Karlsen
Chief Executive Officer

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NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

BOARD OF DIRECTORS' REPORT
Throughout
2021,
Norwegianhas
continued to focus on reducing costs andrestructuring the airline to enable it tobecome a stronger, more resilient andfocused entity to the benefit of allshareholders, customers and employees.
The ongoing global impact of the COVID-19
pandemic and subsequent international
travel restrictions presented the Company
with continued operational challenges that
only began to be alleviated from the spring
onwards. Norwegian reported an operating
loss (EBIT) of NOK 2,786 million,
representing an improvement of NOK
20,982 million compared to 2020. Revenue
decreased by 44 percent in 2021 with anassociated increase in yield by 21 percent
and a decrease in load factor of 2.4
percentage points to 72.8 percent. The ontime performance was 89.9 percent. The
airline’s CO2 emissions per passenger werealso impacted negatively due to the drop in
passenger demand and shorter flight
distances when compared to the previous
year. CO2 emissions increased by 6 percent
to 89 grams CO2 per passenger kilometre.
Around 6.2 million passengers flew with
Norwegian in 2021, a decrease of 10
percent compared to 2020. The decrease
was dampened by the lifting of COVID-19
related global travel restrictions from thesummer onwards.
In 2021, the capacity, measured by available
seat kilometres (ASK), was 48 percent lower
than the previous year. The reduction in
ASK compared to previous years was driven
by the drastic reduction in flight operations
due to the global COVID-19 pandemic, thediscontinuation of the Company’s longhaul operations and the resizing of theCompany’s fleet and organisation following
the restructuring.
During the first quarter of 2021 theCompany operated an average of between
eight and fifteen aircraft, as demand
steadily grew this rose to between 33 and49 aircraft during the peak season. At year
end, the Company had an operational fleetof 51 Boeing 737-800 aircraft.
In March 2021, Norwegian received court
approval for the examinership process in
Ireland, which was soon followed in April bycourt approval in Norway for the respective
reconstruction process. These importantmilestones allowed the Company toannounce a subsequent capital raise withan upper limit set to NOK 6 billion. During
the month of May, the Company formallyexited the financial restructuring processes
and announced the positive conclusion of
the capital raise. The result led to a
substantial reduction in total liabilities anddebt to approximately NOK 16 billion, of
which approximately NOK 5 billion being
aircraft related debt. The cash position of
the Company was also dramatically
improved to more than NOK 7 billion.
As international travel restrictions began to
be lifted entering into the summer period,
Norwegian reported six consecutive
months of positive passenger growth as
demand continued to increase month on
month. October saw over one million
passengers travel with Norwegian, whichbrought to a close a busy and successful

summer season. During the summer
months the Company ramped up
operations serving 18 domestic and 35
international routes in July and August. Key
destinations included Spain, Greece andCroatia following pent-up demand andbookings from all Nordic markets.
Our winter flying schedule for the second
half of 2021 had already been reduced inlight of traditionally weaker demandcompared to the summer months. The
rapid spread of the omicron virus variant
andsubsequent
reinstatementofinternational travel restrictions at short
notice meant that further capacity
reductions were necessary. The agility andadaptability of the Company to rightsize
operations due to lower demand across ourmarkets reduced the financial andoperational impact during this period.
In June, as demand and forward bookings
continued to increase month on month, theCompany reopened its base in Denmark
and announced that 200 pilots and cabincrew would be hired in Copenhagen.
Improving market conditions and positive
long term forecasts showing passenger
demand beginning to return to prepandemic levels led the Company to reopenits bases in Stavanger, Bergen andTrondheim in October.
In August, the Company released its
summer 2022 flying schedule with a strong
focus on Nordic markets with a planned
ramp up of routes to key European
destinations. Around 260 routes were
published for sale with a planned increasein fleet size to 70 aircraft, including theaddition of two Boeing 737 MAX aircraft
announced in December.
From November, Norwegian removed all
temporary restrictions on the use of
CashPoints under its loyalty programme,
Norwegian Reward. The loyalty programme
remains an important part of the Norwegiancustomer proposition and had as of the endof the year close to nine million members.
The validity of CashPoints due to expire in
2021 were extended to 31st December 2022
to allow customers to utilise their points
across the network.

KEY EVENTS 2021
• In January, Norwegian announced a new
business plan focusing on profitable key
Europeandestinations
andthediscontinuation of all long-haul services• In late March and early April, therespective
Examinership
andReconstruction processes in Ireland andNorway were approved, allowing theCompany to prepare the process ofraising new capital• In May, Norwegian announced the positive
results of the capital raise, including theRights
Issue
Offer
which
was
oversubscribed by 395 percent• The month of May also marked anothermilestone, as the Company emerged fromfinancial restructuring with a significantly
reduced total debt liability and a strong
cash position• In June, Geir Karlsen, formerly Chief
Financial Officer of Norwegian, was

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NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

appointed as the new CEO withimmediate effect• Late June, the Copenhagen base wasreopened, and the process of hiring 200
pilots and cabin crew was initiated• In August, Norwegian announced the full
Summer 2022 schedule, encompassing
around 260 routes to key European
destinations• In October, Norwegian reopened bases in
Stavanger, Bergen and Trondheim in
response to a steady increase inpassenger demand over a number ofmonths• The month of October also marked thereturn from furlough of all pilots andcabin crew in Norway• Also in response to improving market
conditions, Norwegian removed all
temporary CashPoints restrictions andreopened the Norwegian Reward loyalty
programme in its original form from
November• In November, the reopening of theHelsinki base was announced• In December, Norwegian announced thatit had entered into an agreement to lease
two Boeing 737 MAX 8• Also in December, Norwegian proudly
announced that the collaboration
between the Company and UNICEF
Norway would be extended for anotherthree years.

GROUP OVERVIEWNorwegian Air Shuttle ASA (“Norwegian” or“the Company”), the parent of theNorwegian Group (“the Group”), is
headquartered at Fornebu in Norway, justoutside Oslo. Norwegian has a leading
position in the Nordic market, operating
short-haul point-to-point flights within theNordics and from the Nordics toContinental Europe. At year-end 2021, theCompany and its subsidiaries employed
3,310 staff at its headquarters and its nine
operational bases across five countries.
Figures include apprentices and temporary
employees in administrative positions.
Norwegianhas
additional
branchregistrations
accordingtolocal
requirements in the operating regions.

BUSINESS STRATEGY
Norwegian has long been recognized as anindustry leader in low-cost travel, winning
numerous awards during its close to 20
years in operation. The Company builds on
this foundation when refocusing its
strategy. The Company’s renewed strategy
builds on its core Nordic business and tooperate a European short-haul networkwith narrow-body aircraft. The airline willcontinue to meet its customers’ needs byoffering affordable fares for all across a
broad range of attractively scheduled
domestic routes in Norway, Sweden,
Denmark and Finland, routes across theNordics, and routes from the Nordics to key
European destinations.
Since
2018,
Norwegianhas
been
progressing well shifting the strategic focus
from growth to profitability and has taken
major operational and financial measuresthat allowed the Company to guide on a
positive net profit in 2020. As society
overall, and in particular the aviationindustry, suffered from the consequencesof the COVID-19 pandemic, Norwegian wasforced to ground a significant part of its
fleet due to government-imposed travel
restrictions and lack of demand, and took
drastic measures immediately to preserveliquidity and navigate through the crisis.
During this period, the Company has seized
the opportunity to completely restructure
and re-create a strong, investable airline
with a new strategy and business plan.

ROBUST FINANCIAL PLATFORM
The restructuring has allowed the Company
to rightsize the network and fleet aroundthe profitable core Nordic business andgive financial headroom to maneuver
through the pandemic until demand
recovers. In addition, both phases of therestructuring seek to lower financial andownership costs and thereby creating an
economically sustainable platform for theCompany for the benefit of all
stakeholders. The Phase 2 Restructuring
was successfully completed in May 2021.

STRONG NORDIC-FOCUSED NETWORKThe new short-haul network is an
optimized, consolidated version of the
network Norwegian has developed andrefined since the beginning in 2002 with acore Nordic footprint. Over the past two
years, the Company has rationalized theroute portfolio and the new network of
300+ routes encompasses the historicallystrongest-performing
routeswhile
maintaining the presence and connectivity
that our customers highly value. PreCOVID, Norwegian was the leading carrier
for leisure-oriented traffic in the Nordics
and the second largest on domestic & intraNordic flights, and the new network is
designed to defend and strengthen thisposition. Furthermore, changes are madeto deliver a more efficient operation with afocus on the most popular destinations andthe largest traffic flows.
Importantly,

sufficient scale allows the airline tomaintain a clear cost advantage versus its
closest peers and potential new entrants.
The long-haul network was in January 2021
decided to be terminated following the
economic rightsizing of the fleet and theCompany.

COMPETITIVE COST BASE
A low-cost operating model with reduced
complexity, higher reliability and, mostimportantly, a rightsized and competitive
cost base, is the Company’s fundament tocontinue to provide affordable fares to all.
The airline will leverage and strengthen its
cost advantage going forward, boosted by
the effects obtained in the restructuring
and with a clear strategic priority in further
improving cost-efficiency and reinforcing
cost control. Through the hibernation
period, the airline has reviewed its entire
operational setup, processes and sourcing
practices and has emerged as a streamlined
Company devoted to its core business.
Clear efficiency-gains are realized from
improved asset and resource utilization,
concentrated network, and reduced
overhead. This model allows Norwegian tocompete effectively on price versus legacy
carriers, on scale versus new entrants andwith a superior quality offering than what
the ultra low-cost carrier (ULCCs) airlines
offer. Maintaining and improving on thiscompetitiveness, by striving every day forincreased cost-efficiency in combination
with a customer offering of high quality, is
key to the Company’s DNA.

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NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

ATTRACTIVE CUSTOMER OFFERING
Norwegian will leverage its brand value andcustomer satisfaction to continue to be thepreferred option for those who seek anaffordable
alternative
without
compromising on quality.
It is thecombination of the competitive cost baseand the strong customer value offering thathas been and will continue to be
Norwegian’s winning formula. Norwegianstrives to deliver customer value across theentire customer journey; at the very start of
the journey by being top-of-mind and first
choice for leisure and business travelers,
followed by a hassle-free booking
experience across a rich set of booking
alternatives at your choice, a smooth
check-in and boarding process, a pleasantinflight experience with excellent customer
service by our professional crew, and by
on-time arrivals.
In addition, Norwegian will continue todevelop and leverage the unique andaward-winning Reward program, with overfour million members in the Nordics, tocreate customer value and enhanced
customer loyalty. This will be enabledthrough new and existing partnerships andinnovative service- and product offerings.

HIGH-PERFORMING ORGANIZATION
Increased labor efficiency following a redesigned, more crew-friendly network
allowing for a right-sized base structure,
will increase utilization and reduce
operational costs. The Company will bebetter positioned to manage seasonality
through a leaner organization and more
flexible arrangements.

Importantly, Norwegian has a very
dedicated, experienced workforce with astrong fighting spirit. Norwegian Crew areconsistently receiving high scores incustomer experience surveys. Norwegianwill continue to build a strong employer
brand that will be a competitive force toattract and retain top talent andcompetence vital to succeed in a postCOVID-19 environment.
Norwegian has a strong organization andgovernance structure with an experienced,
dedicated executive team and redesigned
management levels building on key
performers and new talent. To support the
new organization, a modernized andflexible backbone will boost productivity
throughselectIT
investments,
development of new business centers andrigorous supply chain management.

CORE VALUES
Due to the change in strategy, the new
business plan and the introduction of the
new mantra “Your Smart Move” theCompany have started, in collaboration
with different employee groups, to define
and determine the desired behaviors andvalues that should shape our culture for the
future and enable us to deliver on ourcustomer brand.

CORPORATE STRUCTURE
The Norwegian Group consists of theparent company, Norwegian Air Shuttle
ASA, and its directly or indirectly owned
subsidiaries in Norway, Sweden, Denmark,Finland, Ireland, Spain, Latvia and theUnited States.

The Group has structured its operations
and different functions into several entities
with the purpose to have an organizational
structure that maintains Norwegian’s
flexibility and adaptability considering theCompany's strategy. The respective
companies offer permanent employment,with terms & conditions in accordance tolocal markets, laws and regulations.
The Group does not report profit per entity,
as the Executive Management considers thebusiness as one operating segment, lowcost air passenger travel. The Group’s
operating profit comes from airline-related
activities and the aircraft fleet is theGroup’s main revenue generating asset,
which is utilized across the Group's
geographical segment.
The Group’s organization is further
organized into five functional businessareas:• Network, Pricing & Optimization• Product & Digital Development• Marketing, Sales & Customer Care
• Operations• Support Functions

NETWORK, PRICING & OPTIMIZATIONThe objective for the business area is to
optimize the P&L for the airline throughnetwork, pricing and operations planning.
This is achieved through the developmentof the network strategy and allocation of
aircraft not just for the commercial
production, but also cargo and charter,
through ongoing route management.
Committed focus is given to airline
planning, which is broken down into fleet,andoperations
planning,schedule

development, slot strategy
resourcing optimization.

and

crew

PRODUCT & DIGITAL DEVELOPMENT
The business area primary objective is todeliver superior user experiences acrossdigital and physical touchpoints, and to
maximize value from ancillary products,
inflight sales, partnerships and the loyalty
program. Product & Digital development
was introduced to increase focus onrevenue development of ancillary services
as a key contributor to the business plan, toconsolidate management and developmentof all products in one unit, and to ensurethat Norwegian is delivering a friction-freeand personalized user experience acrossthe travel journey. By combining productswith digital development we aim to increase
focus on the digital customer experienceand to position Norwegian as a digitalleader in the travel industry.
The business area consist of the following
areas:• Product Management: Secure great
product experiences for travel ancillaries,
drive revenue growth, and introduce new
products
andconcepts
inthemarketplace• Loyalty & Memberships: Secure a
profitable and industry-leading Reward
program with close to nine million
members and maximize revenues frompartnerships• In flight Retail: Deliver an attractive
product offering and inflight experiencethat promotes a profitable retail
operation in the air

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NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

• Digital channel development: Develop
conversion-oriented, friction free andbest in class user experiences
As Tor-Arne Fosser, EVP Product & Digital
Development, left the Management Groupin April 2022, the Product & Digital
Development business area will beconsolidated within Network, Pricing &Optimisation and Marketing, Sales & andCustomer Care.

MARKETING, SALES & CUSTOMER CARE
The business area seeks to optimize sales,
distribution and marketing in all channels,
drive the eCommerce operation and takecare of our customers with timely and highquality information in order to attract,
engage and support customers throughout
the entire customer journey. An important
aspect is managing and developing thebrand with a focus on aligning brand efforts
across the business to maximize investment
and marketing impact while reducing costs.
Developing a strong and consistent brandacross the business supports Norwegian’s
aim
todeliverpositivecustomerexperiences in Europe.

The parent company Norwegian Air Shuttle
ASA (NAS), based at Fornebu, outside Oslo,
Norway, holds one of the AOCs. The fully
owned subsidiaries Norwegian Air Norway
AS (NAN), based at Fornebu, Norway, andNorwegian Air Sweden AB (NSE), based in
Stockholm, Sweden, each have an AOC.
Norwegian's commercial airline activities
have been operated through local bases in
the following countries: Norway, Sweden,
Denmark, Finland and Spain. The basestructure has been consolidated as a resultof the new business plan.
Red Handling carries out ground handlingservices and is established in the UK andSpain. Red Handling UK Ltd. which provided
ground handling services at London
Gatwick Airport (LGW) was closed on 31st
December 2021 and handling at London
Gatwick has been subcontracted to Fenix
Logistics as part of a long term agreement.
Red Handling Spain S.L provides groundhandling services at Barcelona Airport(BCN), Alicante Airport (ALC), Palma de
Mallorca Airport (PMI), Málaga Airport (AGP)and Las Palmas Airport (LPA).

SUPPORT FUNCTIONSOPERATIONSAt year-end 2021, Norwegian had three
airline operators in two different countries,
each holding a unique national air
operator’s certificate (AOC). Each AOC isunder the supervision of the civil aviation
authorities in their respective country. The
AOCs exist to give the Norwegian Group
broad market access and have now been
fully aligned with the new business plan.

The Group has four important support
functions: Finance & Control, People, IT &Business Services and Communications &Public Affairs.
The Finance & Control business area
oversees the Group´s asset companies,
which are organized in a set of subsidiaries
based in Dublin, Ireland. Arctic Aviation
Asset DAC is the parent company. The
business area handles aircraft financing,leasing and ownership.

MARKET CONDITIONS
The financial year 2021 began with the
COVID-19 pandemic entering its second
wave with infection rates spiking across allof Norwegian's core markets. Lockdowns
and strict travel restrictions were imposed
affecting demand negatively. As aconsequence of the second wave and thefinancial
restructuring
processofNorwegian, the Company operated a small
network during the first quarter with only
nine to ten active aircraft. The operationconsisted primarily of domestic routes in
Norway with some routes receiving
financial support by the Norwegian
government.
As the infection levels receded going into
the summer season Norwegian scaled
production back up to meet the increase indemand. The capacity and demand
continued to increase throughout thesummer and fall peaking in October until
the aviation sector again was faced with thechallenges from the Omicron mutation.
This led to new rounds of governmentimposed lockdowns, travel restrictions andsubsequent negative impact on demand.
Norwegian ended the year with a fleet ofaround 50 operational aircraft however theutilization of the fleet was adapted to thesofter demand environment towards theend of the fourth quarter.
Norwegian is scaling the fleet up to 70
aircraft by summer 2022 in line with theanticipated recovery of demand. For the2022/23 winter season, 19 aircraft will haveflexible power by-the hour (PBH) terms toallow the Company to adjust capacity in linewithseasonal
demand.
Carefulconsiderations will be made to align the re-introduction of aircraft into production
with sufficient passenger demand.
Going forward, Norwegian will continue toserve its four core source markets of
Norway, Denmark, Sweden and Finland witha balance of intra-Nordic and domestic
routes and routes to key cities and popular
leisuredestinations
acrossEurope.
Norwegian holds a strong position in thesemarkets and will offer a wide and relevant
product to customers flying to, from andwithin these markets in the future.
Despite the global pandemic, competitionin the Nordics has intensified. We haveseen several competitors use the pandemic
as an opportunity to enter the Nordic
market, and while some have exited, we
expect a period of overcapacity before theNordic aviation market stabilizes again.
Norwegian is well placed to compete
against both new entrants and establishedcompetitors, offering higher value than any
other carrier in the market; Norwegian’s
cost base is significantly lower than that ofits legacy competitors, allowing Norwegian
to
offer
more
competitive
fares.
Additionally, Norwegian’s core productoffering, including the breadth and depthof its network, and its local brand value are
far stronger than those of any new entrants.

SAFETY AND COMPLIANCE
The operational focus is always on safety
and compliance. Safety underlies all
activities governed by our three airlines:
Norwegian Air Shuttle ASA, Norwegian Air
Norway AS and Norwegian Air Sweden AB.
Our safety standards are based oncompliance to the regulations and to our9

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

internal
documentation,
managedaccording to the Safety Management
System principles and have dedicatedsafetydepartments
andquality/compliance departments. The directors ofboth departments report directly to theaccountable manager of their respective
airline.
The international dimension of Norwegianas a company brings new cultures and newchallenges to the operation. Norwegian
meets these challenges proactively, as partof the Management of Change, byconducting change impact assessments
and safety risk assessments to ensure thatto the highest degree possible, hazards are
identified, and associated risks areadequately managed. Norwegian’s safety
culture is derived from industry bestpractice and learning and in accordancewith the European Plan for Aviation Safety,
EPAS.
The four pillars of SMS (Safety Management
System) are:
1.
2.
3.
4.

Safety policy and objectives,
Safety promotion,
Safety risk management and
Safety assurance.

Norwegian places substantial emphasis on
its safety culture as a key safety tool, andthe Norwegian Safety Management System
is underpinned by a strong reporting
culture, which is used to provide early
identification of hazards, permitting
opportunity to prevent escalation toaccident or incident. It is also used tomeasure trends to be able to be proactiveof implementing corrective actions or
mitigating factors in the safety work.

The reporting culture is built on thefoundation of “just culture”, and a “learning
culture”. “Just culture” is a culture in which
front-line operators and others are notpunished for their actions, honest
mistakes, missions or decisions taken bythem which match their experience andtraining, but where gross negligence, willful
violations and destructive acts are nottolerated. The knowledge Norwegian gains
from its safety reporters is used to ensure
continualsafetyimprovement.
The
Norwegian code of ethics, applicable to all
personnel, welcomes and ensures that all
cultures amongst the Norwegian family
experience respect and recognition in theworkplace.
Allchangesindocumentation
ororganizational changes are subject to a
management of change process. The
Company has an active hazard register andperforms risk analysis to support safetymeasures and managing changes. Changes
are documented and the effectiveness ofthe mitigations of risks are regularly
reviewed for effectiveness in a predetermined set review loop.
A collaborative, cohesive and proactive
approach to safety across the NorwegianGroup is recognized and accepted as
essential to the business. Accordingly, thesafety directors drive harmonized systems
to deliver risk management and safetyassurance, and the accountable managers
and nominated persons ensure safety
lessons from one part of the airline isutilized across the group to ensure theGroup learns and develops from a common
set of data. Safety management systemtraining is provided to all personnel, andspecialist safety personnel receive internaland external training applicable to theirrole.
Norwegian moved from 2021 into 2022 withno fatal accidents since its inception in
1993. The Group had no critical personnel
injuries during 2021. The safety is managed
to a degree at and above regulatory
requirements utilizing cutting edge safety IT
systems fed with data from highly
competent and well engaged personnel.
In order to ensure compliance with theEuropean Union Aviation Safety Agency(EASA)
regulations
thecompliancedepartments perform audits of bothinternal functions as well as contracted
providers within all operational areas. The
focus going forward is to develop predictive
methods to manage safety.

AIRCRAFT MAINTENANCE
Each national civil aviation authority has
approved
theAOCs’
maintenanceorganization (CAMO) and maintenanceprogram (AMP).
The Company has a Maintenance Repair
Organization (MRO) organized under
Norwegian Air Shuttle ASA. The MRO
delivers maintenance services to the AOCs
in Norwegian for aircraft through a direct
agreement with the AOCs.
Major airframe and workshop maintenanceare performed by external sources subject
to approval by the European Aviation Safety
Agency (EASA) and the national aviation
authorities. Airframe (base) maintenancefor the 737 fleet is currently carried out by
Lufthansa Technik in Budapest, Hungary.
Lufthansa Technik are undertaking theengineandcomponent
workshopmaintenance. On the 787 Trent 1000
engines, engine shop maintenance wascarried out by Rolls Royce covered under a
Total Care agreement between Norwegianand Rolls Royce.
All maintenance, planning and follow-up
activities, both internally and externally, areperformed according to both the
manufacturers’
requirements
andadditional internal requirements, and are in
fullcompliancewith
authoritativeinternational regulations. The Group carries
out initial quality approval, as well as
continuously monitoring all maintenancesuppliers. All supplier contracts are subject
to approval and monitored by the national
aviation authorities.
2021 finally saw the Boeing 737 MAX being
approved to operate in Europe again,
although not operated by Norwegian as
most aircraft were in the process of being
returned to their lessors. Multiple enginechanges were required on the 787’s asthese aircraft were returned to theirlessors. The MAX was grounded in March
2019 because of two fatal accidents
involving the aircraft type, on 29 October
2018, Lion Air Indonesia and the other on 10
March 2019 involving Ethiopian Airlines,
with the tragic casualty of 346 people.

FINANCIAL REVIEWNorwegian reports consolidated financial
information compliant to the International
Financial Reporting Standards (IFRS) as
adopted by the EU.
The preparation of the accounts andapplication of the chosen accounting

10

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

principles involve using assessments andestimates and necessitate the applicationof assumptions that affect the carrying
amount of assets and liabilities, income andexpenses. The estimates and the pertaining
assumptions are based on experience andother factors. The uncertainty associatedwith this implies that the actual figures may
deviate from the estimates.
Maintenance reserve obligations, and therecognition of deferred tax assets areamong the most important estimatesapplied by Management when preparing thefinancial statements.

CONSOLIDATED INCOME STATEMENTThe Group’s total operating revenue for2021 was NOK 5,068 million, a reduction of
44 percent from NOK 9,096 million in 2020.
Passenger revenue accounted for NOK
3,912 million compared with NOK 6,455
million in 2020, whereas ancillary
passenger revenue amounted to NOK 941
million compared with NOK 1,535 million in
2020. Other revenue in 2021 was NOK 200
million compared with NOK 946 million in2020 and are primarily related to thirdparty products and other revenue.
The passenger ticket revenue per available
seat kilometer (unit revenue) for 2021 was
NOK 0.41, up 17 percent compared to NOK
0.36 in 2020, following a yield increase of
21 percent. Ancillary revenue per passenger
decreased by 32 percent to NOK 152 in
2021, down from NOK 223 in 2020.
The number of passengers decreased by 10
percent during 2021 and average sector
length decreased by 31 percent comparedwith 2020.

Operating expenses excluding aircraft
lease, depreciation and amortization in
2021 was reduced by 52 percent andamounted to NOK 6,584 million compared
to NOK 13,851 million in 2020. Unit costdecreased three percent to NOK 0.91 in
2021 from NOK 0.94 in 2020, whereas unit
cost excluding fuel decreased eight percent
to NOK 0.76 in 2021, down from NOK 0.83
in 2020.
Operatingprofitexcludinglease,
depreciation and amortization ("EBITDAR")
improved to negative NOK 1,516 million in
2021, from negative NOK 4,755 million in
2020.
EBITDARexcludingotherlosses/(gains) was negative NOK 2,254
million compared with negative NOK 1,751
million in 2020.
Other losses/(gains) in 2021 include
translation of working capital in foreign
currency and net gain or loss from the saleof fixed assets. Net other losses/(gains) in
2021 amounted to a gain of NOK 737 million,
and includes gain related to the sales ofslots at London Gatwick in December 2021.
In 2020, other losses/(gains) amounted to aloss of NOK 3,005 million and included
restructuring costs of NOK 1,220 million, a
net gain of NOK 883 million from forward
contracts on jet fuel, a gain of NOK 28
million from translation of working capitalin foreign currency and losses of NOK 930
million from the sale of fixed assets.
Operating profit before interest and taxes("EBIT") for 2021 was negative by NOK 2,786
millioncomparedwithnegative
NOK 23,768 million in 2020. In 2020,
impairment losses of NOK 12,816 million
negatively impacted operating profit beforetax.

Net financial items were positive by NOK
4,662 million in 2021, compared withpositive NOK 1,643 million in 2020. Bothyears were positively impacted by
restructuring effects, with NOK 5,341
million in 2021 and NOK 5,208 million in
2020.
Profit before tax ("EBT") amounted to
NOK 1,876 million in 2021, compared to aloss of NOK 22,133 million in 2020. Net
profit after tax was NOK 1,870 million in
2021, compared to a loss of NOK 23,040
million in 2020. In 2020, loss before tax
includes negative effects from impairment
assets held for sale of NOK 12,816 million.
Earnings per share for 2021 were positive
NOK 3.5 compared to negative NOK 1,022 in
2020. Diluted earnings per share werepositive NOK 2.7 for 2021 and negative NOK
1,022 in 2020.

CONSOLIDATED STATEMENT OFFINANCIAL POSITION
Since the COVID-19 outbreak forced
Norwegian into hibernation, a significant
financial restructuring process has beenongoing and in May 2021, the Company
successfully
exitedtheNorwegianExaminership and Irish Reconstruction
process and the basis for continuing as agoing concern was secured.
In 2021, the restructuring in total improved
equity by NOK 13,723 million, of which NOK
5,341 million was recognized in the income
statement.
The total equity increase from the financial
restructuring in 2021 of NOK 13,723 million,
consists mainly of the private placement
and rights issue (net of transaction costs)

which increased equity by NOK 3,998
million, whereas dividend claim and cash
dividend reduced equity by NOK 269
million. The net effect for changes inaircraft, including reduced maintenanceobligations, increased equity by NOK 1,586
million. Extinguishment of vendor debt andrelated receivables from the same vendors
increased equity by NOK 4,044 million.
Extinguishment of borrowings not related
to aircraft financing or bonds, and issue of
perpetual and retained claims bond (net oftransaction costs) increased equity withNOK 2,742 million. Finally, bonds increased
equity net by NOK 427 million andliquidation of companies in the fourth
quarter increased equity by NOK 1,195
million.
Total non-current assets amounted to NOK
8,961 million at the end of 2021, compared
to NOK 11,867 million at the end of 2020.
Deferred tax assets amounted to NOK 1,890
million at the end of 2021, compared to
NOK 1,966 million at the end of 2020. The
Company has NOK 1,796 million in
unrecognized deferred tax assets at theend of 2021 primarily related to carryforward tax losses.
Total current assets amounted to
NOK 9,864 million at the end of 2021,
compared to NOK 37,687 million at the endof 2020. During 2021, aircraft presented at
the end of 2020 as disposal group assets
classified for sale of NOK 30,377 million,
has been disposed.
Trade and other receivables amounted to
NOK 2,153 million at the end of 2021,
compared to NOK 4,579 million at the endof 2020. The decrease from last year is
primarily explained by cram down of11

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

receivables as part of the reconstruction
process.
Cash and cash equivalents amounted toNOK 7,695 million at the end of 2021,
corresponding to an increase of NOK 5,028
million from year-end 2020.
Total
non-current
liabilities
were
NOK 9,488 million at the end of 2021,
compared to NOK 2,679 million at the endof 2020. Per year-end 2020, the majority of
the Company’s debt was reclassified tocurrent liabilities due to the breach ofcovenants.
Non-current debt amounted to NOK 8,416
million per the end of 2021, of which NOK
2,525 million related to the zero coupon
Retained claims bond.
The decrease in provision for periodic
maintenance to NOK 805 million at the endof 2021 from NOK 1,599 million at the endof 2020, is primarily due to the cram downof maintenance accrual in the second
quarter of 2021 as a result of the financial
restructuring in May 2021. The decrease indeferred tax from NOK 650 million at theend of 2020 to NOK 60 million at the end of2021 was also a result of the financial
restructuring in 2021.
Total current liabilities amounted to NOK
6,068 million at the end of 2021, a decrease
from NOK 53,498 million at the end of
2020. Per year-end 2020, the majority of
the Company’s debt was reclassified from
non-current to current due to the breachof covenants. In addition, current liabilities
in 2020 included disposal group liabilities
classified as held for sale of NOK 30,768
million.

Air traffic settlement liabilities were NOK
1,324 million at the end of 2021, compared
to NOK 401 million at the end of 2020.

At the end of 2021, the equity ratio waspositive 17.4 percent compared to negative
13.4 percent at the end of 2020.

The decrease in borrowings of NOK 8,587
million from year-end 2020 is primarily due
to reclassification of debt from current aspresented per year-end 2020, to noncurrent liabilities per year-end 2021.

The Group’s gross interest-bearing debt
amounted to NOK 9,377 million at the endof 2021, a reduction of NOK 33,512 million
or 78 percent, compared to the end of2020.

Trade and other payables were NOK 3,783
million at the end of 2021, compared withNOK 10,329 million at the end of 2020,
where the decrease is primarily explainedby cram down effects from the financial
restructuring.

Included in gross interest-bearing debt at
the end of 2021 were bond issues of NOK
3,227 million, aircraft financing of NOK 803
million, lease liabilities of NOK 5,213 million
and other debt of NOK 135 million.

CAPITAL STRUCTURE
Equity at the end of 2021 was positive
NOK 3,270 million compared to negative
NOK 6,624 million at the end of 2020.
The financial restructuring completed in
May 2021 increased total equity by NOK
13,723 million.
All issued shares in the parent Company are
fully paid with a par value of NOK 0.1 pershare. There is only one class of shares, andall 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 Oslo Stockexchange.
Net interest-bearing debt at the end of2021 was NOK 1,683 million, compared to
NOK 40,222 million at the end of 2020.
Included in net-interest bearing debt is thezero coupon Retained Claims Bonds of NOK
2,525 million.

The Company issued 888,769,130 newshares in 2021. In the financial restructuring
and examinership process in May 2021,
658,945,686 shares were issued inconnection with the rights issues and public
offering of NOK 6,000 million. The net cash
proceeds from the share issues andperpetual bond in 2021 was NOK 5,863
million.
In December 2020, the Company carriedout a reverse split of the Company’s shares
where one hundred old shares weremerged to one new share.

CASH FLOW
Cash and cash equivalents were NOK 7,695
million at the end of 2021 compared to NOK
2,667 million at the end of 2020.
Cash flow from operating activities in 2021
amounted to positive NOK 139 million
compared to negative NOK 1,391 million in
2020. Air traffic settlement liabilities
increased by NOK 923 million in 2021,
compared to a decrease of NOK 5,705
million in 2020. Changes in inventories,

accounts receivable and accounts payable
had a positive effect on cash flow by NOK
2,271 million, compared with positive
NOK 8,331 million in 2020.
Cash flow from investing activities was
positive NOK 223 million, compared topositive NOK 2,662 million in 2020. In
2020, the proceeds from sale of tangible
assets of NOK 2,760 million consisted
mainly of proceeds from the sale of ten
Boeing 737-800 aircraft.
Cash flow from financing activities in 2021
was positive by NOK 4,784 million
compared to negative NOK 1,628 million in
2020. Proceeds from the issuance of newshares and perpetual bond in 2021 wereNOK 5,863 million in 2021, compared to
NOK 328 million in 2020. Principal
repayments of NOK 409 million in 2021
relate to repayment of NAS09 of NOK 250
million, repayment of NAS13 of NOK 50
million and repayment on other credit
facilities of NOK 109 million. Debt servicing
on lease liabilities was NOK 279 million in
2021 compared with NOK 2,351 million in
2020.

FINANCIAL RISK AND RISKMANAGEMENT
Risk management in the Norwegian Groupis based on the principle that risk
evaluation is an integral part of all businessactivities. Policies and procedures havebeen established to manage risk. The
Group’s Board of Directors reviews andevaluates the overall risk management
systems and environment in the Group on aregular basis.

12

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

The Group faces many risks anduncertainties in a global marketplace thathas become increasingly volatile. The
variety of economic environments andmarket conditions can be challenging, withthe risk of Norwegian’s unit cost not being
low enough to shield the airline in case of
weaker consumer demand and business
confidence in its key markets. Pricevolatility may have a significant impact on
the Group’s results. Norwegian is also
continuously exposed to the risk ofcounterparty default.
The Group’s reported results and net assets
denominated in foreign currencies are
influenced by fluctuations in currency
exchange rates and in particular the US
dollar.
Financial risk management is carried out by
a central treasury department (Group
treasury), under policies 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 management suchas foreign currency risk, jet-fuel risk,interest rate risk, credit risk, use ofderivative financial instruments andinvestment of excess liquidity.

INTEREST RISKThe Group is exposed to changes in theinterest rate level, following the amount ofinterest-bearing debt. The Group’s cash
flow interest rate risk arises from cash andcash equivalents and floating interest rate.
Floating interest rate borrowings consist of
unsecured bonds, aircraft financing, loan
facility and financial lease liabilities. Fixedinterest rate borrowings consist of aircraft
financing guaranteed by export credits,commercial debt for aircraft andunsecuredbonds.
Borrowings
aredenominated in USD, EUR, SEK and NOK.
Hence, there is an operational hedge in thecomposition of the debt.

FOREIGN CURRENCY RISK
A substantial part of the Group’s expenses
are denominated in foreign currencies. The
Group’s leases, aircraft borrowings,
maintenance, jet-fuel and related expenses
are mainly denominated in USD, andairplane operation expenses are partly
denominated in EUR. Foreign exchange riskarisesfrom
futurecommercial
transactions, recognized assets andliabilities and net investments in foreign
operations. In order to reduce currency
risk, the Group has a mandate to hedge up
to 100 percent of its currency exposure forthe following 12 months. At the end of 2021,
the Group did not have significant currency
forward contracts.

PRICE RISK
Expenses for jet-fuel represent a
substantial part of the Group’s operating
costs, and fluctuations in 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-fuelprices whilst retaining access to pricereductions. The Group manages jet-fuelprice risk through the use of fuelderivatives. Management has a mandate tohedge up to 50 percent of its expectedconsumption over the next 12 months withforward contracts. At the end of 2021, theGroup did not have any fuel derivative
instruments in place.

LIQUIDITY RISKThe Group monitors rolling forecasts of theliquidity
reserves,
cash
and
cash
equivalents. In addition, the Group’s
liquidity management policy involves
projecting cash flows in major currencies
and evaluating the level of liquid assets
required. Furthermore, these analyses areused to monitor balance sheet liquidity
ratios against internal and external
regulatory requirements and maintaining
debt financing plans.

CREDIT RISK
Credit risks are managed on Group level.
Credit risks arise from cash and cash
equivalents,
derivative
financial
instruments and deposits with banks andfinancial institutions, as well as credit
exposure to commercial customers. The
Company's policy is to maintain credit sales
at a minimum level and sales to consumers
are settled by using credit card companies.
The risks arising from receivables on credit
card companies or credit card acquirers
are monitored closely.

CLIMATE-RELATED RISKS
Climate-related risks include transition
risks and physical risks. Transition risks
refer to transition to a lower-carbon
economy; physical risks refer to theimpacts of climate change.
Transitioning to a lower-carbon economy
may involve changes in government
policies, technological development andcustomer demands. The speed and focus ofthese changes may create financial andreputational risks.
A changing climate may cause increased
severity of extreme weather events.
Cyclones, hurricanes and floods are acute,
event-driven
physicalrisks.
Highertemperatures, sea level rise and heat waves
are chronic physical risks stemming fromlonger-term shifts in climate patterns.
Physical risks may impact financial
performance directly or indirectly throughsupply chain disruptions. Climate-relatedrisks are managed on Group level.

THE SHARENorwegian aims to deliver a competitive an
attractive return to its shareholders. The
Company’s shares are listed are listed on
Oslo Børs (Oslo Stock Exchange) with ticker
symbol NAS. The share is included in the
OSEBX Benchmark Index. From March
2022, the share is also included in the OBX
index which comprises the 25 most liquidcompanies of Oslo Børs.
The Company has one class of shares, andall shares carry equal voting rights. As of
year-end 2021, the Company’s share capitalamounted to NOK 92,851,849.60 divided
between 928,518,496 shares, each with anominal value of NOK 0.10. During the year,
888,769,130 new shares were issued,
predominately relating to the capital raisecompleted in May 2021 following the
successful emergence from examinershipand reconstruction.
As of year-end 2021, the Company had
77,659 shareholders, whereof the 20
largest shareholders held 69.6 percent of
the outstanding shares. The share had a

13

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

closing price of NOK 10.75 as of 31
December 2021. Dividends have not been
paid out during the last three years.

CHANGES IN THE BOARD OF
DIRECTORS AND GROUPMANAGEMENT
Svein Harald Øygard and Lars Boilesen were
elected as new members of the Board at
the Annual General Meeting 4 June 2021
with Niels Smedegaard, Vibeke Hammer
Madsen and Jaan Albrecht Binderberger
stepping down. Mr Øygard was elected new
Chair of the Board.
Adrian Dunne was appointed new EVP
Operations in March 2021 and took overfrom Johan Gauermann which held theposition as Interim EVP Operations.
Geir Karlsen was appointed new Chief
Executive Officer in June 2021.
Magnus Thome Maursund took up the
position of EVP Network, Pricing &Optimisation in October 2021 with Andrew
Hodges leaving the Company.
Tor-Arne Fosser, EVP Product & Digital
Development, left the Management Groupin April 2022. The Product & Digital
Development business area will beconsolidated within Network, Pricing &Optimisation and Sales, Marketing andCustomer Care.
Hans-Jørgen Wibstad has been appointed
new Chief Financial Officer and will take up
the position in May 2022.

EVENTS AFTER 31 DECEMBER
2021
On 11 January 2022, Norwegian reported
the Post-Conversion Report from theOverseer, confirming that the Structured
Sale Process (including the distribution ofproceeds thereof) and the distribution of
No-Sale Conversion Shares to the relevant
Creditors have been completed inaccordance with the terms set out in these
Dividend Claim Terms.
On 16 February 2022, Norwegianannounced the conversion of New Capital
Perpetual bonds whereby new share capital
was registered. The Company received
conversion notices from bondholders
representing
NOK
4,000,000
Early
Conversion Bonds, which pursuant tostandard terms set out in the bond terms
are convertible into 425,985 new shares in
the Company.
On 28 February 2022, Norwegianannounced it has entered into agreementswith AerCap to lease aircraft, of which ten
are new Boeing 737 MAX 8, to be deliveredin the first half of 2023. Norwegian has along-standing relationship with AerCap, theworld’s largest aviation leasing company.
The signed lease agreements also include
eight Boeing 737-800 NG, which are part of
the 70 aircraft fleet operational for thesummer 2022 season. With these additions,
Norwegian will have a total fleet of 80
aircraft by the summer of 2023.
On 28 February 2022, announced that a
total of 107,051 shares were purchased onbehalf of employees in Norwegian Air
Shuttle participating in the Company's
Employee Share Savings Plan. The averagepurchase price was NOK 11.02 per share.

On 08 March 2022, Norwegian announced
the conversion of New Capital Perpetualbonds whereby new share capital was
registered.
The
Company
received
conversion notices from bondholders
representing
NOK
2,000,000
Early
Conversion Bonds, which pursuant tostandard terms set out in the bond terms
are convertible into 212,992 new shares in
the Company.
On 23 March 2022, Norwegian wascontemplating a buy-back of the zerocoupon
seniorunsecuredNOK
3,758,929,711
bond
issue
maturing
30.09.2026 (Retained Claims Bonds with
ISIN NO0010996457).
On 30 March 2022, Norwegian announced
that the “Reverse Dutch Auction” closed on
29 March and the Company has decided toaccept all offers up to and including a priceof 66 percent of par value (the “Buy-Back
Price”). The Company confirmed to buyback bonds with a total nominal value of
NOK 44,611,470 by paying the Buy-Back
Price. Cash settlement for the repurchaseis expected to occur on Tuesday, 5 April
2022. Following the buy-back, theCompany holds zero-coupon Retained
Claims Bonds (ISIN: NO0010996457) for a
total nominal amount of NOK 44,611,470.
The acquired bonds will be cancelled
following settlement.
On 22 April 2022, Norwegian publishedlisting prospectus to list Norwegian Air
Shuttle ASA FRN perpetual subordinatedconvertible bonds with ISIN NO 0011157331
and NO 0011157356 (jointly, the "New
Capital Perpetual PIK Bonds"), and (ii)
Norwegian Air Shuttle ASA zero coupon
senior unsecured NOK 3,758,932,275

bonds 2021/2026 with ISIN NO 0010996457(the "Retained Claims Bonds").
There have been no other material events
subsequent to the reporting period thatmight have a significant effect on the
consolidated financial statements for 2021.

GOING CONCERN
In 2021, the Group successfully exited theexaminership and reconstruction process,and the basis for continuing as a going
concern was secured/fulfilled throughdebt extinguishment and capital injection.
Necessary additional working capital was
obtained mainly through share offerings
including the Rights Issue, an additional
private placement and the issue of
perpetual bonds, raising gross proceeds of
NOK 6 billion.
In February 2022, Russia announced amilitary invasion of Ukraine. Strict sanctions
have been imposed against Russia by theUnited States, the EU and other countries.
Following the invasion, international capital
markets have seen increased volatility andthe oil price has spiked, which in turn has
resulted in increased fuel costs for theCompany. The consequences of the acts of
war on the Group’s operations and financial
results are uncertain but does not affect
the going concern assumption.
Although several countries are currently
easing up on restrictions relating to COVID19, there is still uncertainty regarding thefuture development of infection rates, virus
variants and the potential implementationof new restrictions. The impact thesefactors may have on the Group’s operations

14

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

and financial results are uncertain but does
not affect the going concern assumption.
Uncertainties in relation to the public andpolitical debate regarding the negative
climate impacts of air travel is not regarded
as a threat to the going concern
assumption.

PARENT COMPANY RESULTS
AND DISTRIBUTION OF FUNDSNorwegian Air Shuttle ASA (“NAS”) is theparent company in the Norwegian Group.
Net profit for the parent company
Norwegian Air Shuttle ASA was NOK 12,994
million in 2021, compared with a net loss of
NOK 33,851 million in 2020. Total assets at
the end of 2021 amounted to NOK 17,655
million, compared to NOK 12,296 million in2020 and equity amounted to positive NOK
11,550 million at the end of 2021 ascompared to negative NOK 9,337 million at
the end of 2020. In accordance with theCompany’s Corporate Governance policy,
the Board recommends the following
distribution of funds:

OTHER REPORTINGREQUIREMENTS
Norwegian Air Shuttle ASA and subsidiaries
are covered by Directors and Officers
liability
insurance.
The
insurance
indemnifies directors and officers for
defence costs and potential legal liability
arising out of claims made against themwhile serving on a board of directors and oras an officer.

CORPORATE GOVERNANCE(NOK million)

Dividend
Transferred to equity
Total allocated

The requirements of the Norwegian
Accounting Act § 3-3c for reporting on
Corporate Social Responsibility activities,
have been covered in the separate reportof Corporate Responsibility at Norwegian,presented in a separate section of theannual report and available on the Group’s
websitewww.norwegian.com.
The
Corporate Responsibility Report also
includes reporting on health, safety, theenvironment,
equality
andnondiscrimination, as required by the
Accounting Act § 3-3.

012,994
12,994CORPORATE RESPONSIBILITY
Norwegian strives to be a good corporate
citizen in every area of its operation. The
Company is committed to operate inaccordance with responsible, ethical,
sustainable and sound business principles,that respects people and environment.

Good corporate governance is a priority for
the Board of Directors. Norwegian’s
objective for corporate governance isbased 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 compliancewith laws, regulations and ethicalstandards. Norwegian’s core values areinnovation, teamwork and simplicity, but nobusiness conduct within the Group should
under any circumstances jeopardize safety
and quality.

Norwegian is subject to the annual
corporate
governancereportingrequirements under section 3-3b of theNorwegian Accounting Act and theNorwegian Code of Practice for Corporate
Governance, cf. section 7 on Oslo Børs’
continuing obligations of listed companies.
The Accounting Act may be found (inNorwegian) at
www.lovdata.no. The
Norwegian Code of Practice for Corporate
Governance (“the code”), which was last
revised on 14 October 2021, may be foundat www.nues.no.
The
annualcorporate
governancestatement 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 andsubsequent amendments in all areas.

Following the spread of the COVID-19
omicron virus variant and the reintroductionoftravelrestrictions,
Norwegian reduced the flying schedule forthe first months of 2022. From February
and March, travel restrictions in key
markets were significantly reduced,
resulting in a marked increase in passenger
travel and bookings. There is strong pentup demand travel, especially to beachdestinations ahead of the busy summer
holiday season. To meet this demand,
Norwegian are increasing the fleet to a totalof 70 aircraft, serving a network of above
270 routes. For 2022, Norwegian istargeting a production of 28,000 million
ASK, an increase of 200 percent from 2021.
Ahead of the summer 2023 season, an
additional 10 brand-new and fuel-efficient
aircraft have been sourced, bringing next
year’s fleet to 80 aircraft.

The annual statement on how Norwegiancomplies with the Code of Practice and theNorwegian Accounting Act’s requirements
for corporate governance is included in a
separate section of the annual report andavailable on
the Group’s website
www.norwegian.com.

The start of 2022 has seen rapidly
increasing fuel price and high pricevolatility. While higher cost for aviation fuelis partially offset by increased fares, acontinued high fuel price is expected topartly offset the Company’s positive
recovery.

OUTLOOK
The outlook for Norwegian going forward isencouraging. The Company has a leading
position in the Nordic travel market,
operating short-haul flights within theNordics and from the Nordics toContinental Europe, routes with provenhistoric profitability. The positive financial
and business transformation underwent in
2021 puts the Company on strong footing tobenefit from the upcoming demand returnfor leisure travel.

The successfully completion of theCompany’s
financialtransformation
enables Norwegian to focus our core
principles – the offering of value travel andexcellent service to our customers.
Norwegian’s strong brand is strengthening
across key markets, supported by theaward-winning Reward program with over
4.2 million members across the Nordics.
Norwegian’s winning formula is the
combination of a competitive cost positionand strong customer value offering.

15

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Seasonal flexibility, partially enabled bypower-by-the-hour lease agreements,
enables the Company to protect its
financial position while adapting to market
conditions. The addition of new, modern
aircraft will further improve the Company’s
cost position through scale effects andreduced fuel burn. The addition of new
fuel-efficient
aircraftalignswith

Norwegian’s proud history of implementing
the latest sustainable solutions to reduce
emissions. Going forward, the use ofinnovative technology and modern aircraft
provides a strong foundation that enables
Norwegian to reach its sustainability goals.

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

FINANCIAL STATEMENTS

16

17

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

CONSOLIDATED FINANCIAL STATEMENTS 2021
CONSOLIDATED INCOME STATEMENT 1.1 - 31.12
NOK million

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1.1 - 31.12

Note

2021

2020

3,911.8
941.5
14.8
199.7

6,455.3
1,535.1
158.8
946.4

4

5,067.8

9,095.7

6, 7, 17, 18

2,084.9
1,413.8
820.1
757.0
855.5
1,390.2(737.5)2,921.2
2,006.7
772.5
1,392.2
1,791.8
1,961.9
3,004.7

Total opex excl lease and depreciation

6,583.9

13,850.9

Operating profit excl lease, depreciation and amortization(EBITDAR)(1,516.0)(4,755.2)

1,270.0-

6,197.5
12,815.7

Operating profit (EBIT)(2,786.0)(23,768.4)

Interest income
Interest expense
Other financial income (expense)
Net financial items

13.7(682.3)
5,330.5
4,662.0

68.2(2,690.7)
4,265.7
1,643.2-(7.8)

1,876.0(22,133.0)

Passenger revenue
Ancillary passenger revenue
Freight
Other revenue
Total operating revenue
Personnel expenses
Aviation fuelAirport and ATC charges
Handling charges
Technical maintenance expenses
Other operating expenses
Other losses/(gains) - net

Aircraft lease, depreciation and amortization
Impairment assets held for sale

Profit (loss) from associated companies

5, 7A
20A

1, 10, 11
1, 10, 11825Profit (loss) before tax (EBT)
Income tax expense (income)9

Net profit (loss)
Basic earnings per share
Diluted earnings per share
Profits attributable to:
Owners of the Company
Non-controlling interests

16
16

5.5

906.8

1,870.5(23,039.8)

3.5
2.7

(1,022.1)(1,022.1)

1,870.5-(23,050.9)
11.1

NOK million

Note

2021

2020

1,870.5(23,039.8)(223.4)(979.4)

370.5
147.1

2.0
5.5
(972.0)14.1
14.1(42.0)(42.0)

Total comprehensive income for the period

2,031.7(24,053.8)

Total comprehensive income attributable to:Equity holders of the Company
Non-controlling interests

2,031.7-(24,070.3)
16.6

Net profit (loss)
Other comprehensive income that may be reclassified to
profit or loss in subsequent periods:
Exchange rate differences on translation of foreign operations

15

Exchange rate differences on disposal of foreign operations
Share of other comprehensive income of associated companies
Exchange rate differences attributable to non-controlling interests
Net comprehensive income that may be reclassified
Other comprehensive income that will not be reclassified to
profit or loss in subsequent periods:
Actuarial gains (losses)
Net comprehensive income that will not be reclassified

18

18

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBERNOK million

Note

2021

2020

ASSETS
Intangible assets
Deferred tax asset
Aircraft, parts and installations on leased aircraft
Right-of-use aircraft, parts and installations
Equipment and fixtures
Buildings
Right-of-use buildings
Financial assets available for sale
Investment in associate
Other receivables

10
9
11
12
11
11
12
20
25
13

180.2
1,890.4
1,020.7
5,152.6
135.6
246.7
212.0
3.7
119.5

200.9
1,966.2
6,129.6
2,791.4
163.2
252.4
216.6
3.7
80.4
62.6

8,961.3

11,867.1

16.3
2,152.9
7,694.8
9,864.1

30,377.1
64.1
4,578.8
2,666.9
37,686.9

18,825.4

49,554.0

Total non-current assets
Assets included in disposal group classified as held for sale
Inventory
Trade and other receivables
Cash and cash equivalents
Total current assets

11
14
13
24

Note

2021

2020

15
15

92.9
25,424.3
714.4
1,808.0
259.9(25,029.8)
3,269.6

397.5
18,805.1
155.8
787.7
112.8
(26,882.7)(6,623.9)

3,269.6(6,623.9)

206.2
805.3
59.9
3,981.6
4,434.8-

227.8
1,598.8
13.9
650.0
185.7
3.2

9,487.7

2,679.4

183.1
777.9
3,782.6
1,324.2
0.2

30,767.8
8,769.9
3,165.4
10,328.8
401.5
49.2
15.8

Total current liabilities

6,068.0

53,498.4

Total liabilities

15,555.8

56,177.9

TOTAL EQUITY AND LIABILITIES

18,825.4

49,554.0

NOK million
EQUITY AND LIABILITIESShare capital
Share premium
Other paid-in equity
Perpetual bonds
Other reserves
Retained earnings
Shareholders' equity

15
15

Total equity
Pension obligation
Provision for periodic maintenance
Other non-current liabilities
Deferred tax
Borrowings
Lease liabilities
Derivative financial instruments

18
19
19
9
22
20
3, 20

Total non-current liabilities
TOTAL ASSETS

Liabilities included in disposal group classified as held for sale
Borrowings
Lease liabilities
Trade and other payables
Air traffic settlement liabilities
Derivative financial instruments
Tax payable

22
22
20
21
21A
3, 20

19

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 1.1 - 31.12
NOK million
Equity at 1 January 2020

Share
Capital*Share Other paid-in
Premium*
equityPerpetual
bonds

Other
reserves*

Retained Shareholders'earnings
equityNoncontrollinginterest

Total equity

16.3

6,664.1

149.2-

1,085.5(3,814.0)

4,101.1

23.8

4,124.9

Profit for the year

-

-

-

-

-

(23,050.9)(23,050.9)

11.1(23,039.8)

Actuarial gains and losses

-

-

-

-

-

(42.0)(42.0)-(42.0)

Exchange rate differences on translation of foreign operations

-

-

-

-

(979.4)-(979.4)

5.5(974.0)Share of other comprehensive income of associated companies

-

-

-

-

2.0

-

2.0

-

2.0

Total comprehensive income 2020

-

-

-

-

(977.4)(23,092.9)(24,070.3)

16.6(24,053.8)
11,516.1

Share issue

381.2

12,141.0-(1,006.2)--

11,516.1-

Transactions with non-controlling interests

-

-

-

-

4.6

24.2

28.9

(40.4)(11.5)

Perpetual bond issue

-

-

-

1,793.8--

1,793.8-

1,793.8

Equity changes on employee options

-

-

6.6

-

-

-

6.6

-

6.6

Transactions with owners

381.2

12,141.0

6.6

787.7

4.6

24.2

13,345.4(40.4)

13,305.0

Equity at 31 December 2020

397.5

18,805.1

155.8

787.7

112.8

(26,882.7)(6,623.9)-(6,623.9)

Profit for the year

-

-

-

-

-

1,870.5

1,870.5-

1,870.5

Actuarial gains and losses

-

-

-

-

-

14.1

14.1

-

14.1

Exchange rate differences on translation of foreign operations

-

-

-

-

(223.4)-(223.4)-(223.4)

Exchange rate differences on disposal of foreign operations

-

-

-

-

370.5

-

370.5

-

370.5

Total comprehensive income 2021

-

-

-

-

147.1

1,884.6

2,031.7-

2,031.7

Share issue

66.9

4,738.2

121.3(854.7)--

4,071.7-

4,071.7

Convertible dividend claim issue

22.0

1,881.0

30.6

-

-

-

1,933.6-

1,933.6(393.5)

-

393.5

-

-

-

-

-

-

Perpetual bonds issue

-

-

-

1,843.3--

1,843.3-

1,843.3

Payment-in-kind interest

-

-

-

31.8

-

(31.8)---

Equity changes on employee options

-

-

13.2

-

-

-

13.2

-

13.2

(304.6)

6,619.2

558.6

1,020.4-(31.8)

7,861.8-

7,861.8

92.9

25,424.3

714.4

1,808.0

259.9(25,029.8)

3,269.6-

3,269.6

Capital decrease

Transactions with owners
Equity at 31 December 2021

* See Note 15 for details on share capital, share premium and other reserves

20

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

CONSOLIDATED STATEMENT OF CASH FLOWS 1.1 - 31.12
NOK million
OPERATING ACTIVITIESProfit (loss) before tax
Taxes paid
Depreciation, amortization and impairment
Impairment assets held for sale
Losses/(gains) on disposal of tangible assets
Fair value losses/(gains) on financial assets
Reconstruction effects
Financial items
Interest received
Change in inventories, accounts receivable and accounts payable
Change in air traffic settlement liabilities
Change in other current assets and current liabilities

Note

9
10,11
10,11
11,20
20
2.7.1
8
8

Net cash flow from operating activities
INVESTING ACTIVITIES
Purchase of tangible assets
Purchase of intangible assets
Proceeds from sales of assets
Net investment in associated companies

11
10
10,11
25

Net cash flow from investing activities

2021

2020

1,876.0
1,133.5(269.9)(49.2)(5,874.5)
1,212.5
13.7
2,270.9
922.7(1,096.7)(22,133.0)(6.6)
6,215.2
12,815.7
930.0
49.2(1,643.2)
68.2
8,330.9(5,705.0)(312,4)139.1(1,390.9)

(6.1)
(8.7)
237.5
-

(14.7)(17.7)
2,774.9(80.4)

222.6

2,662.1

FINANCING ACTIVITIES
Proceeds from new loans-

3,290.5(408.7)(52.0)(13.3)(226.8)(377.7)
5,862.9
4,784.4(2,480.2)(878.8)(415.0)(1,472.4)
328.4(1,627.5)

Foreign exchange effect on cash

(118.2)(72.3)Net change in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December

5,027.9
2,666.9
7,694.8(428.7)
3,095.6
2,666.9

Principal repayments
Principal element of lease payments
Interest on borrowings and financing costs
Interest element of lease payments
Paid dividend to creditors
Proceeds from issuing new shares
Net cash flow from financial activities22
22
12, 228

15,2.7.1

24

21

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.1 General information
Norwegian Air Shuttle ASA and its
subsidiaries (‘Norwegian’, ‘the Group’ or‘the Company’) are a low-cost airline
incorporated in Norway and headquarteredat 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 31 December 2021 were authorized
for issue by the Board of Directors on 28
April 2022. The annual general meeting, tobe held 25 May 2022, has the power to
amend
and
reissuethefinancialstatements.
1.2 Basis of preparation
The consolidated financial statements of
Norwegian Air Shuttle ASA have been
prepared in accordance with theInternational Financial Reporting Standards(IFRS) and IFRIC interpretations, as adopted
by the EU. The consolidated financial
statements are prepared on the historicalcost basis, with some exceptions, asdetailed in the accounting policies set out
below.
In order to prepare financial statements inconformity with IFRS, it is necessary toapply certain critical accounting estimates.
It also requires the Management to exercise
its judgment when applying the Group’s
accounting policies. Areas involving agreater degree of judgment or complexity,
or areas where assumptions and estimates
are significant to the consolidated financial
statements are disclosed below. Seeparagraph 1.23.
The financial statements have been
prepared on the going concern basis.
Details on going concern are provided in
Note 2.8.
Newstandards,
amendmentsinterpretations that are adopted

andNo changes in IFRS effective for the 2021
financial statements have had material
impact this financial year, nor are any
material changes expected.
1.3 Basis of consolidation and equity
accounting
1.3.1
Subsidiaries
Subsidiaries are all entities (including
structured entities) over which the Grouphas control. The Group controls an entity
when the Group is exposed to, or has rights
to, variable returns from its involvementwith the entity and has the ability to affectthose returns through its power to direct
the activities of the entity. Subsidiaries are
fully consolidated from the date on which
control is transferred to the Group.
The
Group’s
consolidated
financialstatements comprise Norwegian Air Shuttle
ASA, and its subsidiaries, presented in Note

23 in thestatements.

parentcompany

financial

The acquisition method is applied when
accounting for business combinations.
Companies acquired or sold during the year
are included in the consolidated financial
statements from the date when control wasachieved until the date when control
ceased.
The consideration that is transferred forthe acquisition of a subsidiary consists ofthe fair values of the assets transferred, theliabilities incurred to the former owners of
the acquiree, and the equity interests
issued by the Group. The transferredconsideration includes the fair value of any
asset or liability resulting from a contingent
consideration arrangement. Acquisitionrelated costs are expensed as incurred.
Acquired identifiable assets, liabilities andcontingent liabilities assumed in a businesscombination are initially measured at theirfair values at the acquisition date. On an
acquisition-by-acquisition basis, the Group
recognizes any non-controlling interests 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 considerationtransferred and the amount of the noncontrolling 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 purchase, thetotal of consideration transferred, non-controllinginterest
recognizedandpreviously held interest measured is lessthan the fair value of the net assets of thesubsidiary acquired, the difference isrecognized directly in the income
statement.
All intra-Group balances, transactions andunrealized gains and losses on transactions
between Group companies are eliminated.
1.3.2
Associates
Associates are all entities over which theGroup has significant influence but notcontrol or joint control. This is generally thecase where the Group holds between 20
percent and 50 percent of the voting rights.
Investments in associates are accounted
for using the equity method of accounting(see 1.3.4 below), after initially being
recognized at cost.
1.3.3
Joint arrangements
Under IFRS 11 Joint Arrangements
investments in joint arrangements areclassified as either joint operations or joint
ventures. The classification depends on thecontractual rights and obligations of each
investor, rather than the legal structure of
the joint arrangement. Interests in joint
ventures are accounted for using the equity
method (see 1.3.4 below), after initiallybeing recognized at cost in the
consolidated balance sheet.

22

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

1.3.4
Equity method
The consolidated financial statements
include the Group’s share of the
profits/losses from associates and joint
ventures, accounted for using the equity
method, from the date when a significant
influence is achieved until the date whensuch influence ceases. The Group’s shareof its associates’ post- acquisition profits
or losses is recognized in the income
statement, and its share of postacquisition
movementsinothercomprehensive income is recognized inothercomprehensive
income.
The
cumulative post-acquisition movements
are adjusted against the carrying amount of
the investment.
When the Group’s share of a loss exceeds
the Group’s investment in an investee, theamount carried in the Group’s statement offinancial position is reduced to zero andfurther losses are not recognized unless theGroup has an obligation to cover any suchlosses. Unrealized gains on transactions
between the Group and its associates andjoint ventures are eliminated to the extent
of the Group’s interest in these entities.
Unrealized losses are also eliminated unlessthe transaction provides evidence of an
impairment of the asset transferred.
1.3.5
Changes in ownership
The Group considers transactions with
non-controlling interests that do not resultin loss of control, as transactions withequity owners of the Group. Any difference
between considerations paid and therelevant share acquired from the carrying
value of net assets are recorded in equity.
Gains or losses on disposals to noncontrolling interests are also recorded inequity.

When the Group ceases to consolidate orequity account for an investment becauseof loss of control, joint control orsignificant influence, any retained interestin the entity is remeasured to its fair value
with the change in carrying amountrecognized in profit or loss. The fair value
becomes the initial carrying amount for
purposes of subsequently accounting forthe retained interest as an associate, joint
venture or financial asset. In addition, any
amounts of retained interest in the entity isremeasured to its fair value at the datewhen control ceased, with the change incarrying amount recognized in profit orloss. The fair value is the initial carrying
amount for the purposes of subsequently
accounting for the retained interest as an
associate, joint venture or financial asset.
In addition, any amounts previously
recognized in other comprehensive income
in respect of that entity are accounted for
as if the Group had directly disposed of therelated assets or liabilities. This may meanthat amounts previously recognized inothercomprehensive
incomearereclassified to profit or loss.
If the ownership interest in a joint venture
or an associate is reduced but joint control
or significant influence is retained, only aproportionate share of the amounts
previously
recognizedinothercomprehensive income are reclassified to
profit or loss where appropriate. Dilution
gains and losses arising from investments inassociates are recognized in the income
statement.
1.3.6
Other investments
All other investments are recognized inaccordance with IFRS 9, Financial

Instruments, and additional information areprovided in Note 20.

and losses on financing activities arerecognized within net financial items.

1.4 Foreign currency translation
The Group’s presentation currency is
Norwegian Krone (NOK). Norwegian Air
Shuttle ASA’s functional currency is NOK.
Each entity of the Group determines its
own functional currency and items that areincluded in the entities’ financial
statements are measured in that functional
currency. For consolidation purposes, theresults and financial position of all theGroup’s entities that have a functional
currency other than NOK are translated tothe closing rate at the reporting date ofeach month. Income and expenses for each
income statement are translated to theaverage exchange rate for the period, thisbeing a reasonable approximation for
estimating
actualrate.
Exchangedifferencesarerecognizedincomprehensive income and specified
separately in equity.

Goodwill and fair value adjustments arisingon the acquisition of a foreign entity aretreated as assets and liabilities of theforeign entity and translated at the closing
rate. Any differences in exchange rates arerecognized in other comprehensive
income.

Transactions in foreign currencies are
initially recorded at the functional currency
rate using the exchange rates prevailing on
the dates of the transactions or valuation
where items are re-estimated. Monetary
assets and liabilities denominated inforeign currencies are translated to thefunctional currency exchange rate of thereporting date. Any differences arerecognized in the income statement. Nonmonetary items that are measured in termsof historical cost in a foreign currency aretranslated using the exchange rates of thedates of the initial transactions.
Foreign currency gains and losses on
operating activities are recognized within
operating profit. Foreign currency gains

1.5 Tangible assets
Tangible assets including buildings arecarried at historical cost, less accumulated
depreciation and impairment losses. Whenassets are sold or disposed of, the grosscarrying
amountandaccumulated
depreciation and impairment losses are
derecognized. Any gain or loss on the saleor 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 intended use. Subsequentcosts, such as repair and maintenancecosts, are normally recognized in profit orloss as incurred. When increased future
economic benefits are the result of verified
repair and maintenance work, these costs
will be recognized in the statement offinancial position as additions to noncurrent assets. Borrowing costs arecapitalized on qualifying assets.
Non-current assets are depreciated on astraight-line basis or by airborne hours andcycles over the estimated useful life of theasset beginning when the asset is ready for
its intended use. Residual values, whereapplicable, are reviewed annually against
prevailing market rates at the reporting

23

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

date for equivalently aged assets anddepreciation rates adjusted accordingly on
a prospective basis. The carrying value isreviewed for impairment if events orchanges in circumstances indicate that thecarrying value may not be recoverable.
An aircraft is recognized as one or morecomponents for depreciation purposes inorder to consider different useful lives of
the aircraft components. Depreciable
components are defined as maintenancecomponents. In accordance with official
requirements, the aircraft must be
maintained which means significant
components must be changed after a
specific number of flights or airborne
hours. These components are identified as
two heavy maintenance checks of theaircraft body, power restoration and life
limited parts for the two engines on eachaircraft, as well as maintenance on landing
gears and APU. The maintenance andoverhauls of these components occur on adefined interval, and the value isdepreciated based on the number of takeoffs or airborne hours until the next
maintenance is conducted. Completed
maintenance and overhaul are capitalized
and depreciated until the next relevant
maintenance and overhauls. The second
aircraft component is defined as theremainder of the aircraft and depreciatedover the estimated useful life, considered
to be 25 years for the fleet in Norwegian.
When estimating the future residual values
at the end of the 25-year period,
Norwegian reviews reports from two
separate independent aircraft appraisers
for each applicable aircraft type and year ofbuild and sets the residual value to an
average value of the two appraiser's
reports. In cases where the Company has

contracts
to
cover
all
significant
maintenance of the aircraft, the aircraft
may be depreciated as one single
component.
Rotable spare parts are carried as noncurrent assets and depreciated over theiruseful lives.
The Group capitalizes prepayments on thepurchase contracts of aircraft. The
prepayments are classified as tangible
assets as presented in the statement offinancial position. The prepayments include
capitalized borrowing costs. At delivery of
aircraft, the prepayments are included in
the acquisition costs of the aircraft.
Depreciation periods and methods areassessed annually to ensure that they
match the substance of non-current
assets. Additional details on tangible assets
are outlined in Note 11.
1.6 Intangible assets
1.6.1
Computer software
Acquired computer software licenses arecapitalized based on the costs incurred toobtain and apply the specific software.
These costs are amortized over theirestimated useful lives.
Costs which are directly associated withthe development of identifiable software
products controlled by the Group, andwhich are estimated to generate economic
benefits, are recognized as intangible
assets. These costs are amortized over theirestimated useful lives.
1.6.2

Goodwill and other intangible
assetsGoodwill represents the excess of the costof an acquisition over the fair value of theGroup’s share of the net identifiable assetsof the acquired subsidiary at the date ofacquisition. Goodwill is tested annually for
impairment and carried at cost lessaccumulated impairment losses. Gains andlosses on the disposal of an entity include
the carrying amount of goodwill relating to
the entity sold.
Other intangible assets are related to
identifiable
assetsfrom
business
combinations and investments in otherintangible assets.
Intangible assets which are determined ashaving indefinite useful lives, are notamortized, but subject to annual
impairment testing. The determination ofindefinite useful lives is based on
assessment by Management as to whether
there is any foreseeable limit to the period
over which the asset is expected togenerate net cash inflows for the entity.
See Note 1.7 for details of impairment
testing of non-financial assets and Note 10
for additional details on intangible assets.
1.6.3
Emission rights
Any emission rights received from therespective
countries’
government
agencies, without the need for payment of
any consideration, are recognized at theirnominal amounts, which in practice meansthat the intangible asset are valued at zero.
A provision is recognized in the balance
sheet commensurate to the extent thatemission rights used correspond toemission rights held. This provision ismeasured at the cost of the emission rights
held. The provision is measured at thecurrent market price with a corresponding
cost in the statement of incomecommensurate to the extent emission

rights used exceed the amount of emission
rights held.
1.7 Impairment of non-financial assets
Intangible assets with indefinite useful lives
are not subject to amortization and aretested annually for impairment. Assets thatare subject to amortization are reviewed
for impairment whenever events orchanges in circumstances indicate that thecarrying amount may not be recoverable.
An impairment loss is recognized for theamount by which the asset’s carrying
amount exceeds its recoverable amount.
The recoverable amount is the higher of anasset’s fair value less costs to sell and value
in use.
For the purpose of impairment testing,assets are grouped at the lowest levels of
separately identifiable cash flows (cashgenerating units). The allocation is made tothose 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 generating unit. The
determination of cash generating units isbased on how the Management operates
and assesses the Group’s performance,
profit and cash flow. The aircraft fleet is
operated as one unit, and the route
portfolio is administered and diversified as
one unit generating the Group's profit andcash flow, hence goodwill and other noncurrent assets are reallocated to the entire
Group for the purpose of impairment
testing.
Non-current assets other than goodwillthat have suffered impairment are reviewed
for a possible reversal of the impairment at

24

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

each reporting date. Impairment losses on
goodwill are not reversed.
1.8 Financial assets
Financial assets are classified according to
the following categories: as measured atamortized cost, measured at fair value
through profit or measured at fair value
through other comprehensive income. At 31
December 21, the Group holds financial
instruments measured at amortized cost.
The classification depends on thecharacteristics of the financial assets andthe purpose for which they were acquired.
The
Management
determines
theclassification of its financial assets at initialrecognition.
Debt instruments that meet the following
conditions are measured subsequently atamortized cost: the financial asset is held
within a business model whose objective isto hold financial assets in order to collectcontractual cash flows; and the contractual
terms of the financial asset give rise on
specified dates to cash flows that are solely
payments of principal and interest on theprincipal amount outstanding.
Debt instruments that meet the following
conditions are measured subsequently atfair value through other comprehensive
income (FVTOCI): the financial asset is held
within a business model whose objective isachieved by both collecting contractual
cash flows and selling the financial assets;
and the contractual terms of the financial
asset give rise on specified dates to cash
flows that are solely payments of principal
and interest on the principal amountoutstanding.
By default, all other financial assets aremeasured subsequently at fair value

through profit or loss (FVTPL). Despite theforegoing, the Group may at initialrecognition irrevocably elect to present
subsequent changes in fair value of anequity investment in other comprehensive
income if certain criteria are met; and theGroup may irrevocably designate a debt
investment that meets the amortized cost
or FVTOCI criteria as measured at FVTPL if
doing so eliminates or significantly reduces
an accounting mismatch.
Financial assets are presented as current
assets, unless maturity is greater thantwelve months after the reporting date andManagement
intendstoholdtheinvestment longer than twelve months after
the reporting date.
Regular purchases and sales of financial
assets are recognized on the trade date;the date which the Group commits topurchase or sell the asset. Investments are
initially recognized at fair value plustransaction 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 initiallyrecognized at fair value and transaction
costs are expensed in the income
statement.
Financialassetsarederecognized when the rights to receive
cash flows from the investments have
expired or have been transferred and theGroup has substantially transferred all risks
and rewards of ownership.
Gains or losses arising from changes in thefair value of the financial assets in the
FVTPL category are presented in theincome statement within other losses/(gains) – net of the period in which theyoccur. Interest on securities which is

calculated using the effective interest
method, is recognized in the income
statement as part of other income.
Dividend income from financial assets at
FVTPL and FVOCI are recognized in theincome statement as a part of other income
respectively
intheStatementofComprehensive 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 offset the recognized amounts andthere is an intention to settle on a net basisor realize the asset and settle the liability
simultaneously. The legally enforceable
right must not be contingent on future
events and must be enforceable in thenormal course of business and in the eventof default, insolvency or bankruptcy of theCompany or the counterparty.
1.8.1
Impairment of financial assets
The Group recognizes a loss allowance for
expected
creditlosses(ECL)
oninvestments in debt instruments that aremeasured at amortized cost or at FVTOCI.
The amount of expected credit losses is
updated at each reporting date to reflectchanges in credit risk since initialrecognition of the respective financial
instrument. The Group always recognizes
lifetime ECL for trade receivables, contract
assets and lease receivables. The expectedcredit losses on these financial assets are
estimated using a provision matrix based on
the Group’s historical credit loss
experience, adjusted for factors that are
specific to the debtors, general economic
conditions and an assessment of both thecurrent as well as the forecast direction of

conditions at the reporting date, includingtime value of money where appropriate.
For all other financial instruments, theGroup recognizes lifetime ECL when there
has been a significant increase in credit risk
since initial recognition. However, if thecredit risk on the financial instrument has
not increased significantly since initialrecognition, the Group measures the loss
allowance for that financial instrument at
an amount equal to 12‑month ECL. Lifetime
ECL represents the expected credit losses
that will result from all possible default
events over the expected life of a financial
instrument. In contrast, 12‑month ECL
represents the portion of lifetime ECL thatis expected to result from default events ona financial instrument that are possible
within twelve months after the reportingdate.
1.9 Derivative financial instruments andhedging activities
Derivatives are initially recognized at fairvalue on the transaction date andsubsequently measured at their fair value.
Derivatives are classified within the
category ‘financial assets at fair value
through profit or loss’ as long as thederivatives are not designated as hedging
instruments for accounting purposes.
The Group has not designated any
derivatives as hedging instruments foraccounting purposes in 2021 or 2020.
1.10 Inventory
Inventory of spare parts are carried at thelower of acquisition cost and net realizablevalue. Cost is determined using the first infirst out (FIFO) method. Obsolete inventory
has been fully recognized as impairment
losses. Inventory is consumed during

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NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

maintenance and overhaul of the aircraft
and is expensed when consumed.
1.11 Trade receivables
Trade receivables are amounts due from
customers for services performed andgoods sold in the ordinary course ofbusiness. If collection is expected in one
year or less, they are classified as current
assets. If not, they are presented as noncurrent assets. Trade receivables arerecognized initially at fair value andsubsequently measured at amortized costusing the effective interest method, lessprovision for impairment.
Receivables from credit card companies
are classified as trade and otherreceivables in the statement of financial
position.
1.12 Cash and cash equivalents
Cash and cash equivalents include cash inhand and in the bank, as well as short-term
deposits with an original maturity of threemonths or less. Cash and cash equivalentsin the statement of financial position
include restricted funds from withheld
employee tax, guarantees and deposits
pledged as collateral to suppliers.
The group holds investments in money
market funds classified as cash and cash
equivalents. These funds are highly liquid
and readily convertible to a known amountof cash which is subject to an insignificant
risk of changes in value. Investments notmeeting these criteria are classified as
financial assets measured at fair value
through profit and loss.

1.13 Equity
Share capital comprises the number ofshares multiplied by their nominal value andare classified as equity.
Transaction costs directly attributable to an
equity transaction are recognized directlyin equity net of tax.
When equity instruments are issued to acreditor to extinguish all or part of an
existing liability, the equity instruments arerecognized initially at fair value.
The Group has issued Perpetual Bonds. The
bonds
are
perpetualsubordinatedconvertible bonds with no requirement for
the Group to either pay instalments orinterest. The holders of the bonds can only
require repayment as a part of a liquidationand the conversion element is consideredby itself to be an equity component. The
Perpetual Bond is therefore classified as
equity.
1.14 Liabilities
Financial liabilities are classified either asmeasured at amortized cost or as measured
at fair value through profit or loss.
Derivative instruments recognized as
financial liabilities are being measured atfair value through profit or loss, whereas allother financial liabilities are measured atamortized cost.
Loans and other borrowings are recognizedinitially at fair value, net of transaction
costs incurred. They are subsequently
measured at amortized cost, whereas thedifference between the proceeds (net oftransaction costs) and the redemption
value is recognized in the income statement
over the period of the borrowings using theeffective interest method.

A substantial modification of the terms ofan existing financial liability or a part of it isaccounted for as an extinguishment of theoriginal financial liability and recognition ofa new financial liability. The modification of
the terms is assessed both from aquantitative and qualitative view. If themodification is assessed to be an
extinguishment, the difference between
the carrying amount of the financial liability
and the consideration paid including
liabilities assumed is recognized as gain or
loss. Any cost or fees incurred arerecognized as part of the gain or loss.
For issued convertible debt, the Groupassess at the time of issue if the compound
financial instrument contains both a liability
and an equity component. If so, the fairvalue of the instrument as a whole isallocated to its equity and liability
components. After initial recognition, theliability component is measured atamortized cost. No gain or loss isrecognized upon conversion.
Borrowings are classified as current
liabilities unless the Group has an
unconditional right to defer settlement of
the liability for at least twelve months after
the reporting date.
Trade payables are obligations to pay forgoods or services purchased from suppliersin accordance with general course ofbusiness. Accounts payables are classified
as current liabilities if payment is due within
the next twelve months. Payables due after
the next twelve months are classified as
non-current liabilities. Trade payables arerecognized initially at fair value andsubsequently measured at amortized costusing the effective interest method.

1.15 Provisions
Provisions are recognized when the Group
has a present obligation (legal orconstructive) as a result of a past event, itis probable that an outflow of resources will
be required to settle the obligation and theamount has been reliably estimated. Where
the Group expects some or all of a provision
to be reimbursed, for example under aninsurance contract, the reimbursement isrecognized as a separate asset but only
when the reimbursement is virtuallycertain. The expense relating to any
provision is presented in the income
statement net of any reimbursement. If theeffect of the time value of money ismaterial, provisions are discounted using acurrent pre-tax rate that reflects, whereappropriate, the risks specific to theliability. Where discounting is used, theincrease in the provision due to the passageof 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 insurancecompanies or trustee-administered funds,
determinedbyperiodic
actuarial
calculations.
1.16.1
Defined benefit plans
The cost of providing benefits under
defined benefit plans is determined using
the projected unit credit actuarial valuation
method. The past service cost is recognized
as an expense on a straight-line basis over
the average period until the benefits are
vested. If the benefits are already vested
immediately following the introduction ofor changes to a pension plan, past service
cost is recognized immediately.

26

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

The defined benefit obligation is theaggregate of the present value of thedefined benefit obligation and actuarial
gains and losses not recognized reduced bypast service costs not yet recognized andthe fair value of plan assets out of which the
obligations are to be settled directly. If suchaggregate is negative, the asset is measured
at the lower of such aggregate or at theaggregate of cumulative unrecognized net
actuarial losses and past service cost andthe present value of any economic benefits
available in the form of refunds from theplan or reductions in the futurecontributions 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-employer defined benefit plan.
However, the plan is recognized in theincomestatement
asadefinedcontribution
plan
as
the
plan'sadministrator has not allocated actuarial
gains/losses to the members of the AFP
pension plan at 31 December 2021.
Provisions for pension costs are detailed in
Note 18.
1.16.2 Defined contribution plans
In addition to the defined benefit plan
described above, the Group operates adefined contribution plan. A defined
contribution plan is a pension plan underwhich the Group pays fixed contributions to
a separate entity. The Group has no legal orconstructive obligations to pay further
contributions should the fund not holdsufficient assets to pay all employees thebenefits relating to employee service in thecurrent
andprior
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 areduction in the future payments isavailable.
1.16.3 Share-based payments
The Group operates a number of equitysettled, share-based compensation plans
under which the entity receives services
from employees as consideration for equity
instruments of the Group. The fair value ofthe employee services received in exchange
for the grants of the options is recognized
as an expense over the vesting period. The
total amount to be expensed is determinedby referring to the fair value of the options
granted.
The fair value of the options to be settled inequity instruments is estimated at the grant
date. The fair value is determined by an
external part by applying the Black and
Scholes
option-pricing
model.
The
assumptions underlying the number of
options expected to vest are adjusted toreflect conditions prevailing at thereporting date. For further details see Note17.
The social security contributions payable inconnection with the grant of the shareoptions is considered an integral part of the
grant itself, and the charge will be treatedas 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 Blackand Scholes option pricing model. Expenses
for bonus shares are included in payroll
expenses. The fair value of the bonus sharesand the estimated employer’s contribution

are distributed as expenses over the
expected period until settlement. Changes
inestimates
affecting
employer’s
contributions are expensed over theremaining vested period. For further details
see Note 17.

credits and unused tax losses, to the extent
that it is probable that taxable profit will beavailable against which the deductible
temporary differences, and the carryforward of unused tax credits and unused
tax losses can be utilized.

1.17 Current and deferred income tax
The tax expense for the period comprises
current and deferred tax. Tax is recognizedin the income statement, except to theextent when it relates to items recognizedin other comprehensive income or directlyin equity. In this case, the tax is also
recognized in other comprehensive income
or directly in equity, respectively.

The carrying amount of deferred income
tax assets is reviewed at each reporting
date and reduced to the extent that it is nolonger probable that sufficient taxable
profit will be available to allow all or part ofthe deferred income tax asset to be
utilized. Unrecognized deferred income tax
assets are reassessed at each reporting
date and are recognized to the extent thatit has become probable that future taxable
profit will allow the deferred tax asset to be
recovered.

1.17.1
Current income tax
Current income tax assets and liabilities forthe current and prior periods are measured
at the amount expected to be recoveredfrom or paid to the taxation authorities. The
amount of current tax payable or receivable
is the best estimate of the tax amount
expected to be paid or received thatreflects uncertainty related to income
taxes, if any. The tax rates and tax laws thatare used to compute the amount are thosewhich are enacted or substantively enacted
at the reporting date.
1.17.2
Deferred income tax
Deferred income tax is determined by using
the liability method on temporary
differences at the reporting date between
the tax bases of assets and liabilities andtheir carrying amounts for financial
reporting purposes.
Deferred income tax liabilities arerecognized for all taxable temporary
differences. Deferred income tax assets arerecognized for all deductible temporary
differences, carry forward of unused tax

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 havebeen enacted, or substantively enacted, atthe reporting date.
Deferred income tax assets and deferredincome tax liabilities are offset to theextent that:• the Group has a legal and enforceable
right to offset the recognized amounts
and;• if deferred tax assets and tax liabilities
relates to income tax from the same tax
authorities and the same taxable entity in
the Group, or if different taxable entities
in the Group intend either to settle on a
net basis, or to realize the asset and settle
the liability simultaneously.

27

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Deferred income tax is provided based on
temporarydifferences
arisingfrominvestments in subsidiaries and associates,
except where the timing of the reversal of
the temporary difference is controlled by
the Group and it is probable that thetemporary difference will not reverse in theforeseeable future.
1.18 Contingent assets and liabilities
A contingent asset is not recognized in theannual financial statements but disclosed in
the notes where an inflow of economic
benefits is probable.
Contingent liabilities are defined as
possible obligations arising from past
events the existence of which depends on
future events, or for which it is improbablethat they will lead to an outflow ofresources, or which cannot be measured
with sufficient reliability.
Contingent liabilities are not recognized in
the annual financial statements, but
significant
contingent
liabilities
aredisclosed in the notes to the financial
statements, with the exception ofcontingent liabilities where the probabilityof the liability occurring is remote.
1.19 Revenue recognition
Revenue comprises the amounts thatreflect the consideration to which theentity expects to be entitled in exchange forgoods and services promised to betransferred to customers in the generalcourse of the Group’s activities. Revenue isshown net of value-added tax anddiscounts. The Group recognizes revenue
when the performance obligations in thecontract with the customer are satisfied.

Revenue from the airline business isgenerally associated with the performanceobligation of the air transport taking place.
Tickets are pre-sold up in advance of the airtransport taking place. The Group receives
payment at or shortly after time of sale, butsuch payments might be partly delayed until
time of transport with any hold-back
imposed by credit card acquirers forsecurity reasons. Between time of sale andtime of air transport the amounts collectedfrom the customers, are presented as air
traffic settlement liabilities. The value ofthe resulting air traffic settlement
liabilities, less any taxes collected on behalfof authorities, represents the aggregatetransaction
priceofperformanceobligations not yet satisfied.
Tickets can be purchased up to almost one
year prior to the air transport taking place.
The contracts with customers hence have aduration of less than one year and thecorresponding air traffic settlement
liabilities will always fall due within one
year. Hence will also a financial year’s
reported revenue include the entire closingbalance of the prior year’s air traffic
settlement liabilities.
The time between ticket sale and time of
the air transport taking place is less than
one year and based on materiality
considerations the Group does notrecognize any financing element in relation
to ticket sales.
1.19.1
Passenger revenue
Passenger revenue is reported as traffic
revenue when the air transport has been
carried out and the performanceobligations hence are satisfied. The value ofsold tickets and which are still valid but not

used by the reporting date (amounts sold inexcess of revenue recognized) is reported
as air traffic settlement liability. Thisliability is reduced either when the Grouporanotherairlinecompletes
thetransportation or when the passenger
requests a refund.
1.19.2
Ancillary revenue
Ancillary revenue comprises sales of ticketrelated products and services, e.g. revenue
from baggage sales, seating and premium
upgrades. Most of the products andservices do not have separate performanceobligations but are associated with theperformance obligation of the air transport
and are hence recognized as revenue at thetime of the transport. Between time of saleand time of transport such ancillary
revenue items are reported as part of the
air traffic settlement liability.
Amounts paid by ‘no-show’ customers arerecognized as revenue when the booked
service is provided, and performanceobligations are satisfied. ‘No-show’customers with low fare tickets are notentitled to change flights or seek refunds
for other than taxes once a flight has
departed.
1.19.3 Contract costs
Certain incremental distribution costs inrelation to the pre-sale of tickets arecapitalized between time of sale and timeof the air transport taking place. As such
distribution costs are incremental andcorrelated with ticket sales, experience
data is collected on the size of the various
elements of contract costs relative to thesize of the revenue. Such experience data
together with the size of air traffic
settlement liabilities give basis forcapitalization and amortization of thecontract costs.
1.19.4 Other revenue
Other revenue comprises third party
revenue, such as lease, cargo, government
support and revenue from businessactivities in subsidiaries which are notairlines.
Other airline revenues are recognized when
the performance obligations have beensatisfied through the rendering of services.
Revenue from sales of Wi-Fi products andservices comprises traffic fees. Revenue
traffic fees are recognized as revenue atthe time of consumption.
1.19.5

Customer loyalty program –Norwegian Reward
The Group runs a loyalty program:
Norwegian Reward. Reward members earn
the digital currency “CashPoints”. The
program enables members to earn
CashPoints as they fly with Norwegian, use
the Bank Norwegian credit card and frommaking purchases of goods and services
from more than 50 Reward partners.
CashPoints can be used as full or partial
payment for goods or services offered by
the Group.
CashPoints are considered as a separate
element of a sale with multiple elements.
The portion of the price allocated to Cash
Points is based on the stand-alone selling
price. Revenue allocated to accrued cash
points is deferred and recognized as acontract liability, taking into consideration
estimated redemption rate. The contract
liability is included in the line-item Tradeand other payables in the consolidated
statement of financial position. The

28

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

CashPoint liability is derecognized andrecognized as revenue when the points are
redeemed or expire.
Revenue and costs from issuing CashPoints
to external partners in the loyalty program
Reward are presented on a net basis.
1.20 Leasing
At inception of a contract, the Groupassesses whether a contract is, or contains,
a lease. A contract is, or contains, a lease if
the contract conveys the right to control
the use of an identified asset for a periodof time in exchange for consideration. To
assess whether a contract conveys the rightto control the use of an identified asset, theGroup assesses whether the contract
involves the use of an identified asset. The
asset is not identified if the lessor has asubstantive substitution right. The Groupassesses further whether it has the right toobtain substantially all of the economic
benefits from the use of the asset
throughout the period and whether it has
the right to direct the use of the asset.
The Group has elected not to recognize
right-of-use assets and lease liabilities for
short-term leases, except for aircraft
leases, and leases of low-value assets,
including IT equipment. The Group
recognizes the lease payments associatedwith these leases as an expense on astraight-line basis over the lease term.
1.20.1

Measurement and presentation ofright-of-use assets and leaseliabilities
As a lessee, the Group leases many assets
including aircraft, aircraft spare parts,
facilities and other equipment.

The Group recognizes a right-of-use asset
and a lease liability at the leasecommencement date. The right-of-use
asset is initially measured at cost, which
comprises the initial amount of the leaseliability adjusted for any lease payments
made at or before the commencement
date, plus any initial direct costs incurredand an estimate of costs to dismantle andremove the underlying asset or to restore
the underlying asset or the site on which it
is located, less any lease incentives
received.
The right-of-use asset is subsequently
depreciated using the straight-line methodfrom the commencement date to the endof the lease term, unless the lease transfers
ownership of the underlying asset to theGroup by the end of the lease term or thecost of the right-of-use asset reflects that
the Group will exercise a purchase option.
In that case the right-of-use asset will be
depreciated over the useful life of theunderlying asset, which is determined on
the same basis as those of property andequipment. In addition, the right-of-use
asset is periodically reduced by impairment
losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at thepresent value of the lease payments thatare not paid at the commencement date,discounted using the interest rate implicitin the lease or, if that rate cannot be readily
determined, the Group’s incremental
borrowing rate. Generally, the Group uses
its incremental borrowing rate as thediscount rate. The Group determines its
incremental borrowing rate by obtaining
interest rates from various externalfinancing sources and makes certain

adjustments to reflect the terms of thelease and type of the asset leased.
Lease
payments
includedinthemeasurement of the lease liability comprisethe following:• fixed payments, including in-substance
fixed payments;• variable lease payments that depend on
an index or a rate, initially measured using
the index or rate as at thecommencement date;• amounts expected to be payable under aresidual value guarantee; and• the exercise price under a purchase
option that the Group is reasonably
certain to exercise, lease payments in an
optional renewal period if the Group isreasonably certain to exercise an
extension option, and penalties for earlytermination of a lease unless the Group isreasonably certain not to terminate early.
Variable rents that do not depend on anindex or rate are not included in themeasurement the lease liability and theright-of-use asset. The related payments
are recognized as an expense in the period
in which the event or condition that triggers
those payments occurs.
The lease liability is subsequently measured
by increasing the carrying amount to reflect
interest on the lease liability (using theeffective interest method) and by reducing
the carrying amount to reflect the lease
payments made. It is remeasured when
there is a change in future lease payments
arising from a change in an index or rate, if
there is a change in the Group’s estimate of
the amount expected to be payable under aresidual value guarantee, if the Groupchanges its assessment of whether it will

exercise a purchase, extension or
termination option or if there is a revised
in-substance fixed lease payment. Whenthe lease liability is remeasured in this way,a corresponding adjustment is made to thecarrying amount of the right-of-use asset
or is recorded in profit or loss if thecarrying amount of the right-of-use asset
has been reduced to zero.
Obligations for costs to restore theunderlying asset to the condition requiredby the terms and conditions of the lease, aprovision is recognized and measured
under IAS 37. To the extent that the costs
relate to a right-of-use asset, the costs areincluded in the related right-of-use asset.
The Group presents right-of-use assets
from aircraft and aircraft spare parts leasesin ‘Right-of-use aircraft, parts andinstallations’ in the consolidated statementof financial position. Right-of use assets
from facility and equipment leases arepresented as `Right-of-use buildings´ and´Right-of-use equipment´, respectively.
Interest expense on the lease liability ispresented as `Interest expense´ in the
consolidated
incomestatement.
Depreciation of the right-of-use assets ispresented
under`Aircraftlease,
depreciation and amortization´.
For aircraft sale-leaseback transactions,
the ROU asset is measured at the portion of
the previous carrying amount of the asset
that relates to the right of use retained by
the seller-lessee. Gain or loss is recognized
for the amount that relates to the rights
transferred to the buyer-lessor.
1.21 Segment reporting
Operating segments are reported in amanner consistent with the internal

29

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

reporting provided to the chief operating
decision maker who is responsible forallocating resources and assessing theperformance of the operating segments.
The chief operating decision maker has
been
identified
asthe
Executive
Management. The Group has one operating
segment, which is low-cost air passenger
travel. See Note 4 for further details.
1.22 Events after the reporting date
New information regarding the Group’s
positions at the reporting date is taken into
account in the preparation of the annual
financial statements. Events occurring after
the reporting date which do not affect theGroup’s position at the reporting date, butwhich will affect the Group’s position in the
future, are disclosed if significant.
1.23 Critical accounting estimates andjudgments
In preparing the consolidated financial
statements, the Management is required toassessjudgments,
estimatesandassumptions that affect the reported
amounts of assets and liabilities, income
and expenses. The critical judgments andkey sources of estimation uncertainty thathave been made in preparing theconsolidated financial statements aredetailed below. These judgments involve
assumptions or estimates in light of future
events that can differentiate from what is
expected.
The aircraft held under lease agreements
are subject to specific redelivery
conditions stated in the contracts as well as
periodic maintenance programs as definedby the aircraft and engines manufacturers.
To meet these requirements, the Group
must conduct maintenance, both regularly
and at the expiration of the leasing period.
Provisions are made based on theestimated costs of overhauls andmaintenance. In order to estimate these
conditions, the Management must makeassumptions
regarding
expected
maintenancecosts.
Descriptionofmaintenance cost estimates are describedin Note 19.
Non-current assets are depreciated on astraight-line basis or by airborne hours andcycles over the estimated useful lives,
taking expected residual value into
consideration. An aircraft is separated into
several components for depreciation
purposes in order to consider different
useful lives of the aircraft components, inaccordance with official requirements. The
depreciation period and method areassessed annually to ensure that theyreconcile with the substance of the noncurrent asset, and the residual value isestimatedat
each
year-end.
The
assessments require Management to makeassumptions regarding expected useful
lives and residual values.
Deferred tax assets are recognized for all
unused tax losses to the extent that taxable
profits are probable. Deferred tax liabilities
are recognized when an obligation has been
incurred.
Significant
management
judgment is required to determine theamounts of deferred tax assets that can berecognized, based on the anticipatedtiming and level of future taxable profits

together with future tax planning
strategies. Deferred tax liabilities that havebeen incurred are based on the best
estimate of the likely obligation at eachreporting period. These estimates are
subject to revision based on the outcomeof tax audits and discussions withauthorities that can take several years toconclude. See Notes 9 and 27 for further
details of tax positions.
The COVID-19 effects on the airline industry
and the Company's level of operation isevaluated as an impairment indicator, andan impairment testing has been performed
for the Company's non-current assets. The
recoverable amounts of cash-generating
units have been determined based onvalue-in-use
calculations.
These
calculations require the use of estimates.
See Note 11 for further details.
The Group cannot readily determine theinterest rate implicit in the lease,
therefore, it uses its incremental borrowing
rate (IBR) to measure lease liabilities. The
IBR is the rate of interest that the Groupwould have to pay to borrow over a similarterm, and with a similar security, the funds
necessary to obtain an asset of a similarvalue to the right-of-use asset in a similar
economic environment. The IBR therefore
reflects what the Group ‘would have topay’, which requires estimation when noobservable rates are available (such as for
subsidiaries that do not enter into financing
transactions) or when they need to be
adjusted to reflect the terms andconditions of the lease (for example, whenleases are not in the subsidiary’s functional

currency). The Group estimates the IBR
using observable inputs (such as market
interest rates) when available and isrequired to make certain entity-specificestimates (such as the subsidiary’s standalone credit rating).
In connection with the Examinership andReconstruction processes, all owned but
four aircraft were returned to the financing
parties. 16 previously owned aircraft were
subsequently leased back to the Group. The
abandonment and leasing of aircraft
previously owned by the Group inconnection with the Examinership areassessed by management to be closely
related transactions which are to betreated as sale-leaseback transactions.
In calculating the proportion of the carrying
amount of the aircraft retained by theGroup, management estimated the fairvalue of the aircraft sold based on externalvaluations. The consideration received fortheabandoned
aircraftwastheextinguished debt related to the aircraft.
The fair value of the consideration wasassessed to be the book value of theextinguished debt to the creditors.
In the measurement of the new leaseliabilities for the aircraft on sale-leaseback,management estimated the expectedutilization of those aircraft during the PBHperiod. Lease payments expected to
exceed the minimum lease payments during
the PBH-period are included in themeasurement of the lease liabilities

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NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 2: FINANCIAL RISKThe Group’s activities expose it to a variety
of financial risks; market risk (including
currency risk, interest rate risk and pricerisk), credit risk and liquidity risk. The
Group’s overall financial risk management
program focuses on changes andfluctuations in financial markets and seeks
to minimize potential adverse effects on
the Group’s financial performance. The
Group uses derivative financial instruments
to hedge certain financial risk exposures.
Financial risk management is carried out by
a central treasury department (Group
Treasury), under policies approved by the
Board of Directors. Group treasury
identifies, evaluates and hedges financial
risk in close co-operation with the Group’s
operating units. The Board provides
principles for overall risk management suchas foreign currency risk, interest rate risk,
credit risk, use of derivative financial
instruments and investment of excess
liquidity.

of the Group’s net investments in foreign
entities and proceeds from theseinvestments varies with changes in theforeign exchange rate. In order to reduce
currency risk, the Group has a mandate tohedge its currency exposure for thefollowing 12 months. Hedging can consist of
forward currency contracts and flexible
forwards.
2.2.1

Exchange rate risk sensitivity
analysis
This analysis does not take into accountcorrelation between currencies. Empiricalstudies confirm substantial diversification
effect across the currencies that the Groupis exposed to.
2.2.2

Effects on net currency gains(losses)
The Group is exposed to currency
fluctuations on financial instruments in thestatement of financial position.

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 willaffect the Group’s income or value of its
holdings of financial instruments.

If NOK had weakened by 1 percent against
USD in 2021, with all other variables held
constant, post-tax profit effect would havebeen negative by NOK 2 million (comparedto negative NOK 44 million in 2020), mainly
as a result of foreign exchange losses/gains
on receivables, payables and cash and cash
equivalents.

2.2 Foreign exchange risk
A substantial part of the Group’s expenses
is denominated in foreign currencies. The
Group’s leases, aircraft borrowings,
maintenance, jet fuel and related expenses
are mainly denominated in USD, andairplane operation expenses are partly
denominated in EUR. The carrying amount

If NOK had weakened by 1 percent against
EUR with all other variables held constant,post-tax profit effect for the year would
have been negative by NOK 3 million(compared with negative NOK 6 million in2020), mainly as a result of foreignexchange losses/gains on receivables,
payables and cash and cash equivalents.

If NOK had weakened by 1 percent against
GBP with all other variables held constant,post-tax profit effect for the year would
have been close to zero (compared withpositive NOK 2 million in 2020), mainly as aresult of foreign exchange losses/gains onreceivables, payables and cash and cash
equivalents.
2.2.3

Effects due to foreign exchangetranslations on othercomprehensive income

The Group has major investments inoperations abroad, whose net assets are
exposed to foreign currency translation
risk. Currency exposure arising from thenet assets of the Group’s foreign
operations can be material, but thevariances create a natural hedge against theGroup’s currency exposure on operating
expenses. If NOK had weakened with 1
percent against USD with all other variables
held constant, other comprehensive
income would have been NOK 123 million
higher (compared to NOK 129 million higher
in 2020). If NOK had weakened with 1
percent against EUR with all other variables
held constant, other comprehensive
income would have been NOK 9 million
lower (NOK 2 million higher in 2020).
2.3 Cash flow and fair value interest raterisk
As the Group has net interest bearing
deposits, the Group’s income andoperating cash flows are dependent onchanges in the market interest rates. The
Group’s cash flow interest rate risk arises
from cash and cash equivalents and floatinginterest rate borrowings. Floating interest

rate borrowings consist of a secured bondissue and a term facility. Borrowings issued
at fixed rates expose the Group to fair valueinterest rate risk. Fixed interest rateborrowings consist of aircraft financing.
Borrowings are denominated in USD and
NOK.
If the floating interest rate in 2021 had been
1 percent higher/lower with all othervariables held constant, post-tax profit andpost-tax equity effect for the year would
have been NOK 8.5 million lower/higher(2020: NOK 54.5 million), mainly as a resultof higher/lower interest income on floating
rate cash and cash equivalents andborrowings.
The Group measures borrowings at
amortized cost. No changes in fair value of
fixed rate interest rate borrowings would
be accounted for. Fair value calculations of
fixed interest rate borrowings are detailedin Note 22.
2.4 Jet fuel prices
Expenses for jet fuel represent a substantial
part of the Group’s operating costs, andfluctuations in jet fuel prices influence theprojected cash flows. The objective of thejet fuel price risk management policy is tosafeguard against significant and sudden
increases in jet fuel prices whilst retaining
access to price reductions. The Groupmanages jet-fuel price risk using fuelderivatives. Management has a mandate tohedge zero to 50 percent of its expectedconsumption over the next twelve months
with forward contracts.
At the end of 2021, the Group did not have
any jet fuel forward contracts.

31

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

2.5 Credit risk
Credit risk is managed on a Group-widebasis. Credit risk arises from cash and cash
equivalents,
derivative
financial
instruments and deposits with banks andfinancial institutions, as well as credit
exposures to travel agencies andcommercial
customers,
includingoutstanding receivables and committed
transactions. The utilization of credit limits
is regularly monitored. The Group’s policy
is to maintain credit sales at a minimum
level. Sales to private customers are settled
in cash or using major credit cardcompanies.
Credit risk related to bank defaults is
closely monitored and partly offset bydiversifying the Group’s deposit portfolio.
There is re-invoicing of maintenance costs
on aircraft to leasing companies, andNorwegian 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 marketablesecurities, the availability of funding
through an adequate amount of committed
credit facilities and the ability to close out
market positions. The liquidity is affectedby trading risks presented by current
economic conditions in the aviation sector,
particularly in relation to passenger
volumes and yields and the associatedprofitability of individual routes. A portionof the Group’s sales are paid for by thecustomers at the time of booking andNorwegian receive the actual paymentsfrom the credit card acquirers either at thetime of sale or at the time of travel. Delayed
payments from credit card companies vary

between credit card acquirers. A reduction
in credit lines with credit card acquirers
might have an adverse effect on theGroup's liquidity. The risk arising fromreceivables on credit card companies or
credit card acquires are monitored closely.
The Board of Directors has imposed aninternal liquidity target which is closely
monitoredbytheManagement.
Management monitors rolling forecasts of
the Group’s liquidity reserve, cash and cash
equivalents (see Note 24) on the basis of
expected cash flow. The Group's liquidity
management policy involves projecting
cash flows in major currencies andconsidering the level of liquid assets
necessary to monitor liquidity ratios againstinternal
andexternal
regulatory
requirements and maintaining debt
financing plans. The projected cash flows
are based on a detailed plan that covers aperiod for at least twelve months after thedate of approval of these financial
statements. In developing these forecasts,
estimates and judgement are made to
project revenue, costs and availability ofdifferent financing sources. Assessments
are made of potential adverse effects fromevents outside the Group’s control.

32

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

The table below analyses the maturity profile of the Group’s financial liabilities at thereporting date. The amounts disclosed are the contractual undiscounted cash flows:

NOK million

Less than 1
year

Between 1
and 2 years

Between 2
and 3 years

Between3 and 5years

Over 5years

181.1
3,782.6
1,000.2
34.4
4,998.4

220.2
1,164.9
46.3
1,431.4

233.8
1,092.2
39.8
1,365.8

4,297.4
1,752.4
58.7
6,108.5

458.2
1,072.5
35.3
1,566.0

At 31 December 2021
Borrowings
Trade and other payables
Lease liabilities
Calculated interest on borrowings
Total financial liabilities

NOK million
At 31 December 2020
Borrowings
Derivative contracts - payments
Trade and other payables
Lease liabilities
Total financial liabilities

Less than 1
year

Between 1
and 2 years

Between 2
and 3 years

Between 3
and 5 years

Over 5years

26,085.2
49.2
10,328.8
23,067.2
59,530.4

35.7
35.7
35.7

35.7
35.7
35.7

3.2
67.4
70.6

111.6-The impact to share and paid-in capital and the income (loss) following the financial
restructuring in May 2021 are presented in the table below.
NOK million
Bonds
Trade and other payables and related receivables
Aircraft and related liabilities
Borrowings, Perpetual and Retained claims bondPrivate placement/Rights issue
Dividend claim
Cash dividend
Liquidated companies
Total

1)

The equity ratios at 31 December were as follows:

2)

3)
2021
3,269.6
18,825.4
17.4 %

Footnotes
1
2
3
4
5
6
6
7

Share and paidin capital

Income (loss)

41.9
0.0
0.0
1,843.3
4,029.7
1,933.6
0.0
0.0
7,848.5385.4
4,043.8
1,586.3
866.8
0.0(1,762.8)(439.5)
1,194.5
5,874.5

111.6

2.7 Capital risk management
The Group’s capital management policy is to have a capital structure which meets thedemands of operations, reduces cost of capital and complies with financial covenants andfuture investments planned by the Group. The Group will adjust debt and equity to maintainand secure an optimal capital structure by continuously monitoring the total equity level andthe equity ratio of the Group. This ratio is calculated as equity divided by total assets aspresented in the consolidated statement of financial position and consolidated statementof changes in equity.

(NOK million)
EquityTotal assets
Equity ratio

2.7.1
Financial restructuring
The Company successfully completed the restructuring process in May 2021. In total, therestructuring improved equity by NOK 13,723 million. The total effect on total
comprehensive income was NOK 5,875 million, of which NOK 534 million relates to historicalcurrency translation effects from subsidiaries derecognized in 2021, reclassified from othercomprehensive income to profit and loss.

2020(6,623.9)
49,554.0-13.4 %

4)

Bonds: These amounts reflect the net effect of the extinguishment of unsecured
Bond debt issued prior to 18 November 2020 (NAS07, NAS08 and the US convertible)
and the issue of the new Bond NAS13. The effect is a net reduction in debt with acorresponding increase in equity through Income. The portion recognized asincrease in Share and paid in capital reflects the conversion of zero-coupon
perpetual bonds with floor protection from debt to equity during the first half year
in 2021.
Trade and other payables and related receivables: These amounts reflect theextinguishment of vendor debt and related receivables from the same vendors,
from the period before 18 November 2020. The effect is a reduction in net debt
and increase in other equity through Income.
Aircraft and related liabilities: This amount reflect the net effect of replacing oldlease contracts with new for 31 aircraft, reduced maintenance obligations, saleleaseback of 16 aircraft and redelivery of 83 aircraft included in disposal group at
year end 2020. The net effect is a reduction in net liabilities with a corresponding
increase in other equity through Income.
Borrowings, Perpetual and Retained Claim Bond: These amounts reflect
extinguishment of the unsecured part of loan with state guarantee and otherborrowings, the issue of the new Perpetual Bond classified as equity and the related

33

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

5)
6)

7)

Retained Claim Bond. The effect is a net reduction in outstanding debt with acorresponding increase in share and paid in capital with NOK 1,843 million andother equity through Income of NOK 867 million.
Private placement/Rights issue: This amount reflects the net proceeds from shareissue in the private placement and the rights issue in May 2021.
Dividend claim: Reflects the issue of the Dividend Claim with conversion rights,
followed by conversion of dividend claim to shares. The Dividend Claim was granted
to unsecured creditors, that did not participate in the rights issue or new capital
perpetual bond issue, as a 4% compensation for extinguished debt in addition to
the Cash Dividend. The effect is an increase in debt with NOK 2 million, and anincrease in Share and paid in capital with NOK 1,934 million representing the valueof the conversion element and a net corresponding effect on other equity ofnegative NOK 1,763 million that has to be assessed together with the effect related
to Trade and other payables and related receivables. Cash dividend: This amountreflects the cash dividend payable to unsecured creditors, that did not participate
in the rights issue or new capital perpetual bond issue, as compensation for
extinguished debt.
Liquidated companies: This amount reflect the impact on equity from
derecognition of disposed/liquidated subsidiaries. The effect is a gain onderecognition of negative equity with NOK 1,195 million and a transfer ofaccumulated negative currency translation differences with NOK 534 million from
OCI to Income. Net impact reflected in Income is NOK 661 million.

2.8 Going concern
In 2021, the Group successfully exited the examinership and reconstruction process, andthe basis for continuing as a going concern was secured/fulfilled through debt
extinguishment and capital injection. Necessary additional working capital was obtained
mainly through share offerings including the Rights Issue, an additional private placement
and the issue of perpetual bonds, raising gross proceeds of NOK 6 billion.
In February 2022, Russia announced a military invasion of Ukraine. Strict sanctions havebeen imposed against Russia by the United States, the EU and other countries. Following theinvasion, international capital markets have seen increased volatility and the oil price has
spiked, which in turn has resulted in increased fuel costs for the Company. The
consequences of the acts of war on the Group’s operations and financial results are
uncertain but does not affect the going concern assumption.
Although several countries are currently easing up on restrictions relating to COVID-19,
there is still uncertainty regarding the future development of infection rates, virus variants
and the potential implementation of new restrictions. The impact these factors may have on
the Group’s operations and financial results are uncertain but does not affect the going
concern assumption.

Uncertainties in relation to the public and political debate regarding the negative climate
impacts of air travel is not regarded as a threat to the going concern assumption.

NOTE 3: FAIR VALUE ESTIMATION
Financial instruments which are measured in the statement of financial position at fair value,
require 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 andregularly available and represent actual and regular occurring market transactions on anarm’s length basis. The Group had no financial instruments in this category at end of 2020
or 2021.
Level 2
The fair value of financial instruments that are not traded in an active market is determinedby using valuation techniques. These valuation techniques maximize the use of observable
market data where it is available and rely as little as possible on entity specific estimates.
Level 3
If one or more of the significant inputs are not based on observable market data, specificvaluation techniques are applied.
The Group had no financial instruments measured at fair value at end of 2021.
The following table presents financial liabilities measured at fair value at 31 December 2020:
NOK million

Derivative financial liabilities, non-current
Derivative financial liabilities, current
Total liabilities at fair value through profit and loss

Level 1

Level 2

Level 3

Total

-

3.2
49.2
52.5

-

3.2
49.2
52.5

Fair value of borrowings
All borrowings per 31 December 2021 and 2020 are measured at amortized cost. The fairvalue of current borrowings approximates their carrying amount. The NAS13 bonds issued in
2021 are traded in an active market. Thus, their fair value is based on quoted market prices
on or close to the reporting date (level 1 in fair value measurement hierarchy). The fair value

34

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

of other non-current borrowings in 2021 is not exclusively determined based on observable
market data (level 3 in fair value measurement hierarchy). Their fair value is based on cash
flows which are discounted using rates listed in Note 22.
The maturity profile of borrowings is presented in note 2.6. The carrying amounts and fairvalues of the non-current borrowings are as follows:
Carrying amountNOK million

Fair value

2021

2020

2021

2020

575.0
2,524.9
134.9
802.9
2.0
4,039.6-415.4
2,594.5
145.1
662.3
2.0
3,819.3-

Freight
Other revenue
Total operating revenue

Total fair value

158.8
946.4

5,067.8

9,095.7

Other revenue includes governmental funds to uphold certain routes deemed part of criticalinfrastructure in Norway of NOK 50.5 million (2020: NOK 426.7 million).

NOK million
Bond issue
Retained claims bonds
Term facility
Aircraft financing
Other non-current debt

14.8
199.7

2021

2020

NorwaySpain
Denmark
SwedenFinlandFranceUK
Italy
GreeceGermany
Other
Total

2,487.0
651.1
575.8
524.2
122.0
104.8
91.1
66.3
65.3
47.5
332.7
5,067.8

3,316.3
1,218.2
546.6
603.3
221.8
256.8
720.4
53.3
19.8
86.8
2,052.4
9,095.7

Total outside of Norway

2,580.8

5,779.4

By country:

NOTE 4: SEGMENT AND REVENUE INFORMATION
Executive Management reviews the Group’s internal reporting to assess performance andallocate resources. Management has determined the operating segment based on thesereports. 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, amortization and aircraft lease (EBITDAR).
Other information is measured in accordance with the financial statements.

NOTE 5: OTHER OPERATING EXPENSES
NOK million

2021

2020

The table below shows revenues from low-cost air passenger travel which is split between
passenger revenue, ancillary revenue, freight revenue and other revenue. Passenger related
revenue per country is based on starting point of passenger journeys. Freight related
revenue is based on starting point of freight services.

Sales and distribution expenses
Other flight operation expenses
General and administrative expenses

165.3
323.0
901.8

274,2
516,2
1,171.5

1,390.2

1,961.9

NOK million
By activity:
Passenger transport
Ancillary revenue

2021

3,911.8
941.5

Total other operating expenses

2020

6,455.3
1,535.1

Other operating expenses are related to sales and distribution, the operating of systems,
marketing, back office, consultants, and other costs not directly attributable to theoperation of the aircraft fleet and related airline-specific costs.

35

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 6: PAYROLL EXPENSES AND NUMBER OF EMPLOYEESNOTE 7: REMUNERATION OF THE BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENTNOK million

2021

2020

Wages and salaries
Social security tax
Pension expenses
Employee stock options
Other benefits
Hired crew personnel

1,608.0
242.0
131.8
13.2
89.9
-

1,785,6
357.3
226.2
6,6
148,6
396.9

Total

2,084.9

2,921.2

Payroll expenses include hired crew personnel. Some employees are participants in defined
pension plans. See Note 18 for details.
Man-labor
years

Head count

2021

2021

2020

Cabin Crew

638

1,375

3,450

Flight Deck Crew

330

774

1,456

841

1,161

1,460

1,809

3,310

6,365

Non-crew
Total

**)

Head count **)Norway

1,282

2,111

2,062

Spain

194

691

1,903

United Kingdom

17

15

1148

Sweden40

48

59

Denmark

151

267

55

Italy

0

0

325

United States

1

0

469

Finland

7

29

2

France10272

Ireland

22

12

60

Latvia

94

137

11

Total

1,809

3,310

6,365

*) including head count and man-labor years related to hired crew personnel**) head count at 31.12.

Pursuant to the Norwegian Public Limited Liability Companies Act, section 6-16 a, the Board
presented the following statement regarding remuneration of Norwegian’s Management to
the 2021 Annual General Meeting (AGM).
The nomination committee proposed an extraordinary fee for the additional workload forthe members of the Board for the period from the AGM in 2020 to the AGM in 2021. This
was approved by the AGM in 2021.
According to the remuneration policy, the Board may decide to deviate from the guidelines
in individual cases, provided there are circumstances that make such deviations necessary
to safeguard the Company’s long-term interest and financial sustainability, or ensure theCompany’s viability.
The Company was operating in unprecedented times following the outbreak of COVID-19,
and it was vital to achieve sustainable solutions and demonstrate continuance of key
management to investors. The Board acknowledged the importance of motivating andretaining its Executives and securing qualified management of the Company for as long as
possible and at least for the upcoming period until 20 June 2021.
Therefore, in addition to the general terms and conditions agreed upon as part of each
Executives’ employment relationship, an incentive scheme in the form of retention bonus
was implemented to ensure continuity in key management through the extraordinary times
in the first half of 2021.
The deviation from the remuneration policy ensured stable and qualified management which
contributed to secure a successful reorganisation plan seeking protection under Irish
Examinership and Reconstruction in Norway.
The actual remuneration for 2021 is fully aligned with the principles of the remuneration
policy. Necessary steps were taken to ensure long-term performance and ensure theCompany’s viability, within the framework of the remuneration policy.
Remuneration governance - directive of remuneration of the CEO and the Executive
Management
The purpose of the remuneration of Executive Management in Norwegian is to stimulate astrong and lasting performance-oriented culture, enabling the Company to deliver on its
strategy. The overall compensation level should be competitive compared to comparable
organizations. The Board of Directors determines the remuneration of the CEO and theguidelines for remuneration of Executive Management (“Executives”). The grandfather
principle applies for Executives, implying that the Chair of the Board approves remuneration

36

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

for Executives other than the CEO. The remuneration of the Board and the Executives must
not have negative effects on the Company, nor damage the reputation of the Company.
Compensation made to Executives going forward will in part be aligned with Norwegian’s
performance.
Principles for base salary
The fixed salary should reflect the Executive’s area of responsibility and performance overtime. Norwegian offers base salary levels which are competitive in the market in which theCompany operates. Salaries are benchmarked against salary statistics provided by global
third-party human resource organisations and related financial services consulting firms.
Short-term incentive (STI) program
Norwegian’s short-term incentive program (STI) is an incentive program with a timeframe of
one year. The STI is a global incentive program designed to recognise, and reward executives
for the contributions they make to enable to the Company’s to meet its financial andbusiness targets. The objectives of the program are to,(i)clearly communicate to Executives the Company targets,(ii)
communicate to the Executives how variable compensation is linked to theCompany’s performance,(iii)
positively impact the organisation’s ability to meet or exceed theCompany’s performance targets,(iv)
encourage more cross-functional cooperation and a “one Norwegianmind-set”, and(v)
improve the Company’s ability to attract and retain employees.
The target variable compensation for the CEO is 75 percent of the gross base salary. The
maximum variable compensation is 127.5 percent of the gross base salary. The intended
variable compensation scheme for 2021 was not made effective, primarily due to thefinancial impact of COVID-19 on the Company.
Long-term incentives program
Norwegian offers employees hired in a Scandinavian legal entity participation in a long-term
incentive program (LTI) through an employee share savings plan. The objective of the LTI is
to align and strengthen the interest of employees and shareholders and to remunerate forlong-term commitment and value creation. Under this plan, Norwegian will match 50
percent of the employees’ investment, limited up to NOK 6,000 per annum. Provided thatthe employee contributes NOK 12,000 annually, Norwegian’s contribution will be NOK
6,000. The program has a one-year vesting period. If the shares are kept for two calendar
years, the participants will be allocated bonus shares proportionate to their purchase. One
bonus share will be earned for every tenth share allocated under this scheme.

Share Option Plan
The Board of Directors has established annual share option plans for Executives and otherkey leading employees. It is the Company's view that the granting of share purchase options
through option schemes are positive for long-term value creation of the Company. The
intention of this plan is to (i) attract and retain employees whose service is important to theCompany's success, (ii) motivate such employees to achieve long-term goals for theCompany, (iii) provide incentive compensation opportunities to such employees which arecompetitive with those of other companies, and (iv) to secure that such employees’ financial
interest is aligned with the shareholders of the Company. The Board can offer share options
to Executives and other key leading employees when shareholders have given the authority
through an AGM to grant schemes in accordance with the following principles:
•

•
•

•

The exercise price per share shall be the average price of the Norwegian share, ticker
NAS.OL, on trading days during the first 10 calendar days after presentation of
Norwegian’s second quarter financial results plus 10 percent and rounded to the nearest
NOK 0.1
1/3 of options granted can be exercised at the earliest after 1, 2, and 3 years respectively,
and the options shall expire after seven years
In any calendar year, each employee’s aggregated gross profit from exercise of options
under all share option programs shall not exceed five years of accumulated gross basesalaryIf an employee leaves the Company, the non-vested options will forfeit. Outstanding
options exercisable at the date of such termination shall be exercisable no later than thefirst exercise period thereafter.

Severance pay
The notice period for the CEO and Executives is six months. The CEO severance pay is six
months. Executives do not have severance pay, with the exception of the EVP Product &Digital Development and EVP Sales, Marketing & Customer Care which have six months basesalary severance pay. The employee is not entitled to a severance payment in the event heor she terminates the employment. The CEO has a change of control clause in theemployment contract.
Remuneration composition
In addition to fixed and variable salary, other benefits such as insurance, newspaper,internet and telephone may be granted. The total value of these benefits should be modest
and only account to a limited portion of the combined remuneration package. Principles forcompany car and car allowance vary in accordance with local conditions.
Executives participate in the same pension plans as other employees within the unit in which
they are employed. Executives in the Norwegian entities participate in a defined
contribution pension plan. The annual accrual for 2021 was five percent of the annual basesalary from 1 to 7.1 G and eight percent from 7.1 to 12 G. G is the base amount of Norwegian

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Social Security which in 2021 amounted to NOK 106,399. From 2022 the annual accrual isamended to five percent of the annual base salary from zero to 7.1 G and eight percent from
7.1 to 12 G. Executives do not have a retirement agreement that deviates from other
employees within the unit in which they are employed.
The STI program described above was not effective for 2021, primarily due to the financial
impact of COVID-19 on the Company. A retention incentive scheme was implemented toensure continuity in Executives through the extraordinary times in the first half of 2021.

37

38

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Total Compensation year 2021
NOK 1,000
The Board of Directors

Fee4,5)

SalaryBonus6)Other
benefits 2)

Total
Compensation

Pensionexpense 3)

Niels Smedegaard, Chair of the Board (until the end of May 2021)
Svein Harald Øygard, Chair of the Board (since June 2021)
Sondre Gravir
Ingrid Elvira Leisner
Jaan Albrecht Binderberger (until the end of May 2021)
Lars Boilesen (since June 2021)
Margaret Christine Browne
Vibeke Hammer Madsen (until the end of May 2021)
Eric Holm, elected by the employees1)
Katrine Gundersen, elected by the employees1)
Geir Olav Øyen, elected by the employees (until April 2022) 1)
Torstein Soland, elected by the employees (since April 2022) 1)
Total board of directors

1,550
350
500
675
525
100
500
400
150
150

-

-

-

1,550
350
500
675
525
100
500
400
150
150

-

-

-

150
5,050

-

150
5,050

-

Executive Management
Geir Karlsen (Chief Executive Officer from 21.06.2021)
Anne-Sissel Skånvik (Executive Vice President Communications and Public Affairs)
Magnus Thome Maursund (Executive Vice President Network, Pricing & Optimisation) (since October 2021) 8)
Adrian Dunne (Executive Vice President Operations) (joined August 2021) 8, 9)
Christoffer Sundby (Executive Vice President Marketing, Sales & Customer Care)

-

4,875
2,000
525
1,270
3,000

11,000
1,500
337
1,017
2,250

153
159
45
74
151

16,028
3,659
907
2,361
5,401

89
89
30
108
89

Tor-Arne Fosser (Executive Vice President Airline Products & Digital Development) 7)

-

2,900

2,175

153

5,228

89

Knut Olav Irgens Høeg (Executive Vice President IT & Business Services)

-

2,300

1,725

153

4,178

89

Guro H. Poulsen (Executive Vice President People)

-

2,000

1,500

152

3,652

89

Andrew Hodges (Executive Vice President Network, Pricing & Optimisation) (until October 2021)

-

3,075

2,306

-

5,381

242

Johan Gauermann (Interim Executive Vice President Operations) (until September 2021)

-

1,795

1,593

-

3,388

561

Jacob Schram (Chief Executive Officer until 21.06.2021)

-

7,000

11,000144

18,14489

Total executive management-

30,74036,403

1,184

68,327

1,5641) For the employee representatives in the Board of Directors, only their fee for serving on the Board of Directors fee is stated2) Other benefits include company car/car allowance, insurance, telephone, internet, severance pay, etc.
3) Pension expense reflects paid pension premium4) Directors elected by the shareholders prior to the AGM of 2021 were granted an extraordinary fee of NOK 100,000 and the chair of the board NOK 1 million
5) The shareholder elected Board members and the Chair of the Board were granted fees to buy shares in the Company. The shares cannot be sold until the shares have a value corresponding to an annual board fee, total NOK 500,000, or
before resignation from the board
6) A retention incentive scheme was implemented to ensure continuity in Executives through the extraordinary times in the first half of 2021 as described on previous pages (Note 7)7) Tor-Arne Fosser left the Management Group in April 2022
8) Pro rata
9) Adrian Dunne received a sign on fee when he was appointed EVP COO in March 2021

No share options were exercised by the Management in 2021.

39

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Total Compensation year 2020
Other
benefits 2)

Total
Compensation

Pensionexpense 3)

-

550
300
300
300
300
300
-

-

-

-

2,050

1,050
750
575
125
125
125
300
300
300
400
425
4,475

-

7,000
4,500
2,000
2,000
2,108

148
148
171
148
139

7,148
9,648
2,171
2,148
2,248

86
86
86
86
79

Andrew Hodges (Executive Vice President Airline) (since June 2020) 4)

-

1,827

5,000
-

20

1,847

155

Johan Gauermann (Interim Executive Vice President Operations) (since June 2020) 4)

-

1,395

-

-

1,395

458

-

1,000

-

49

1,049

29

Tor-Arne Fosser (Executive Vice President Airline Ecosystem) (since October 2020) 4)

-

725

-

762

21

Bjørn Erik Barman-Jenssen (Executive Vice President Operational Development) (until January 2020) 4)

-

243

-

37
-

243

7

Thomas Hesthammer (Group Accountable Manager) (until January 2020) 4)

-

159

-

7

166

7

Kurt Erik Simonsen (Chief Customer & Digital Officer) (until January 2020) 4)

-

2,189

1,550

86

3,825

50

-

961

-

62

1,023

48

-

1,125

-

62

1,187

48

Sarah Goldsbrough (Executive Vice President HR, HSE & Payroll) (until May 2020) 4)

-

743

-

63

806

36

Marty St. George (Interim Chief Commercial Officer) (until May 2020) 4) 6)

-

4,235

-

0

4,235

43

NOK 1,000
The Board of Directors

Fee

SalaryBonus

Niels Smedegaard, Chair of the Board
Ingrid Elvira Leisner
Sondre Gravir
Eric Holm, elected by the employees
Geir Olav Øien, elected by the employees
Katrine Gundersen, elected by the employees
Chris Browne (elected at EGM 30 June 2020)
Jaan Albrecht Binderberger (elected at EGM 30 June 2020)
Vibeke Hammer Madsen (elected at EGM 30 June 2020)
Anton Joiner (elected at EGM 30 June 2020, resigned 10 November 2020) 7)
Christian Fredrik Stray (stepped down at EGM 30 June 2020)
Liv Berstad (stepped down at EGM 30 June 2020)
Total board of directors

500
450
275
125
125
125
-

-

400
425

-

2,425

Jacob Schram (Chief Executive Officer)
Geir Karlsen (Chief Financial Officer) 5)
Anne-Sissel Skånvik (Executive Vice President Communications and Public Affairs)
Guro H. Poulsen (Senior Vice President Crew Management/Executive Vice President People)
Knut Olav Høeg (Executive Vice President IT, Supply Chain & Process Improvement) (since February 2020) 4)-

Executive Management

Christoffer Sundby (Executive Vice President Customer) (since September 2020)

4)

Frode Berg (Chief Legal Officer) (until May 2020) 4)
Tore Jenssen (Chief Operating Officer/Managing Director Arctic Aviation) (until May 2020)

4)

4)

-

1,000

-

549

1,549

Kei Grieg Toyomasu (Senior Vice President Brand & Marketing) (since February 2020, until August 2020) 4)

-

1,371

-

5

1,376

50

Total executive management-

34,580

6,550

1,694

42,825

1,373

Brede Huser (Executive V.P. Loyalty/Man. Dir. Norwegian Reward) (since February 2020, until July 2020)

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

1)
2)
3)
4)
5)
6)
7)

For the employee representatives in the Board of Directors, only their fee for serving on the Board of Directors fee is stated
Other include company car/car allowance, insurance, telephone, internet, severance pay, etc. For board members, other include shares awarded on 30 June 2020 at the current market price of NOK 2.72 per sharePension expense reflects paid pension premium
Pro rata
Retention bonus
Hired consultant
Anton Joiner renounced his Board remuneration

No share options were exercised by the Management in 2020.

40

41

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 7A: AUDIT REMUNERATIONNOTE 9: TAXESNOK million excluding VAT

2021

2020

This year’s tax expense consists of:

Audit fee
Other audit related services
Tax advisory
Other services

10.5
0.7
1.8

14.4
2.8
2.8

NOK million

Total

13.0

20.0

The Group elected PricewaterhouseCoopers AS as their new auditor with effect for thefinancial year 2020.

2021

2020

Tax payable
Adjustments from previous year
Change in deferred tax

0.1
5.4
-

1.1
2.0
903.7

Income tax expense

5.5

906.8

2021

2020

1,876.0(22,133.0)

Expected tax expense (income) using nominal tax rate (22%)

412.7(4,869.3)

Tax effect of the following items:
Non-deductible expenses/income
Adjustments from previous year
Tax rate outside Norway other than 22%
Deferred tax asset not recognized/derecognized
Other items(374.0)5.5
756.5(740.0)(55.0)(617.9)720.4
1,131.7
4,593.1(51.3)

Reconciliation from nominal to effective tax rate:
NOK million

NOTE 8: OTHER FINANCIAL INCOME
NOK million

Profit before tax
2021

2020

Net foreign exchange (loss) or gain
Appreciation cash equivalents
Restructuring effects
Fair value adjustments conversion rights
Financial gain/loss debt to equity conversion
Other financial items(210.9)5,341.0
23.6
176.9(1,483.7)
0.4
2,609.0
3,217.5(77.5)

Other financial income

5,330.5

4,265.7

Tax expense
Effective tax rate

5.5

906.8

0.3 %

-4.1 %Net foreign exchange loss of NOK 210.9 million is recognized in 2021 (2020: NOK 1,483.7
million loss).
See Note 3 for fair value estimation and Note 20 for further information concerninginvestments in financial assets. See Note 2.7.1 for further information about restructuring
effects in 2021.

The following table details net deferred tax liabilities (assets) at year end:
NOK million
Intangible assets
Tangible assets
Inventories
Receivables
Deferred gains/losses
Other accruals

2021

2020

(522.3)
(3.3)
(5.9)
572.4
(37.8)(833.6)350.4(14.7)(159.2)
1,225.6
219.4

42

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Pensions
Other temporary differences
Loss carried forward
Not recognized deferred tax(45.4)(430.5)(3,154.1)
1,796.4(50.1)(271.2)(5,873.8)
4,091.1

Net deferred tax liabilities (assets)(1.830.5)(1,316.2)

Recognized as deferred tax assets
Recognized as deferred tax liabilities(1,890.4)
59.9(1,966.2)
650

Net deferred tax liabilities (assets)(1,830.5)(1,316.2)

Loss carried forward per country
NOK million

2021

2020

NorwayIrelandOther(2,484.6)(651.1)(19.3)(3,733.8)(1,728.5)(411.4)

Total(3,154.1)(5,873.8)

Deferred tax assets are based on unused tax loss carryforwards and temporary differencesin assets and liabilities. The Group’s deferred tax assets, and in particular the Group’s
unused tax losses, are substantial both in nominal terms and in relation to total equity.
Deferred tax assets stemming from losses carried forward are mainly related to thediscontinued long-haul operations and COVID-19 pandemic. Unused tax losses arerecognized to the extent that taxable profits are probable. Significant management
judgement is required to determine the amounts of deferred tax assets that can berecognized, based on the anticipated timing and level of future taxable profits together with
future tax planning strategies. In situations where Group Companies have experienced
recent losses, the Group will evaluate whether there are convincing other evidence
supporting taxable profits and the future utilization of its carryforward losses.
Convincing other evidence is considered for recognition of the deferred tax assets. The
future operations with focus on short haul markets and routes that has been profitable in
the past, supports that there are convincing evidence that carry forward losses will bereversed with the revised business model. Carryforward losses within Norwegian tax
jurisdiction, do not expire. Not recognized deferred tax asset of NOK 1,796.4 million includes
valuation allowance for losses carried forward in Ireland with NOK 484.4 million.
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 2021.
Deferred tax liabilities and deferred tax assets are presented net to the extent that there isa legal right to settle current tax amounts on a net basis and the deferred tax amounts arelevied by the same taxing authority.
NOK million
Recognized at 1 January
Charged/credited to the income statement
Adjustment from previous year
Charged directly to equity
Disposal of tax positions - sale of subsidiary
Translation differences
Recognized at 31 December

2021

2020

(1,316.2)
508.4
5.9(1,830.5)(2,131.8)
903.7(10.9)(12.0)
0.5(65.7)(1,316.2)

43

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 10: INTANGIBLE ASSETSNOK million

Software

Goodwill

Other intangible assets

Total

Acquisition costs 1 January 2020

533.2

94.0

53.8

680.9

Additions

17.7

-

-

17.7

Translation difference acquisition cost
Acquisition cost 31 December 2020

550.8

10.2
104.2

53.8

10.2
708.8

Acquisition costs 1 January 2021

550.8

104.2

53.8

708.8

8.7

-

-

8.7

Translation difference acquisition cost
Acquisition costs 31 December 2021

559.5

(10.2)
94.0

53.8(10.2)
707.3

Accumulated amortization 1 January 2020

482.8

-

-

482.8

Amortization
Accumulated amortization 31 December 2020

25.1
507.9

-

-

25.1
507.9

Accumulated amortization 1 January 2021

507.9

-

-

507.9

Amortization
Accumulated amortization 31 December 2021

19.2
527.1

-

-

19.2
527.1

Book value at 31 December 2020

43.0

104.2

53.8

200.9

Book value at 31 December 2021

32.4

94.0

53.8

180.2

3-5 years

Indefinite

Indefinite

Straight-line

None

None

AdditionsUseful life
Amortization plan

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, backoffice 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 FlyNordic in Sweden
July 2007 and purchase of slots at London Gatwick airport in 2017. Other intangible assets
from business combinations consist of estimated fair value of Brand name, charter
operations, slots and the Air Operating Certificate. Other intangible assets also consist ofintellectual property rights that are related to purchases of internet domains. The Grouphas developed international web portals in major markets.
In 2021, the Group sold slots at London Gatwick Airport which did not have an acquisition
value for the Group. Goodwill, slots, and intellectual property rights are determined tohave 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 theassets. For impairment testing, please refer Note 11.

44

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 11: TANGIBLE ASSETS

Buildings

Aircraft, parts andinstallations on
leased aircraft

Prepaymenton aircraft
ordersEquipment
and fixtures

Total

294.8

33,748.8

4,946.6

586.9

39,577.1

Additions

-

-

-

15.8

15.8

Additions cap interest

-

-

169.9

-

169.9

Translation difference acquisition cost

-

597.2

(150.1)-447.1

Reclassification to disposal group-(17,879.0)(4,769.4)-(22,648.4)

Disposals(5.4)(4,104.1)(197.0)-(4,306.5)

Acquisition costs 31 December 2020

289.3

12,362.9-

602.7

13,255.0

Acquisition costs 1 January 2021

NOK million
Acquisition cost 1 January 2020

289.3

12,362.9-

602.7

13,255.0

Additions

-

5.6

-

15.0

20.7

Translation difference acquisition cost-

(802.2)--(802.2)

Disposals-(9,136.6)-(29.5)(9,166.1)

Acquisition costs 31 December 2021

289.3

2,429.8-

588.2

3,307.4

Accumulated depreciation 1 January 2020

31.1

6,356.8-

389.0

6,776.9

Depreciation

5.8

1,296.1-

50.5

1,352.4-(1,333.3)--(1,333.3)

Depreciation disposals
Foreign currency translation-(86.4)--(86.4)

Accumulated depreciation 31 December 2020

36.9

6,233.2-

439.5

6,709.5

Accumulated depreciation 1 January 2021

36.9

6,233.2-

439.5

6,709.5

Depreciation

5.7

212.7

-

26.8

245.1

Depreciation disposals-(5,045.8)-(13.6)(5,059.4)

Foreign currency translation

-

9.0

-

-

9.0

Accumulated depreciation 31 December 2021

42.6

1,409.1-

452.6

1,904.2

Book value 31 December 2020

252.4

6,129.4-

163.2

6,545.2

Book value 31 December 2021

246.7

1,020.7-

135.6

1,403.0

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

45

Aircraft
At 31 December 2021, the Group had a total fleet of four owned (2020: 55).

industry and the Group's level of operation are considered a triggering event, and an
impairment testing has been performed for the Group's non-current assets.

The Group redelivered 26 owned Boeing 737-800 (2020: sold 10), 14 owned Boeing 737 MAX
8 (2020: 0), three owned Boeing 787-8 (2020: 0) and eight owned Boeing 787-9 (2020: 0)
during 2021.

The CGU is tested for recoverable amount of the CGU’s assets based on value in use, withexpected future cash flows in accordance with the Group's current management approved
business plans for the upcoming four years. Cash flows beyond the forecast period havebeen projected in accordance with management's long-term growth assumptions. The
impairment test is consistent with the one used previous periods, but with business plansadjusted and adapted to the current market situation. The impairment test carried out does
not result in any impairment of the CGU’s intangible or tangible assets.

The residual value is NOK 221 million (2020: NOK 3,886 million) in total for all owned aircraft
and deducted from the depreciable amount of the body of the aircraft. To determine theresidual value, the Group has a process of internal assessment along with the use of an
external and independent appraiser providing estimates on future value based on aircraft
type and year of build. The economic life expectancy of the body of the aircraft is 25 years
and the economic life of the owned aircraft is 25 years less the age of the aircraft at time ofpurchase.
Aircraft are owned by companies with USD as functional currency. The values presented in
NOK in the consolidated statement of financial position, include effects from currencytranslation.
Installations on leased aircraft
The installations on the leased aircraft include cabin interior modifications and otherimprovements to the aircraft after lease commencement. The capitalized value isdepreciated over the remainder of the aircraft lease, which is between 2-9 years. Linear
depreciation is applied, and residual value is NOK 0.
Spare parts
Spare parts consist of rotable parts for the aircraft and are depreciated over their usefullife. The useful life of spare parts ranges between 5-8 years. Straight-line depreciation isapplied, and 25 percent of the acquisition cost is calculated as residual value.
Buildings
Buildings consist mainly of a hangar at Gardermoen airport. It was constructed in 2014. 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.
Equipment and fixtures
Equipment and fixtures consist of IT hardware, purchased software, vehicles and otherequipment.
Impairment test of tangible and intangible assets
The Group reviews assets for impairment testing at each reporting date and whenever there
are indications of impairment. The effects of the COVID-19 virus outbreak on the airline

Key assumptions used in the calculation are growth rates, operating costs, terminal value
and discount rate. Cash flows beyond the four-year period are extrapolated with a longterm growth rate. Estimated cash flows and discount rate are after tax.
Discount rate
The cash flows are discounted using the expected long-term weighted average cost ofcapital (WACC). The applied after-tax discount rate is 8.75 percent (2020: 7.3 percent). The
cost of the Group’s debt and equity capital, weighted accordingly to reflect its capital
structure, gives the Group’s weighted average cost of capital. The WACC rates which areused to discount future cash flows are based on market risk free interest rates adjusted for
inflation differentials and include the debt premium, market risk premium, gearing
corporate tax rate and asset beta. An increase of the discount rate of five percentage point
will not result in impairment of the CGU’s intangible or tangible assets.
Growth rates
The basis for calculating future growth rate is in accordance with the Group's current
management approved business plans for the upcoming four years.
Operating costs
The operating costs are calculated based in accordance with the Group's current
management approved business plans for the upcoming four years.
Terminal value
A growth rate of 0 percent is used in calculating cash flow beyond the four-year period.
Sensitivity
On 31 December 2021, the Group’s value in use was significantly higher than the carrying
amount of its non-current assets. A sensitivity analysis has been performed, to determine if
a reasonable change in key assumptions would cause the carrying amount to exceed therecoverable amount. A reduction in the estimated revenue by five percent, an increase in
the operating cost five percent or an increase in WACC after tax by five percentage point
would not lead to an impairment loss of the fleet CGU.

46

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

2020 Impairment test of assets and related liabilities in the disposal group and other assets

NOTE 12: LEASESThe net fair value of the disposal group assets including liabilities was estimated to be zeroless cost to sell. Resulting in an impairment of NOK 8,695 million. A further impairment of
NOK 4,121 million was recognized in 2020 related to pre-delivery payments on terminatedaircraft purchase agreements.

NOK million

Specification impairment and disposal group
Impairment asset held for sale

Right-ofuse
buildings

Right-of-use
equipment

Totalright-of-use
assetsAcquisition cost 1 January 2020

37,831.3

337.7

50.5

38,219.5

Additions

29,826.8--

29,826.8

-

-

-

-

Additions cap interest(440.9)

(0.4)

1.7

(439.6)

Reclassification to disposal group(20,144.8)--(20,144.8)

4,121.1

Terminations(41,413.5)(40.5)(52.2)(41,506.2)

12,815.7

Acquisition costs 31 December 2020

5,658.9

296.8

0.1

5,955.7

Acquisition costs 1 January 2021

5,658.9

296.8

0.1

5,955.7

5,575.0

42.5-

5,617.5

561.8(12.1)-

549.6

NOK million
Impairment assets included in disposal group

2020
8,694.6

Impairment prepayments to aircraft manufacturers
Total

Translation difference acquisition cost

Specification of assets included in disposal group
NOK million

Right-of-use
aircraft, parts
and installations

2020
17,879.0

Additions

Aircraft, parts and installations on leased aircraft
Right-of-use aircraft, parts and installations

20,142.2

Terminations(5,658.9)(10.1)(0.1)(5,669.1)

Acquisition costs 31 December 2021

6,136.7317.1-

6,453.7

39,071.7

Accumulated depreciation 1 January 2020

4,586.0

40.4

14.8

4,641.2

Impairment(8,694.6)

Depreciation

4,761.2

40.8

7.8

4,809.8

Total assets included in disposal group 31.12

30,377.1

Depreciation terminations(6,286.2)(0.9)(23.7)(6,310.8)

Foreign currency translation(193.3)0.1

1.2(192.0)

Accumulated depreciation 31 December
2020

2,867.6

80.4

0.1

2,948.2

Accumulated depreciation 1 January 2021

2,867.6

80.4

0.1

2,948.2

Other receivables

851.4

Assets held for sale
Total assets in disposal group before impairment

199.1

Specification of liabilities included in disposal group
NOK million

Translation difference acquisition cost

Borrowing
Lease liabilities

2020
15,661.2
15,106.6

Total liabilities included in disposal group 31.12

30,767.8

Specification of prepayments to aircraft manufacturers
NOK million
Prepayment to aircraft manufacturers
Impairment
Total prepayments to aircraft manufacturers 31.12

2020
4,121.1(4,121,1)-

Depreciation

832.0

37.1

-

839.1

(2,867.6)

-

(0.1)

(2,867.7)

Foreign currency translation

152.1(12.4)-

139.7

Accumulated depreciation 31 December
2021

984.1

105.1

-

1,089.4

Book value 31 December 2020

2,791.4

216.6-

3,008.0Book value 31 December 2021

5,152.6

212.0-

5,364.6

Depreciation terminations

47

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

At the end of 2021, the Group leases 55 (2020: 76) aircraft. The lease agreements on the
Boeing 737 aircraft last between two and nine years from the date of agreement. There areno options to extend the aircraft lease agreements.

PBH-period are included in the measurement of the lease liability and treated as downpayments on the respective lease liabilities.

In connection with the Examinership and Reconstruction processes initiated in 2020, theGroup terminated all its aircraft leasing contracts in 2021. 31 aircraft were kept on the fleet
under renegotiated lease terms. 16 aircraft previously owned by the Group were abandoned
and subsequently leased back into the Group.

NOK million

The Group cannot readily determine the interest rate implicit in the leases entered into in
2021. In the recognition of the new leases in 2021, the Group uses its incremental borrowing
rate (IBR) to measure its lease liabilities. The IBR is the rate of interest that the Group would
have to pay to borrow over a similar term, and with a similar security, the funds necessary
to obtain an asset of a similar value to the right-of-use asset in a similar economic
environment. The Group estimates the IBR using observable inputs, such as market interest
rates, when available and is required to make certain entity-specific estimates. The
weighted average IBR applied in discounting future lease payments for lease agreements
entered into in 2021 is 5.39 percent.
All new aircraft lease agreements entered into in 2021 contain a “Power-by-the-hour”
clause (“PBH” or “PBH-clause”). These clauses contain a fixed minimum lease payment
between zero and 25 percent of the agreed monthly lease rates and a variable rate (“PBH”)
from the lease start date until 31 March 2022. In addition, eight aircraft leases entered into
in 2021 contain PBH-clause for the period from 1 November 2022 until 31 March 2023.
During these periods, the Group pays the fixed minimum lease payment and a variable rate
per block hour operated on the leased aircraft, with a maximum total lease rate notexceeding the agreed monthly lease rates. To avoid preferential treatment of certain lessors,
the aircraft lease agreements include a pooling clause which allocates 50 percent of themonthly flight hours divided by the number of leased aircraft to each aircraft lessor. The
remaining 50 percent of the monthly PBH payments per lease contract are based on theactual flight hours of the respective aircraft.
Lease liabilities are recognized based on the fixed minimum lease payments. Outside of the
PBH-periods, the minimum lease payments are equal to the contractually agreed lease rates.
Lease payments during the PBH-period which exceed the fixed minimum lease payments,
are recognized as variable lease payments and expensed when they occur and presented
under “Aircraft lease, depreciation and amortization” in the consolidated income
statement. Variable PBH lease payments for aircraft leases in 2021 amounted to NOK 136.5
million (2020: zero).
The Group realized losses from 16 sale-leaseback transactions of NOK 163.4 million in 2021
(2020: NOK 125.9 million), presented as restructuring effect in “Other financial income(expense)”. For the aircraft on sale-leaseback, expected variable lease payments during theLease liabilities

Opening balance
Additions
Terminations
Conversion to equity
Reclassification to disposal group
Accrued interest expense
Interest paid
Payment of lease liabilities
Currency differences
Lease liabilities 31 December
Due within one year – current
Due after one year – non-current

2021

2020

3,351.1
4,937.7(3,116.4)
226.8(226.8)(52.1)
92.6
5,212.7

34,274.3
21,866.1(25,725.7)(10,105.1)(15,106.6)
1,472.4(1,472.4)(878.8)(973.2)
3,351.1

777.9

3,165.4

4,434.8

185.7

Maturity profile of nominal minimum lease payments are presented in Note 2.6.
In 2021, the Group had short-term and/or leases of low-value items for 12 cars and 28
properties in Oslo, Barcelona and Riga, in addition to properties in other bases. The Grouphas elected not to recognize right-of-use assets and lease liabilities for these leases.
Instead, the rental payments are expensed when they occur.

The following amounts are recognized in the income statement:
in NOK million
Expenses relating to short-term leases
Expenses relating to low-value leases
Variable lease payments
Total

2021
11.0
0.5
183.2
194.7

2020
13.0
0.6
121.3
134.9

As of 31 December 2021, there are no significant future potential lease payments that are
not included in the lease obligations as a result of extension or purchase options.

48

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 13: TRADE AND OTHER RECEIVABLES

Provision for bad debt

Specifications of receivables
NOK million

2021

2020

Trade receivables
Credit card receivables
Deposits
Reimbursements claims maintenance costs
Other claims

97.5
1,443.0
176.0
(5.5)
146.0

597.7
1,776.1
306.2(54.7)
1,526.1

Sum trade and other receivables

1,857.1

4,151.4

326.3
83.0
6.0
-

512.7
(102.1)0.3
78.9

Prepaid costs
Public duty debt
Prepayments to employees
Prepaid rent
Prepayments

415.3

489.9

Total

2,272.4

4,641.4

Maximum credit risk

1,681.1

3,836.6

Other claims in 2020 included receivables from Boeing of NOK 1,056.9 million related to thegrounding of 737MAX aircraft beginning in March 2019. These claims were crammed down
together with outstanding debt against Boeing in the financial restructuring in 2021.
Due dates, nominal value of receivables
NOK million
Within one year
After one year2021
2,180.2
119.9

2020
4,614.2
63.0

Total

2,300.1

4,677.2

NOK million
Balance 1 January

2021
35.4

2020
17.0

Receivables written of during the year
Increase in provisions
Unused amounts reversed(16.0)
17.5(9.6)(22.5)
40.9-

Balance 31 December

27.3

35.4

NOK million
Overdue less than 1 month
Overdue 1-2 months
Overdue 2-3 months
Overdue over 3 months

2021
202.5
7.2
40.3
85.2

2020
33.5
28.7
(0.8)
212.7

Total

335.2

274.1

Overdue trade receivable

Provisions for bad debt relates to trade receivables. The provisions for bad debts on tradereceivables relate to overdue trade receivables that are not impaired at 31 December.
Impairment losses on trade receivables and other receivables are presented as net
impairment losses included in the line item “other operating expenses”. Subsequent
recoveries of amounts previously written off are credited against the same line item.
Non-interest-bearing deposits are measured at amortized cost in the statement of financial
position. Deposits denominated in foreign currencies are converted using the prevailingexchange rates on the reporting date.

NOTE 14: INVENTORY
Fair value of trade and other receivables
NOK million
Due within one year
After one year *)2021
2,152.9
119.5

2020
4,578.8
62.6

Total

2,272.4

4,641.4*)

Discount rate 2.5 percent (2020: 2.5 percent).

NOK million

2021

2020

Consumables

16.3

64.1

Total

16.3

64.1

Charges for obsolete parts in 2021 were NOK 131 million (2020: NOK 114.3 million).

49

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 15: EQUITY AND SHAREHOLDER INFORMATION
Shares and share issues:

NOK million
1 January 2020

Number of ordinary
shares163,558,377

Share capital Share Premium
16.4
6,664.0

Total
6,680.3

Share issue 20.05.2020

2,906,066,430

290.6

9,536.0

9,826.6

Share issue 10.06.2020

47,819,487

4.8

173.6

178.4

Share issue 17.06.2020

108,938,080

10.9

326.0

336.9

Share issue 26.06.2020

40,164,731

4.0

111.7

115.7

Share issue 02.07.2020

4,569,611

0.5

17.0

17.5

Share issue 20.07.2020

6,280,732

0.6

22.8

23.4

Share issue 21.07.2020

289,664,273

29.0

817.5

846.5

Share issue 03.08.2020

571,201

0.1

2.0

2.1

Share issue 06.08.2020

55,070,783

5.5

105.2

110.7

Share issue 07.08.2020

6,183,077

0.6

10.8

11.4

Share issue 18.08.2020

4,775,564

0.5

6.1

6.6

Share issue 03.09.2020

6,046,802

0.6

22.3

22.9

Share issue 23.10.2020

56,314,248

5.6

29.8

35.4

Share issue 05.11.2020

4,555,868

0.5

14.1

14.6

Share issue 08.12.2020

18,778,583

1.9

5.7

7.6

Share issue 11.12.2020

253,970,846

25.4

934.6

960.0

Share issue 15.12.2020

7

-

-

-

Reverse split 18.12.2020(3,933,595,413)

-

-

-

Share issue 23.12.2020
31 December 2020

NOK million
1 January 2021
Capital reduction 19.02.2021
Share issue 22.02.2021
Share issue 19.03.2021
Share issue 30.03.2021
Share issue 03.05.2021
Share issue 25.05.2021

16,079

0.2

5.9

6.1

39,749,366

397.7

18,805.1

19,202.7

Number ofordinary shares
39,749,366

Sharecapital397.7

Share Premium
18,805.1

Total
19,202.7

485,054
135,875
113,108
1,569,069
256,696(393.5)
0.0
0.0
0.0
0.2
0.0

41.0
51.3
42.7
592.5
72.8

(393.5)
41.0
51.4
42.8
592.7
72.8

Share issue 26.05.2021
Share issue 11.06.2021
Share issue 25.06.2021
Share issue 27.07.2021
Share issue 09.09.2021
Share issue 03.11.2021
Share issue 01.12.2021
Transaction costs

658,945,686
4,474,787
1,605,727
94,961,294
125,038,910
292,439
890,485
-

65.9
0.4
0.2
9.5
12.5
0.0
0.1
-

4,059.1
40.9
14.7
812.0
1,069.0
2.7
8.1(187.6)4,125.0
41.3
14.8
821.5
1,081.5
2.7
8.2(187.6)31 December 2021

928,518,496

92.9

25,424.3

25,517.2

All issued shares are fully paid with a par value of 0.1 NOK per share (2020: 0.1 NOK per
share). There is only one category of shares, and all shares have equal rights. For information
about employee share options, see Note 17.
The completion of the capital reduction, initiated by the extraordinary general meeting held
17 December 2020, was subject to a creditor notice period of six weeks. The creditor notice
period expired on 28 January 2021 without any objections from creditors being raised. The
share capital reduction was registered as completed with the Norwegian Registry ofBusiness Enterprises 19 February 2021.
On 22 February 2021, the Company announced conversion notices from bondholders
representing USD 1.8 million of USD Perpetual Bonds and USD 17.7 million of Future
Maintenance Bonds, with the issue of 485,054 new shares.
On 19 March 2021, the Company announced conversion notices from bondholders
representing USD 5.5 million of USD Perpetual Bonds, with the issue of 135,875 new shares.
On 30 March 2021, the Company announced conversion notices from bondholders
representing EUR 0.5 million of EUR Perpetuals Bonds and USD 4.1 million of USD Perpetuals
Bonds, with the issue of 113,108 new shares.
On 3 May 2021, the Company announced conversion notices from bondholders representing
USD 46 thousand of USD Convertible Bonds and USD 63.1 million of USD Perpetuals Bonds,
with the issue of 1,569,069 new shares.
On 25 May 2021, the Company announced conversion notices from bondholders
representing USD 0.2 million of USD Convertible Bonds and EUR 0.8 million of EUR
Perpetuals Bonds, with the issue of 256,696 new shares.

50

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

On 26 May 2021, the Company announced that the shares from the capital raise, raisinggross proceeds of approximately NOK 4,125 million by issuing 658,945,686 new shares, hadbeen registered in the Norwegian Register of Business Enterprises (Nw. Foretaksregisteret).
On 11 June 2021, the Company announced conversion notices from bondholders
representing NOK 42 million Early Conversion Bonds, with the issue of 4,474,787 new shares.
On 25 June 2021, the Company announced conversion notices from bondholders
representing NOK 15 million Early Conversion Bonds, with the issue of 1,605,727 new shares.
On 27 July 2021, the Company announced that Dividend Claims in an amount of NOK 821.9
million have been converted to 94,961,294 new shares.
On 9 September 2021, the Company announced that No-Sale Dividend Claims in an amountof NOK 1,081.9 million have been converted to 125,038,910 new shares.
On 3 November 2021, the Company announced conversion notices from bondholders
representing NOK 2.7 million Early Conversion Bonds, with the issue of 292,439 new shares.
On 1 December 2021, the Company announced conversion notices from bondholders
representing NOK 8.3 million Early Conversion Bonds, with the issue of 890,485 new shares.
All transactions resulted in a total of 928,518,496 shares as of 31 December 2021.

Description of items booked directly on shareholder’s equity:
Other comprehensive income
Net NOK 147.1 million has been booked as exchange rate differences under comprehensive
income in 2021 (2020: NOK -979.4 million). The exchange differences arise from translating
the subsidiaries from functional currency to presentation currency and from disposal offoreign operations. In addition, the Company’s share of other comprehensive income inassociated companies during 2021 amount to zero (2020: NOK 2.0 million).
Actuarial gains and losses
During 2021, NOK 14.1 million in actuarial loss arising from defined benefit pension plans wasbooked directly to equity (2020: NOK -42 million).
Share option plan
Upon appointment as CEO 21 June 2021, Geir Karlsen was awarded 1,000,000 options with
¼ of the options vest on 21 June 2022, ¼ vest on 21 June 2023, ¼ vest on 21 June 2024, and¼ vest on 21 June 2025. Options expire 4 years after the vesting date and the strike price is
NOK 10.10.
In 2020 no stock option program was offered.
2018 and 2019 programs are adjusted for the reverse share split. Strike price is multipliedby 100 and the number of outstanding options is divided by 100.
On 7 May 2019 the Annual General Meeting of Norwegian Air Shuttle ASA adopted a shareoption program limited to 12,000 share options. 12,000 options under this program were
granted to 10 executives in May 2019. Options may be exercised at the earliest in 2022, andany remaining options in 2026 at the latest. The exercise price is NOK 4,300, which was theaverage price of the NAS share on trading days the first 10 calendar days after presentationof Norwegian’s 1st quarter 2019 financial results, plus 15%. On 20 November 2019 6,000
additional options were granted to 2 executives. On 31.12.2021 there were 12,500
outstanding share options under this plan.
On 8 May 2018 the Annual General Meeting of Norwegian Air Shuttle ASA adopted a shareoption program limited to 4,000 share options. 3,800 options under this program were
granted to 11 executives in September 2018. Options may be exercised at the earliest in 2021,
and any remaining options in 2025 at the latest. The exercise price was NOK 27,800, which
was the average price of the NAS share on trading days the first 10 calendar days after
presentation of Norwegian’s 2nd quarter 2018 financial results, plus 15%. To maintain the
incentive of the plan, the Board approved an adjustment to the strike price from NOK
27,800.00 to NOK 4,300.00 on 24 September 2019. On 31.12.2021 there were 1,000
outstanding share options with strike price NOK 4,300.00 and 800 outstanding shareoptions with strike price NOK 27,800.00.
Total share option expense in 2021 amounted to NOK 12.6 million (2020: NOK 6.0 million).
See Note 17 for further details.

51

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

The largest shareholders at 31 December 2021 were:

The largest shareholders at 31 December 2020 were:
SharesOwnership

Voting rights

Geveran Trading Company, Ltd.
Sundt AS
Folketrygdfondet
DNB Asset Management AS
Davy Stockbrokers
Keskinäinen eläkevakuutusyhtiö Varma
Nordnet Bank AB.
Silver Point Capital, L.P.
Centerbridge Partners, L.P.
Avanza Bank AB
Contrarian Capital Management, LLC
Handelsbanken Asset Management
Ludvig Lorentzen AS
Nordea Funds Oy
KLP Forsikring
Brumm AS
Swedbank AB
Arctic Fund Management AS
BofA Global Research (UK)
Citibank N.A. Private Bank
Other

134,123,801
124,003,198
60,165,405
59,068,682
31,840,332
27,500,000
26,773,193

282,527,742

14.4%
13.4%
6.5%
6.4%
3.4%
3.0%
2.9%
2.9%
2.4%
2.4%
2.0%
1.9%
1.2%
1.2%
1.1%
1.1%
1.0%
0.9%
0.8%
0.7%
30.4%

14.4%
13.4%
6.5%
6.4%
3.4%
3.0%
2.9%
2.9%
2.4%
2.4%
2.0%
1.9%
1.2%
1.2%
1.1%
1.1%
1.0%
0.9%
0.8%
0.7%
30.4%

Total number of shares

928,518,496

100.0 %

100.0 %

26,489,130
22,480,439
22,176,441
18,304,923
17,861,186
11,249,305
11,161,001
10,288,769
10,000,942
9,657,707
8,723,966
7,423,879
6,698,455

SharesOwnership

Voting rights

5,791,956
3,340,991

14.6 %
8.4 %
8.2 %
4.6 %
4.5 %
4.0 %
3.9 %
3.6 %
3.2 %
1.9 %
1.9 %
1.7 %
1.4 %
1.3 %
1.2 %
0.9 %
0.7 %
0.7 %
0.6 %
0.6 %
31.6 %
100.0 %

Avanza Bank AB
Nordnet Bank AB
MG Aviation Limited
BOC Aviation Limited
AerCap Holdings N.V.
Swedbank AB
DP Aircraft Ireland Limited
OSM Aviation GroupDNB Markets
Svenska Handelsbanken AB
Interactive Brokers, L.L.C.
Instinet Europe Limited, meglerkonto innland
Chatsworth Aviation Ltd.
PFA Pension Forsikringsaktieselskab
BofA Global Research (UK)
Saxo Bank A/S
Nordea Bank AB (publ)
Nykredit Bank AS
Handelsbanken Asset Management
LGT Bank Ltd.
Other

12,575,123

14.6 %
8.4 %
8.2 %
4.6 %
4.5 %
4.0 %
3.9 %
3.6 %
3.2 %
1.9 %
1.9 %
1.7 %
1.4 %
1.4 %
1.3 %
1.2 %
0.9 %
0.7 %
0.6 %
0.6 %
31.6 %

Total number of shares

39,749,366

100.0 %

3,257,450
1,821,223
1,778,931
1,593,824
1,541,897
1,430,958
1,258,167
737,115
736,454659,003562,625541,018
513,684
481,564
353,864
278,047
257,528
237,94452

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Shares directly or indirectly held by members of the Boards of Directors, Chief Executive Officer and Executive Management at 31 December 2021:
Name

Title

Shares1)

Svein Harald Øygard

Chair

1,534,281

Lars Boilesen

Board Member

568,424

Ingrid Leisner

Board Member

12,927

Sondre Gravir

Board Member

33,052Chris Browne

Board Member

9,502

Geir Olav ØienBoard Member - Employee representative-

Katrine Gundersen

Board Member - Employee representative-

Eric Holm

Board Member - Employee representative

Geir Karlsen

Chief Executive Officer

Magnus Thome Maursund

Executive Vice President Network, Pricing & Optimisation

Christoffer Sundby

Executive Vice President Marketing, Sales & Customer Care

335,943

Guro H. Poulsen

Executive Vice President People

236,808

Anne-Sissel Skånvik

Executive Vice President Communications and Public Affairs

50,095

Knut Olav Irgens Høeg

Executive Vice President IT & Business Services

239,846

Tor-Arne Fosser2)

Executive Vice President Products & Digital Development

95,847

Adrian Dunne

Executive Vice President Operations

243,019

1)
2)

1,011
651,478
888

Including shares held by related parties.
Left the Executive management Group in April 2022

Options directly held by the Chief Executive Officer and members of Executive Management:

Name

Title

Jacob SchramGeir Karlsen
Anne-Sissel Skånvik

Chief Executive Officer(until 21.06.2021)
Chief Executive Officer
Communications and Public Affairs

Issued in
Strike price (NOK)

2018
4,300

2019
4,300

2021
10.10

Expiry2025

2026

2026-2029

Total

500
200

3,000
4,500
500

1,000,000

3,000
1,005,000700

53

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Specification of other reserves

NOTE 16: EARNINGS PER SHARE
OCI
associatedcompanies

Translationdifferences

Total

1 January 2020
Translation differences
Share of other comprehensive income of associatedcompanies
Transactions with non-controlling interest

(1.9)
-

1,087.4(979.4)

1,085.6(979.4)

2.0

-

2.0

-

4.6

4.6

31 December 2020

0.1

112.7

112.8

Translation differences

-

147.1

147.1

31 December 2021

0.1

259.8

259.9

NOK million

See also consolidated statement of changes in equity for overview of total changes in equity.
Other paid-in equity
Other paid-in equity amounts to NOK 714.4 million at 31 December 2021 (2020: NOK 155.8
million) and consists of equity effects from the capital decrease from issuing convertible
dividend claims and accumulated stock option expenses.

Basic earnings per share calculations are based on the weighted average number of commonshares outstanding during the period, while diluted earnings per share calculations are
performed using the average number of common shares and dilutive common sharesequivalents outstanding during each period.

Profit attributable to the owners of the Company (NOK million)
before PIK interest on Perpetual BondPIK interest on Perpetual Bond
Profit attributable to the owners of the Company after PIK interest
Weighted average number of shares outstanding
Weighted average number of shares outstanding after dilution
Basic earnings per share (NOK)
Diluted earnings per share (NOK)*

Number of shares outstanding

2021

2020

1,870.5
31.8
1,838.7
522,786,820
698,547,559
3.52
2.68

(23,050.9)(23,050.9)
22,552,180
25,114,751(1,022.11)(1,022.11)

2021

2020

928,518,496

39,749,366

195,801,049
1,124,319,545

15,80069,3772,477,393
42,311,936-

Perpetual bond
As a part of the restructuring in May 2021, the parent company issued Convertible Perpetual
Bonds for the nominal amount of NOK 1,875 million. There is no maturity or instalments inthe bond agreement. Conversion price is fixed at NOK 9.39 for each share. The bond accrues
Payment-in-Kind (“PIK”) interest with NIBOR plus a margin of 2.5-9.5 percent, increasingover the life of the bond, but no obligation to make any payments for the accrued interest.
Accrued interest is convertible at similar terms as the principal. The holders of the bonds
can only require repayment as a part of a liquidation and the conversion element is
considered by itself an equity component, hence the whole instrument is considered andclassified as equity.
The equity increase upon initial recognition was NOK 1,875 million less transaction costs.
The nominal amount is considered as fair value at initial recognition.
Nominal amount outstanding at the end of 2021 is NOK 1,808 million. The perpetual bondhas a dilutive effect on diluted earnings per share, see Note 16.

Potential shares that might become dilutive in future periods
Stock options
Convertible bond
Perpetual bondPotential number of shares outstanding after dilution*)

Diluted earnings per share is equal to earnings per share in the event of negative earnings per share.

The subscription price for the share issue in May 2021 is considered the best estimate of thefair value of subscribed shares. Adjustment for bonus shares is therefore not applicable.
Stock options granted to employees is considered dilutive if they are "in the money" after
vesting conditions is considered. None of the outstanding stock options granted to
employees had dilutive effect at the end of 2021. For further details on outstanding stock
options, please refer to Note 17.

54

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 17: OPTIONS
2021 Program
Upon appointment as CEO 21 June 2021, Geir Karlsen was awarded 1,000,000 options with
¼ of the options vest on 21 June 2022, ¼ vest on 21 June 2023, ¼ vest on 21 June 2024, and¼ vest on 21 June 2025. Options expire four years after the vesting date and the strike priceis NOK 10.10.
2020 Program
In 2020 no stock option program was offered.
2019 program is adjusted for the reverse share split. Strike price is multiplied by 100 and thenumber of outstanding options is divided by 100.
2019 ProgramOn 7 May 2019 the Annual General Meeting of Norwegian Air Shuttle ASA adopted a shareoption program limited to 12,000 share options. 12,000 options under this program were
granted to 10 executives in May 2019. Options may be exercised at the earliest in 2022, andany remaining options in 2026 at the latest. The exercise price is NOK 4,300, which was theaverage price of the NAS share on trading days the first 10 calendar days after presentationof Norwegian’s 1st quarter 2019 financial results, plus 15%. On 20 November 2019 6,000
additional options were granted to 2 executives.
On 31 December 2021 there were 12,500 outstanding share options under this plan.
2018 Program
On 8 May 2018 the Annual General Meeting of Norwegian Air Shuttle ASA adopted a shareoption program limited to 4,000 share options. 3,800 options under this program were
granted to 11 executives in September 2018. Options may be exercised at the earliest in 2021,
and any remaining options in 2025 at the latest. The exercise price was NOK 27,800, which
was the average price of the NAS share on trading days the first 10 calendar days after
presentation of Norwegian’s 2nd quarter 2018 financial results, plus 15%. To maintain the
incentive of the plan, the Board approved an adjustment to the strike price from NOK
27,800.00 to NOK 4,300.00 on 24 September 2019.
On 31 December 2021 there were 1,000 outstanding share options with strike price NOK
4,300.00 and 800 outstanding share options with strike price NOK 27,800.00.

Outstanding options

Outstanding 1 January
GrantedForfeited
Outstanding 31 December
Outstanding 31 December
adjusted for reverse share split

2021 shares
15,8001,000,000(1.500)

Average exerc.
price
5,489.87
10.10
4,300

Average2020 shares exerc. price
2,130,000
51.83
00(550,000)
43.00

1,014,300

89.12

1,580,000

54.90

1,014,300

89.12

15,8005,489.87

Total share option expense in 2021 amounted to NOK 12.6 million (2020: NOK 6.0 million).
Share savings program
Norwegian offers employees hired in a Scandinavian legal entity participation in an employee
share savings plan. The objective of the plan is to align and strengthen employee andshareholder’s interests and remunerate for long-term commitment and value creation.
Under this plan, Norwegian will match 50% of the individuals’ investment, limited to NOK
6,000 per annum. Provided that the employee contributes NOK 12,000 annually,
Norwegian’s contribution is NOK 6,000. The grant has a one-year vesting period. If sharesare kept for two calendar years, the participants will be allocated bonus sharesproportionate to their purchase. One bonus share will be earned for every tenth shareallocated under this scheme.
The fair value of the bonus shares is measured at the grant date using the Black & Scholes
option-pricing model. The fair value of the bonus shares and the corresponding estimatedsocial security cost are expensed as personnel costs over the vesting period. Changes in
estimated social security costs are expensed over the remaining vesting period.
Total share savings program expense in 2021 amounted to NOK 1.8 mill (2020: NOK 3.0 mill).

NOTE 18: PENSIONSThe Group operated defined contribution plans in Norway, Denmark, Sweden, Finland,
Ireland, UK, France, Italy, Spain and Latvia, and defined benefit plans in Norway.
Defined contribution plan
The defined contribution plans require that the Group pays premiums to public or private
administrative 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

55

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

personnel 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 local Pension legislation.
Pension expenses on defined contribution plans are NOK 98.8 million in 2021 (2020: NOK
207.6 million).
Defined benefit planAs per 31 December 2021, 426 employees were active members (2020: 454) and 70 were on
pension retirement (2020: 49). The related pension liability is recognized at NOK 206.2
million (2020: 227.8 million).

Change in fair value of plan assets:
Fair value of pension assets 1 January
Expected return
Actuarial gains/losses
Contributions paid
Benefits paid
Social security on payments to plan

215.6
3.3
0.8
38.6
(1.7)
(4.8)

188.3
4.4
2.9
24.3
(1.4)
(3.0)

Fair value of plan assets 31 December

251.9

215.6

Net pension liability

206.2

227.8

Net recognized pension liability 31 December

206.2

227.8

The pension plans are in compliance with the Occupational Pensions Act and actuarial
calculations comply with IAS 19.
The mortality and disability estimates are based on up-to-date mortality tables K2013 BE.

Actual return on pension funds
Expected contribution to be paid next year

2021

2020

4.00 %
43.7

1.70 %
27.3

FundedNOK million

2021

2020

Pension expense
Net present value of benefits earned
Interest cost on pension liability
Return on plan assets
Administrative expenses
Recognized settlement
Social security tax

25.6
3.1
0.0
0.2
0
4.1

25.5
8.4
(4.5)
0.1
4.2

Net pension expense defined benefit plans

32.9

33.8

Pension expense on defined contribution plans
Social security tax

87.9
11.0

185.8
21.8

Total pension expense

131.8

241.4

Change in present value of defined benefit liability:
Gross pension liability 1 January
Current service costs
Interest cost
Actuarial gains/losses
Benefits paid
Social security on payments to plan

443.4
29.6
6.6
(13.3)
(3.5)
(4.8)

365.9
29.8
8.3
44.9
(2.5)
(3.0)

Gross pension liability 31 December

458.1

443.4

The net pension liability was based on several assumptions. The discount rate was based on
covered bonds, with adjustments for duration. The pension liability's average duration was
20 years. Wage adjustments, pension adjustments and the expected increase in statepensions were based on historical observations for the Group, and an expected long-term
inflation rate of 1.75 percent.

Discount rate
Expected return on pension funds
Wage adjustments
Increase of social security base amount (G)Future pension increase
Average turnover

2021

2020

1.90 %
0-1.90 %2.75 %
2.50 %
0.00 %
0-8.00 %1.50 %
0-1.50 %2.00 %
1.75-2.00 %0.00 %
0.5-8.00%

56

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

The Group’s pension fund was invested in the following instruments (at 30 September 2020
and 2021):

EquityBonds
Money market funds
Hold-to maturity bonds
Real estate
Various

2021

2020

9.7 %
19.6 %
10.6 %
26.7 %
13.6 %
19.8 %

7.2 %
20.4 %
10.6 %
30.8 %
13.6 %
17.4 %

Historical information
NOK million

2021

2020

2019

2018

2017

Present value of defined benefit obligation

458.1

443.4

365.9

293.1

267.6

Fair value of plan assets

251.9

215.6

188.3

146.6

118.0

Deficit/(surplus) in the plan

206.2

Experience adjustments on plan liabilities(13.3)

227.8
44.9

177.6
44.3

146.5
(1.9)

149.7
44.0

Experience adjustments on plan assets

0.8

2.9

2.0

0.6

1.0

57

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 19: PROVISIONS AND OTHER LONG-TERM LIABILITIESPeriodic maintenance on leased aircraft
NOK million
Opening balance
Provisions charged to the income statement
Maintenance services performed and invoices received
Restructuring effects
Other items
Closing balance
Classified as current liabilities
Classified as non-current provision

2021

2020

2,501.7
523.2(74.5)(1,720.4)(293.1)

3,924.1
1,235,5(1,494.8)(1,163.1)

937.0
131.7
805.3

2,501.7
902.9
1,598.8

For aircraft held under lease agreements, Norwegian is contractually committed to either
return the aircraft in a certain condition or to compensate the lessor based on the actual
condition of the airframe, engines, and life-limited parts upon return. In addition, during
the lease term the Group is obliged to follow the maintenance program as defined by theaircraft manufacturers. In order to fulfil the conditions of the lease and maintenanceobligations, in the form of major airframe overhaul, engine maintenance checks, andrestitution of major life-limited parts, the Group is required to perform these obligations
during the period of the lease and upon return of the aircraft to the lessor. The estimatedmaintenance costs are accrued and charged to profit or loss over the lease term for thiscontractual obligation, based on the estimated current cost of the major airframe overhaul,
engine maintenance checks and restitution of major life-limited parts, calculated by either
reference to the number of hours flown or cycles operated since last maintenance event or
since the aircraft was new, or the age of the aircraft.
The estimated costs of overhauls and maintenance are based on the Group’s maintenanceprogram, the Group’s and industry experience, and contractual and catalog prices. Changes
in estimated maintenance event costs over time are charged to the income statement asincurred with reference to number of hours flown or cycles operated during the period
since the last maintenance event or since the aircraft was new. Additional provisions arealso set to meet specific redelivery conditions if these are deemed to be other or higher
than the estimated maintenance costs. The Group’s aircraft leases are typically between two
and nine years in length, and several of the maintenance events will occur within the leasing
period.
For some of the leases, the Group is invoiced by the lessor for Maintenance Reserve
Contribution (MRC), which is reclaimable at time of actual maintenance event, or forfeited

if the maintenance event occurs after leasing period ends. Paid and unclaimed MRC is offset
against the accumulated accrual balances in the Statement of Financial Position. For theselease contracts, the accrual and charge to the income statement is based on the larger ofthe Maintenance Reserve Contribution and the estimated maintenance cost. In the case oflease extension, estimates on maintenance costs will be revised.
Parts of the periodic maintenance will be conducted in 2022, and NOK 131.7 million isclassified as a current liability for periodic maintenance (2020: NOK 902.9 million). The
current part of periodic maintenance is estimated based on the planned maintenance in
2022. Other items in the table above consist of currency effects, credits received fromservice suppliers and other adjustments.

NOTE 20: FINANCIAL INSTRUMENTS
Financial Instruments by category

Financial assets at
amortized cost

Financialassets at fairvalue throughprofit or loss

Financialassets at fairvaluethrough OCI

Total

Assets as per balance sheet
Investments in financial assets
Trade and other receivables *)Cash and cash equivalents

3.7
1,857.1
7,694.8--

3.7
1,857.1
7,694.8

Total 2021

9,555.6--

9,555.6

Assets as per balance sheet
Investments in financial assets
Trade and other receivables *)Cash and cash equivalents

3.7
4,151.4
2,666.9--

3.7
4,151.4
2,666.9

Total 2020

6,822.0--

6,822.0

NOK million*) Prepayments not included in trade and other receivables was NOK 415.3 million in 2021 and NOK 489.9
million in 2020.

Investments in financial assets consist of an investment in shares of Norwegian Block
Exchange AS. Changes in the share price of Norwegian Block Exchange AS are not reflected
as a change in fair value in profit or loss due to immateriality of the investment.

58

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOK million

Financialliabilities at fairvalue throughprofit or loss

Financialliabilities atamortized cost

Investments in financial assets
Total

Liabilities per balance sheet
Borrowings
Lease liabilities
Trade and other payables *)-4,164.6
5,212.7
1,354.4

4,164.6
5,212.7
1,354.4

Total 2021-

10,731.7

10,731.7

Borrowings
Lease liabilities
Liabilities included in disposal group
Derivative financial instruments
Trade and other payables *)52.5-

8,769.9
3,351.1
30,767.8
7,767.0

8,769.9
3,351.1
30,767.8
52.5
7,767.0

Total 2020

52.5

50,655.8

50,708.2*) Public duties and liabilities from customer loyalty program not included in trade and other payables was NOK
2,428.2 million in 2021 and NOK 2,561.8 million in 2020.

2021

2020

1 January
Additions

3.7
-

3.7

31 December

3.7

3.7

Current portion--

Derivative financial instruments
2021
NOK million

2020

AssetsLiabilities

AssetsLiabilities

Forward commodities contracts
Conversion rights

-

-

-

49.2
3.2

Total

-

-

-

52.5

Non-current portion:
Current portion

-

-

-

3.2
49.2

Trading derivatives are classified as current or non-current assets or liabilities dependingon the maturity profile and net value of individual forward contracts.

See Note 22 for details related to borrowings.

Credit quality of financial assets
NOK million

NOK million

2021

2020

Trade receivables
Counterparties with external credit rating
A or better
Counterparties without external credit rating

1,443.0
414.1

1,776.1
2,375.3

Total trade receivables

1,857.1

4,151.4

Cash and cash equivalents
A+ or better
BBB +4,672.9
3,021.9

2,646.2
20.8

Total cash and cash equivalents

7,694.8

2,666.9

Forward commodities contracts
Forward commodities contracts relate to jet fuel derivatives. The net fair value of theoutstanding forward commodities contracts at 31 December 2021 were NOK 0 (2020:
negative NOK 49.2 million). At 31 December 2021, the Group had not secured any jet fuel(2020: 18,000 tons) through forward contracts.
Fuel derivatives are categorized as financial assets or financial liabilities at fair value throughprofit 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.

NOTE 20A: OTHER LOSSES / (GAINS) – NETNOK million
Net losses/(gains) on financial assets at fair value through profit or loss
Foreign exchange losses/(gains) on operating activities

2021

2020

(5.3)
(487.2)882.9(27.8)59

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Losses/(gains) on asset sale
Restructuring costs
Total(269.9)24.9(737.5)930.0
1,219.5
3,004.7

Net gains of NOK 5.3 million (2020: losses of NOK 882.9 million) is related to net gains on jet
fuel derivatives.

Accrued vacation pay
Accrued airport and transportation taxes
Accrued expenses
Trade payables
Public duties
Current provisions for MRC (Note 19)
Cashpoint liabilities
Other current provisions
Total

Term facility
Interest rate of NIBOR and a margin. The term facility is denominated in NOK and matures
on 26 May 2026. The coupon is 3-Months NIBOR + 2.00 percent. The effective interest rate
is 3.9 percent. The facility is repaid in quarterly instalments of NOK 9.3 million from 1 June
2023.
Retained claims bonds
No interest payments. The effective interest rate is 9.4 percent. The bond issue isdenominated in NOK and 50 percent each mature on 30 September 2025 and 30 September
2026.

NOTE 21: TRADE AND OTHER PAYABLESNOK million

NOTE 22: BORROWINGS

2021

2020

125.4
83.6
467.0
321.0
121.7
131.7
2,306.5
225.6
3,782.6

139.5
221.7
671.2
3,984.6
165.1
902.9
2,396.8
1,847.0
10,328.8

The current payables and provisions are non-interest bearing and are due within the next
twelve months. Accrued expenses are related to goods and services delivered and not
invoiced to the Group in 2021.

Aircraft financing
Fixed interest rates between 4.1 and 4.8 percent. The borrowings mature quarterly after thedelivery of aircraft. The aircraft financing is denominated in USD.
Nominal value at 31 December 2021

NOK million

NominalValue

Unamortized
effective
interest cost

Book value

Aircraft financing
Term facility
Bond issue
Retained claims bonds
Other non-current debt
Total

810.4
134.9
700.0
3,750.0
2.0
5,397.2(7.5)(1,225.1)(1,232.5)

802.9
134.9
700.0
2,524.9
2.0
4,164.7

NOK million

NominalValue

Unamortized
effective
interest cost

Book value

Disposal group aircraft financing
Aircraft financing
Loan with state guarantee
Bond issue
Other current debt
Total

16,344.6
3,879.5
2,989.0
2,434.8
437.2
26,085.2(683.4)(67.5)(903.2)(1,654.1)

15,661.2
3,812.0
2,989.0
1,531.6
437.2
24,431.1

Effective
interest rate
4.7 %
3.9 %
0.9 %
9.4 %
0.0 %

Nominal value at 31 December 2020
NOTE 21A: AIR TRAFFIC SETTLEMENT LIABILITIESAir traffic settlement liabilities increased from NOK 401.5 million on 31 December 2020 toNOK 1,324.2 million on 31 December 2021. The increase is related to a low level of bookingsin 2020 due to travel restrictions and an increase of bookings in the second half of 2021 astravel restrictions were eased.

Effective
interest rate
4.0 %
3.6 %
3.9 %
32.3 %
8.0 %60

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Effective interest rate during 2021, recognized as financial items (Note 8) and capitalizedborrowing costs (Note 11), is 4.1 percent (2020: 9.3 percent).
For information on the fair value of borrowings please refer to Note 3.
In 2020, the value of the conversion rights related to the USD convertible bond issued 5
November 2019 of NOK 52.5 million, is not included as part of Bond issue and is classified
under Derivative financial instruments in the consolidated statement of financial position.

Non-current
Aircraft financing
Term facility

2021(408.7)939.3

Conversion- and reconstruction effects
Net amortization effects
Currency translation effects
Other(19,660.6)
387.7(584.9)-(4,293.2)
833.4
543.7
(326.1)

Non-cash changes(19,857.7)
4,164.7(3,242.3)
24,431.1(2,351.2)

2020

The carrying amounts of the Group’s borrowings are denominated in the following
currencies:
744.8
134.9
575.0
2,524.9
2.0
3,981.6-

Disposal group aircraft financing
Aircraft financing
Loan with state guarantee
Bond issue
Other current debt

58.1
125.0
-

15,661.2
3,812.0
2,989.0
1,531.6
437.2

Total

183.1

24,431.1

4,164.7

24,431.1

Bond issue
Retained claims bonds
Other non-current debt
Total

(408.7)

Cash changes

Closing balance total borrowings

Classification of borrowings
NOK million

Repayment

NOK million
USD
NOK
SEK
EUR
Total

2021

2020

802.9
3,361.8
4,164.7

11,991.4
3,940.9270.1
8,228.7
24,431.1

Current

Total borrowings

Financial covenants on borrowings
Bond issue (NAS13)•••

The bonds are secured by a pledge of the shareholding by NAS Eire Invest AS in
Norwegian Air Norway AS and via a pledged account, see Note 23.
No indebtedness and minimum liquidity of USD 2 million in Norwegian Air Norway AS
No dividend payment

Term facility
Cash and non-cash changes in total borrowings•

Changes in total borrowings over a period consist of both cash effects (disbursements andrepayments) and non-cash effects (conversion- and reconstruction effects, amortizationand currency translation effects). The following is the changes in the Group’s borrowings
stemming from cash effects and non-cash effects:

Retained claims bonds

NOK million
Opening balance total borrowings
Disbursement

2021

2020

24,431.1-

26,734.0
3,290.5•

No dividend payment

No dividend payment

Aircraft financing•

Aircraft financing does not include covenant requirements. Aircraft in the Group arefinanced with guarantees by either the parent company and/or by export credit

61

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

agencies. Owned aircraft are pledged as collateral. For more information on assets
pledged as collateral, see Note 23.

Prepayment and aircraft
Buildings
Total

1,030.8
1,030.8

6,019.6
246.8
6,266.4

2021

2020

4,672.9
3,021.9
7,694.8

2,646.1
20.8
2,666.9

NOTE 23: ASSETS PLEDGED AS COLLATERALS AND GUARANTEES
Liabilities secured by pledge
NOTE 24: BANK DEPOSITSNOK million

2021

2020

Bond issue
Bonds refinanced
Aircraft financing

700.0
-

242.5
968.0
19,473.3
20,683.8

Total

802.9
1,502.9

NOK million

Owned aircraft are pledged as collateral to the providers of the relevant financing for theaircraft. The Group provides guarantees to the benefit of lenders. The Group has not issued
any guarantees for third parties.
In 2021 the NAS07 and NAS08 bonds were replaced by the secured bond NAS13 following
approval by the bondholders. In order to secure approval of the restructuring, the Group
continued to pledge the following assets:••

Cash and cash equivalents

Pledge of the shareholding by NAS Eire Invest AS in Norwegian Air Norway AS.
Pledged Account (including both present and future credit balances, any interest and any
commission payable thereon).

The above pledges of the shareholding by in Norwegian Air Norway AS and the pledged
account are not shown in the table below as these assets do not have a book value in theGroup.

Cash in bank
Cash equivalents
Total

Deposits in money market funds are classified as cash equivalents, as the underlying maturityof the deposits are 3 months or less. At 31 December 2021, the interest terms of the main
cash deposits in folio accounts for the two cash pools are 1 month NIBOR flat 0.0 percent
p.a. and NOWA -0.3 percent p.a.
Receivables from credit card companies are included in trade receivables. See note 13.
Restricted cash
NOK million

2021

2020

Guarantees for leases and credits from suppliers
Safety deposits on defined benefit plan
Slots proceeds
Taxes withheld

270.5
329.9
237.8
61.3
899.5

570.1
297.9
38.4
906.4

Total

Book value of assets pledged as security and guarantees
NOK million

2021

2020

Bank guarantees are granted for leasing liabilities for aircraft, suppliers of fuel and handlingservices, as well as airport charges from airports and governments. Cash proceeds from saleof slots is classified as restricted as it can only be used to buy new slots, or make repaymentson the NAS13 bond. There is also a guarantee/deposit in place to secure a pension program.
Restricted cash is included in the line item Cash and cash equivalents in the statement offinancial position. Unrestricted cash at 31 December 2021 was NOK 6,795.3 million.

62

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 25: RELATED PARTY TRANSACTIONS
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.
No loans or guarantees have been issued to related parties in 2021 or 2020.
The following transactions were carried out with related parties:
NOK million (excl. VAT)
Sales (-) and purchases (+) of goods and services
OSM Aviation Ltd. (incl. subsidiaries; crew management services)

2021

2020

-

841.1

Transactions between Group companies have been eliminated in the consolidated financial
statements and do not represent related party transactions. See Notes 25 Related Parties
and 23 Shares in Subsidiaries in the financial statements of Norwegian Air Shuttle ASA for
further details.

NOTE 26: CONTINGENCIES AND LEGAL CLAIMSIn March 2017 and June 2018, the Norwegian Tax Authorities made a reassessment pertaining
to an EEC cross-border restructuring that took place in 2013 and 2014. The restructuring
was carried out under the rules of contingent tax-free group reorganizations. The disputed
question is if the rules on contingent tax-free group reorganization, as they applied in 2013
and 2014, are contrary to EU law. The case was heard by the Oslo Municipality court 12-20
April 2021 and the court issued a ruling dated 21 May 2021 in favour of the tax authorities.
Norwegian and its tax advisor are of the opinion that the ruling is without merit, thus theruling is appealed. The maximum total potential cost increase would be NOK 650 million. As
a consequence of the Reconstruction, the amount is crammed down to NOK 33.7 million,
and the Company has made a provision for this amount.
On 21 September 2021, the Norwegian Environment Agency (Nw.: Miljødirektoratet)concluded in an administrative ruling that the cram down of claims in the Examinership andReconstruction does not apply to the Company’s obligation to surrender emission
allowances under EU ETS (see Section 9.6.2“Environmental regulations”) for emissions predating 18 November 2020. The contemplated market value of such allowances wasapproximately NOK 300 million at year-end. The Reconstructor determined that the
Restructuring applies to the Company’s obligation to surrender emission allowances

because a different view would have given preference to the EU ETS regime which thecurrent insolvency legislation does not facilitate. Therefore, the Company was unable tocomply with the Norwegian Environment Agency’s demand of the Company surrendering
emissions allowances. The lack of compliance has caused the Norwegian Environment
Agency to impose a fine of NOK 400 million on the Company. The Company filed a complainton 25 October 2021 and on 4 February 2022 the Norwegian Environment Agency sent thecomplaint to the Ministry of Climate and Environment. The Company, supported by its
advisors and the Reconstructor, are of the view that such fine either is invalid as theCompany is incapable of complying with the EU ETS regime or–if at all valid –will be subject
the cram-down introduced in the Restructuring. The Company has appealed theadministrative ruling and expects the appeal to probably be effective and has therefore notmade a provision for the fine. As a consequence of the Reconstruction, the amountcorresponding to the contemplated market value of such allowances was crammed down
and the company has made a provision of NOK 15 million at year end.

NOTE 27: COMMITMENTS
Norwegian previously held aircraft purchase commitments with Airbus and Boeing. Thesepurchase commitments were terminated as part of the Irish examinership and Norwegianreconstruction processes during 2021. Norwegian is currently in dialog with bothmanufacturers evaluating the strategy going forward on a fleet renewal plan as well as for
expanding the fleet.

NOTE 28: EVENTS AFTER THE REPORTING PERIODOn 11 January 2022, Norwegian reported the Post-Conversion Report from the Overseer,confirming that the Structured Sale Process (including the distribution of proceeds thereof)
and the distribution of No-Sale Conversion Shares to the relevant Creditors have been
completed in accordance with the terms set out in these Dividend Claim Terms.
16 February 2022, Norwegian announced the conversion of New Capital Perpetual bonds
whereby new share capital was registered. The Company received conversion notices frombondholders representing NOK 4,000,000 Early Conversion Bonds, which pursuant tostandard terms set out in the bond terms are convertible into 425,985 new shares in the
Company.
On 28 February 2022, Norwegian announced it has entered into agreements with AerCap tolease aircraft, of which ten are new Boeing 737 MAX 8, to be delivered in the first half of2023. Norwegian has a long-standing relationship with AerCap, the world’s largest aviationleasing company. The signed lease agreements also include eight Boeing 737-800 NG, whichNORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

are part of the 70 aircraft fleet operational for the summer 2022 season. With these
additions, Norwegian will have a total fleet of 80 aircraft by the summer of 2023.
On 28 February 2022, Norwegian announced that a total of 107,051 shares were purchasedon behalf of employees in Norwegian Air Shuttle participating in the Company's Employee
Share Savings Plan. The average purchase price was NOK 11.02 per share.
On 8 March 2022, Norwegian announced the conversion of New Capital Perpetual bonds
whereby new share capital was registered. The Company received conversion notices frombondholders representing NOK 2,000,000 Early Conversion Bonds, which pursuant tostandard terms set out in the bond terms are convertible into 212,992 new shares in the
Company. Following the conversion, the Company has New Capital Perpetual Bonds in issue
in the nominal amount of NOK 1,800,796,249, of which NOK 1,738,293,310 constituteOrdinary Conversion Bonds and NOK 62,502,939 constitute Early Conversion Bonds. The
remaining New Capital Perpetual Bonds may be converted into approximately 191.8 million
shares in the Company at a conversion price of NOK 9.39, subject to anti-dilution provisions.
The Company’s share capital is increased by NOK 21,299.20 by issue of 212,992 shares. The
Company’s new share capital is NOK 92,915,747.30 divided into 929,157,473 shares, eachwith a nominal value of NOK 0.10.
On 23 March 2022, Norwegian was contemplating a buy-back of the zero-coupon seniorunsecured NOK 3,758,929,711 bond issue maturing 30.09.2026 (Retained Claims Bonds with
ISIN NO0010996457).
On 30 March 2022, Norwegian announced that the “Reverse Dutch Auction” closed at 29
March and the company has decided to accept all offers up to and including a price of 66
percent of par value (the “Buy-Back Price”). The Company confirmed to buy back bonds witha total nominal value of NOK 44,611,470 by paying the Buy-Back Price. Cash settlement for
the repurchase is expected to occur on Tuesday, 5 April 5, 2022. Following the buy-back,the Company holds zero-coupon Retained Claims Bonds (ISIN: NO0010996457) for a total
nominal amount of NOK 44,611,470. The acquired bonds will be cancelled following
settlement.
On 22 April 2022, Norwegian published listing prospectus to list Norwegian Air Shuttle ASA
FRN perpetual subordinated convertible bonds with ISIN NO 0011157331 and NO 0011157356(jointly, the "New Capital Perpetual PIK Bonds"), and (ii) Norwegian Air Shuttle ASA zero
coupon senior unsecured NOK 3,758,932,275 bonds 2021/2026 with ISIN NO 0010996457(the "Retained Claims Bonds").
There have been no other material events subsequent to the reporting period that might
have a significant effect on the consolidated financial statements for 2021.

63

64

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

FINANCIAL STATEMENTS OF THE PARENT COMPANY
INCOME STATEMENT 1.1 - 31.12
NOK million
Passenger revenue
Ancillary passenger revenue
Other revenue
Total operating revenue
Personnel expenses
Aviation fuelAirport and ATC charges
Handling charges
Technical maintenance expenses
Other operating expenses
Other losses/(gains) - net
Total opex excl lease and depreciation

STATEMENT OF COMPREHENSIVE INCOME 1.1 - 31.12
Note

2021

2020
3,860.4

3

2,581.7
630.5
733.6
3,945.8

1,000.1
2,041.5
6,902.0

449.3
893.2
519.0
470.1
502.9
1,355.5(5,389.1)(1,199.1)

1,159.1
1,189.7
567.6
1,079.7
1,276.9
2,681.4(1,100.2)
6,854.2

5,144.9

47.8

1,867.3
949.6
2,328.0

4,912.6
1,114.3
29,782.7(35,761.8)

126.9(317.6)
11,315.0
11,124.3

306.4(627.9)2,232.7
1,911.2

13,452.3(33,850.7)

458.5
12,993.8
3%0.0(33,850.7)
0%

24.8
18.6

(1,501.0)(1,501.0)

5, 6

4
19A

EBITDARAircraft lease, depreciation and amortization
Impairment non-financial items
Impairment investment in subsidiaries incl. receivables
Operating profit (EBIT)Interest income
Interest expense
Other financial income (expense)
Net financial items

9, 10
9
25

7

Profit (loss) before tax (EBT)
Income tax expense (income)Net profit (loss)
Effective tax rate
Basic earnings per share
Diluted earnings per share

8

NOK million

Note

2021

2020

Net profit (loss)

12,993.8(33,850.7)

Total comprehensive income for the period

12,993.8(33,850.7)

Total comprehensive income attributable to:Equity holders of the Company

12,993.8(33,850.7)

65

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

STATEMENT OF FINANCIAL POSITION AT 31 DECEMBERNOK million

Note

2021

2020

ASSETS

Note

2021

2020

EQUITY AND LIABILITIESIntangible assets

9

Deferred tax asset

8

Aircraft, parts and installations on leased aircraft

10

Right-of-use aircraft, parts and installations

11

Equipment and fixtures

10

Buildings

10

Right-of-use buildings

11
19, 24

Financial assets available for sale

NOK million

159.2

Share capital

1,616.2

2,074.0

Share premium

92.9

397.5

25,424.3

18,805.1

0.1

47.7

Other paid-in equity

744.4

155.8

-

544.2

Perpetual bonds

1,808.0

786.5

145.7

Other reserves

1.2

107.8

1.2

246.7

252.4

Retained earnings(16,520.5)(29,482.5)

173.7

211.5

Total equity

11,550.2(9,336.5)

17

16.9

1,077.9

0.0

425.0
0.0
634.1

148.0

14

3.7

3.7

Investments in subsidiaries

23

2,034.7

1,328.1

Lease receivable

25

-

498.9

Other non-current liabilities

Other receivables

12

3,832.7

405.3

Borrowings

22

3,303.6

8,163.5

5,670.7

Lease liability

19

171.4

Derivative financial instruments

2, 19

Total non-current assets

Provision for periodic maintenance-

3.2

3,491.9

2,140.3

125.0

5,539.8

Inventory

13

-

63.3

Trade and other receivables

12

2,201.3

4,119.1

Cash and cash equivalents

21

7,290.4

2,443.2

Borrowings

22

9,491.7

6,625.6

Lease liability

19

20.4

149.1

18

2,467.7

13,354.5

Air traffic settlement liabilities

-

401.1

Derivative financial instruments

-

49.2

-

(1.3)

Total current liabilities

2,613.1

19,492.5

Total liabilities

6,105.0

21,632.8

TOTAL EQUITY AND LIABILITIES

17,655.3

12,296.3

Total current assets

Total non-current liabilities

Trade and other payables
TOTAL ASSETS

17,655.3

12 296.3

Tax payable

2, 19

66

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

STATEMENT OF CHANGES IN EQUITY 1.1 - 31.12
Share Capital
NOK million
Equity at 1 January 2020

Share Other paid-in
Premium
equityPerpetualbonds

Total paid inequityOther
reserves

Retainedearnings

Total equity
11,198.8

16.4

6,664.0

149.2-

6,829.5

1.2

4,368.1

Profit for the year

-

-

-

-

-

-

(33,850.7)(33,850.7)

Total comprehensive income 2020

-

-

-

-

-

-

(33,850.7)(33,850.7)

Share issue

381.1

12,141.1-(1,006.2)

11,516.1--

11,516.1

Perpetual bonds issue

-

-

-

1,792.6

1,792.6--

1,792.6

Equity changes on employee options

-

-

6.6

-

6.6

-

-

6.6

Transactions with owners

381.1

12,141.1

6.6

786.5

13,315.3--

13,315.3

Equity at 31 December 2020

397.5

18,805.1

155.8

786.5

20,144.9

1.2(29,482.5)(9,336.5)

Profit for the year

-

-

-

-

-

-

12,993.8

12,993.8

Total comprehensive income 2021

-

-

-

-

-

-

12,993.8

12,993.8

Share issue

66.9

4,738.2

181.9(853.5)

4,133.5--

4,133.5

Convertible dividend claim issue

22.0

1,881.0--

1,903.0--

1,903.0(393.5)

-

393.5

-

-

-

-

-

Perpetual bonds issue

-

-

-

1,843.3

1,843.3--

1,843.3

Payment-in-kind interest

-

-

-

31.8

31.8

-

(31.8)-

Capital decrease

Equity changes on employee options
Transactions with owners
Equity at 31 December 2021

-

-

13.2

-

13.2

-

-

13.2

(304.6)

6,619.2

588.6

1,021.6

7,924.8-(31.8)

7,892.9

92.9

25,424.3

744.4

1,808.0

28,069.7

1.2(16,520.5)

11,550.2

67

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

STATEMENT OF CASH FLOWS 1.1 - 31.12
NOK million

2021

2020

13,452.3
162.0
13.2(4,587.7)(49.2)(11,124.3)
1,341.7(401.1)
1,230.5(33,850.7)
31,181.4
6.6(2,968.7)
49.2(1,911.2)
15.574.3(5,705.1)(5,314.1)

37.4(2,938.3)

10
923(19.1)(9.6)(2.5)(31.2)(286.5)(16.6)(303.1)FINANCING ACTIVITIES
Proceeds from long-term debt

22-

3,290.5

Payment of borrowings

22(376.2)(298.1)

Principal element of lease payments
Interest on borrowings and financing costs
Interest element of lease payments
Transaction cost
Cash dividend to creditors
Proceeds from issuing new shares
Net cash flow from financial activities

11(51.4)(15.8)(19.7)(377.7)
5,862.9
5,022.1(151.3)(379.9)(50.4)(5.7)
328.4
2,733.5

Foreign exchange effect on cash

(181.1)

152.1

Net change in cash and cash equivalents

4,847.3(355.8)Cash and cash equivalents at 1 January

2,443.2

2,799.0

7,290.4

2,443.2

OPERATING ACTIVITIESProfit (loss) before tax (EBT)
Depreciation, amortization and impairment
Compensation expense for employee options
Losses/(gains) on disposal of tangible assets
Fair value losses/(gains) on financial assets
Financial items
Change in inventories, accounts receivable and accounts payable
Change in air traffic settlement liabilities
Change in other current assets and current liabilities

Note

9, 10, 25
16
19
7

Net cash flow from operating activities
INVESTING ACTIVITIES
Purchase of tangible assets
Purchase of intangible assets
Net investment in subsidiaries
Net cash flow from investing activities

Cash and cash equivalents at 31 December

14

21

The Company participates in cash pool arrangements, and deposits and overdrafts
by subsidiaries within these arrangements are presented as other receivables andother payables in the statement of financial position. The net deposits in cash poolarrangements are included as cash equivalents.

68

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 1: GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLESNOTE 2: FINANCIAL RISKSNorwegian Air Shuttle ASA is the parent in the Norwegian Group. Besides being an operative
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 areas with shared services. The information provided in the consolidated
financial statements covers the Company to a significant degree. Please refer to theconsolidated financial statement of the Group for a description of the operative activities
of Norwegian Air Shuttle ASA.

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 2 in the consolidated
financial statements.

The financial statements of Norwegian Air Shuttle ASA for the year ended 31 December 2021
were authorized for issue by the Board of Directors on 28 April 2022. The annual
shareholders meeting, to be held 25 May 2022, have the power to amend and reissue thefinancial statements.

NOK million

The financial statements of the Company have 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 21 January 2008.
The financial statements have been prepared on the going concern basis.
The Company’s significant accounting principles 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 theGroup, these are shown below. Otherwise, refer to the notes to the Group’s Consolidated
Financial Statements (hereinafter referred to as the Group’s Consolidated Financial
Statements).
Additions to Note 1 of the Group Financial Statements:
Dividends and group contribution
Dividend and group contributions are recognized as financial income, unless dividends orgroup contributions are received out of pre-acquisition profits of its subsidiary, in suchcases they are deducted from the cost of investment rather than included in profit or loss.
Dividends and group contributions are recognized in the period in which they are decided
by the relevant decision making body in the subsidiary.
Investments in subsidiaries and associates
Shares in subsidiaries are valued at cost and tested for impairment. Any impairment losses
and reversal of impairment losses are classified as net gains (loss and impairment) on
investments in subsidiaries in the income statement. Loans provided to subsidiaries aremeasured at cost in accordance with IFRS 9.

NOTE 3: OPERATING REVENUE
2021

2020

By activity:
Passenger transport
Ancillary revenue
Other revenue

2,581.7
630.5
733.6

3,860.4
1,000.1
2,041.5

Total operating revenue

3,945.8

6,902.0

Per geographical markets:
Domestic Norway
Other

1,770.3
2,175.5

3,262.4
3,639.5

Total operating revenue

3,945.8

6,902.0

The Company is a low-cost airline, using its fleet of aircraft. Revenues from this businessare specified in the table above. Passenger revenue consists of revenue generated fromsales 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.

NOTE 4: OTHER OPERATING EXPENSES
NOK million

2021

2020

Sales and distribution expenses
Other flight operation expenses
General and administrative expenses

275.3
192.3
887.8

693.6
914.9
1,072.8

1,355.5

2,681.4

Total other operating expenses

69

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Other operating expenses amounts to NOK 1,355.5 million (2020: NOK 2,681.4 million). Other
operating expenses are related to sales and distribution, the operating of systems,
marketing, back office, consultants and other costs not directly attributable to operation of
the aircraft fleet and related airline-specific costs.

NOTE 6: REMUNERATION OF THE BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENTNOTE 5: PAYROLL EXPENSES AND NUMBER OF EMPLOYEESNOTE 6A: AUDITOR REMUNERATION

Breakdown of payroll and personnel expenses - employees

NOK million excluding VAT

2021

2020

Audit fee
Other audit related services
Other services

9.6
0.6
1.8

7.9
2.5
0.6

Total

12.0

11.0

NOK million

2021

2020

Wages and salaries
Social security tax
Pension expenses
Employee stock options
Other benefits

339.8
41.0
21.1
13.2
14.4

377.9
43.6
29.8
6.6
22.6

Total

429.5

480.6

In 2021, NOK 12.6 million (2020: NOK 6.0 million) was charged as an expense to salaries,
according to the stock option program (Note 16). The Company has a pension scheme
covering all employees. The scheme compliant with the act on occupational pensions (Note
15).
2021

2020

336.6

411.5

NOK million

2021

2020

Personnel expenses – employees
Personnel expenses – hired – Full Scale Crew Services
Personnel expenses – hired

429.5
19.7
0.1

480.6
626.0
52.6

Total

449.3

1,159.1

Number of man-labor years

Breakdown of payroll and personnel expenses - employees and hired

For information on remuneration of the Board of Directors and Executive management,
please refer to Note 7 in the Group’s Consolidated Financial Statements.

The Company elected PricewaterhouseCoopers AS as their new auditor with effect for thefinancial year 2020.

NOTE 7: NET FINANCIAL ITEMSNOK million
Interest income
Interest expense leasing
Other Interest expense
Net foreign exchange (loss) or gain
Appreciation cash equivalents
Restructuring effects
Fair value gain conversion rights
Financial gain debt to equity conversion
Other financial items
Net financial items

2021

2020

126.9
(19.7)(300.6)(483.2)
11,596.1
6.1
217.4(18.7)
11,124.3

306.4(50.4)(583.7)(691.2)0.4
786.1
1,845.9
297.7
1,911.2

Restructuring effects of NOK 11,596 million include effects from the restructuring process
successfully completed in May 2021. In total, the restructuring improved equity by NOK
19,476 million. The impact of the restructuring on share and paid-in capital and on
income/(loss) are presented in the table below.

70

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOK million
Bonds
Trade and other payables and related receivables
Aircraft and related liabilities
Borrowings, Perpetual and Retained claims bondPrivate placement/Rights issue
Dividend claim
Cash dividend
Total

1)

2)

3)

4)

5)
6)

Footnotes
1
2
3
4
5
6
7

Share and paidin capital

Income (loss)

41.9
0.0
0.0
1,843.3
4,029.7
1,964.8
0.0
7,879.7

385.4
12,405.8
398.5
866.8
0.0
(2,020.8)(439.5)
11,596.1

Bonds: These amounts reflect the net effect of the extinguishment of unsecured
Bond debt issued prior to 18 November 2020 (NAS07, NAS08 and the US convertible)
and the issue of the new Bond NAS13. The effect is a net reduction in debt with acorresponding increase in equity through Income. The portion recognized asincrease in Share and paid in capital reflects the conversion of zero-coupon
perpetual bonds with floor protection from debt to equity during the first half year
in 2021.
Trade and other payables and related receivables: These amounts reflect theextinguishment of vendor debt and related receivables from the same vendors,
from the period before 18 November 2020. The effect is a reduction in net debt
and increase in other equity through Income.
Aircraft and related liabilities: This amount reflect the net effect of reduced
maintenance obligations, aircraft financing liabilities and deposits on aircraft
leases. The net effect is a reduction in net liabilities with a corresponding increasein other equity through Income.
Borrowings, Perpetual and Retained Claim Bond: These amounts reflect
extinguishment of the unsecured part of loan with state guarantee and otherborrowings, the issue of the new Perpetual Bond classified as equity and the related
Retained Claim Bond. The effect is a net reduction in outstanding debt with acorresponding increase in share and paid in capital with NOK 1,843 million andother equity through Income of NOK 867 million.
Private placement/Rights issue: This amount reflects the net proceeds from shareissue in the private placement and the rights issue in May 2021.
Dividend claim: Reflects the issue of the Dividend Claim with conversion rights,
followed by conversion of dividend claim to shares. The Dividend Claim was granted
to unsecured creditors, that did not participate in the rights issue or new capital
perpetual bond issue, as a 4% compensation for extinguished debt in addition to
the Cash Dividend. The effect is an increase in debt with NOK 69 million, and anincrease in Share and paid in capital with NOK 1,965 million representing the valueof the conversion element and a net corresponding effect on other equity of7)negative NOK 2,021 million that has to be assessed together with the effect related
to Trade and other payables and related receivables. Cash dividend: This amountreflects the cash dividend payable to unsecured creditors, that did not participate
in the rights issue or new capital perpetual bond issue, as compensation for
extinguished debt.
This amount reflects the cash dividend payable to unsecured creditors, that did notparticipate in the rights issue or new capital perpetual bond issue, as compensationfor extinguished debt.

NOTE 8: TAXESThis year’s tax expense consists of:
NOK million

2021

2020

Tax payable
Adjustments from previous year
Change in deferred tax

0.2
0.5
457.8

0.0
0.0
0.0

Income tax expense

458.5

0.0

2021

2020

Profit before tax

13,452.3(33,850.7)

Expected tax expense (income) using nominal tax rate (22%)

2,959.5(7,447.1)

Tax effect of the following items:
Non-deductible expenses/income
Adjustments from previous year
Change in tax rate
Deferred tax asset not recognized
Restructuring effects on tax losses carried forward
Other items(3,734.2)(284.6)(793.9)2,300.3
11.4

6,376.0
789.6
293.8(12.3)

Reconciliation from nominal to effective tax rate:
NOK million

Tax expense

458.5

0.0

Effective tax rate

3.4 %

0.0 %

71

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Details of deferred tax assets in the balance sheet:
NOK million

Adjustments from previous years consists of differences in deferred tax positions between
the Company’s annual report 2020 and its tax reporting finalized later in 2021.
2021

2020

Intangible assets
Tangible assets
Inventories
Receivables
Financial instruments
Deferred gains/losses
Other accruals
Other temporary differences
Net lease liabilities
Loss carried forward
Not recognized deferred tax

28.0(19.8)
(5.6)
633.5
(1.1)
(323.6)(4.0)(1,937.3)
13.6(103.0)(16.8)(14.7)(9.2)(11.5)
1,149.1(327.4)(316.9)(6.1)(3,225.1)
807.6

Net deferred tax assets(1,616.2)(2,074.0)

Reconciliation of deferred tax assets and liabilities:
NOK million
Recognized at 1 January
Charged/credited to the income statement
Charged directly to equity
Recognized at 31 December

2021

2020

(2,074.0)
457.8(1,616.2)(2,062.0)(12.0)(2,074.0)

Deferred tax assets are based on unused tax loss carry forwards and temporary differencesin assets and liabilities. The tax loss carried forward is expected to be utilized by futuretaxable profits. The deferred tax assets are partially explained by the historical tax losses of
the Company. Unused tax losses are recognized to the extent that taxable profits areprobable. Significant management judgment is required to determine the amounts ofdeferred tax assets that can be recognized, based on the anticipated timing and level offuture taxable profits together with future tax planning strategies. In situations where theCompany has experienced recent losses, the Company will evaluate whether there areconvincing other evidence supporting taxable profits and the future utilization of its carryforward losses. The future operations with focus on markets that has been profitable in thepast, supports that there are convincing evidence to support expectations that the Company
will generate taxable profits in the upcoming periods.

72

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 9: INTANGIBLE ASSETSNOK million

Software

Goodwill

Other intangible assets

Total

Acquisition costs 1 January 2020

488.9

1,208.5

27.0

1,736.6

Additions
Impairment
Acquisition costs 31 December 2020

16.6
505.5

(1,114.3)
94.2

27.0

16.6
(1,114.3)
626.6

Acquisition costs 1 January 2021

505.5

94.2

27.0

626.6

7.1

1.6

-

8.7

Acquisition costs 31 December 2021

512.6

95.8

27.0

635.4

Accumulated amortization 1 January 2020

442.3

-

4.6

446.9

Amortization

20.6

-

-

20.6

Accumulated amortization 31 December 2020

462.8

-

4.6

467.4

Accumulated amortization 1 January 2021

462.8

-

4.6

446.9

Amortization

20.0

-

-

20.6

Accumulated amortization 31 December 2021

482.8

-

4.6

487.4

Book value at 31 December 2020

42.6

94.2

22.4

159.2

Book value at 31 December 2021

29.8

95.8

22.4

148.0

Additions

SoftwareCapitalized software is related to external consulting fees for the development of
Norwegian's own systems for bookings and ticket-less travels, various sales portals, backoffice, and maintenance system. These costs are amortized over their estimated useful lives(three to five years).
Goodwill and other intangible assets
Goodwill is related to the purchase of FlyNordic in Sweden July 2007, and the transfer oflong-haul operations based in Ireland from NAI to NAS in 2018.
Other intangible assets from business combinations consist of estimated fair value of Brand
name, charter operations, slots and the Air Operating Certificate. Other intangible assets

also consist of intellectual property rights that are related to purchases of internet domains.
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 longas the management has the intention to continue using the assets.
Impairment
The Company tests goodwill and assets with indefinite useful lives annually at year-end for
impairment. Intangible and tangible assets with definite lives are tested for impairment if
indicators of impairment are identified. The effects on the airline industry and the

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Company's level of operation is considered a triggering event, and an impairment testinghas been performed for the Company's non-current assets.
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 businessplan covering the next four years which is approved by the Board of Directors. Key
assumptions used in the calculation are growth rates, operating costs, terminal value anddiscount rate. Cash flows beyond the four-year period are extrapolated with a long-term
growth rate. Estimated cash flows and discount rate are after tax.
Discount rate
The applied after-tax discount rate is 8.5 percent (2020: 7.3 percent) 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 capital structure, gives the Group’s weighted average costof capital. The WACC rates which are used to discount future cash flows are based on market
risk free interest rates adjusted for inflation differentials and include the debt premium,market risk premium, gearing corporate tax rate and asset beta. An increase of the discountrate of 1 percentage point will not result in impairment of goodwill and intangible assets.
Growth rates
The basis for calculating future growth rate is in accordance with the Company's current
management approved business plans for the upcoming four years.
Operating costs
The operating costs are calculated based on the business plan period.
Terminal value
A growth rate of 0 percent is used in calculating cash flow beyond the four-year period.

73

74

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 10: TANGIBLE ASSETSNOK million

Buildings

Aircraft, spare parts and installations on leased aircraft

Equipment and fixtures

Total

Acquisition cost at January 1, 2020
Additions
Disposals
Acquisition cost at December 31, 2020

294.8
0.0
(5.4)
289.3

645.8
248.9
(243.7)
650.8

514.5
17.1
(26.0)
505.6

1,455.1
266.0(275.1)
1,445.7

Acquisition cost at 1 January 2021
Additions
Disposals
Acquisition costs 31 December, 2021

289.3
289.3

650.8
13.7
(45.5)
619.0

505.6
5.4
511.0

1,445.7
19.1(45.5)
1,419.3

Accumulated depreciation at January 1, 2020
Depreciation
Impairment
Depreciation on disposals
Accumulated depreciation at December 31, 2020

31.1
5.8
36.9

526.1
61.4
22.7
(7.0)
603.2

346.9
36.3
(23.4)
359.8

904.1
103.5
22.7
(30.4)
999.9

Accumulated depreciation at 1 January, 2021
Depreciation
Impairment
Depreciation disposals
Accumulated depreciation 31 December, 2021

36.9
5.8
42.7

603.2
43.9
(28.1)
619.0

359.8
32.1
11.2
403.2

999.9
81.8
11.2
(28.1)
1,064.8

Book value at 31 December 2020
Book value at 31 December 2021

252.4
246.6

47.7
0.1

145.7
107.8

445.8
354.5

Installations on leased aircraft
The installations on leased aircraft include cabin interior modifications and otherimprovements to the aircraft after lease commencement. The capitalized value isdepreciated over the remainder of the aircraft leases, which are between 1-10 years. Linear
depreciation is applied, and residual value is NOK 0.
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 percent of the acquisition cost is calculated as residual value.

Equipment and fixtures
Equipment and fixtures consist of purchased software and technical equipment on leased
facilities.
Buildings
Buildings consists of one apartment in Seattle purchased in 2010 by the Group. Theapartment is carried at acquisition cost. The residual value is estimated to equal theacquisition 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. The residual value is NOK 0.
For information regarding assets pledged as collateral, see Note 20.

75

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 11: LEASESNOK million
Acquisition cost 1 January 2020
AdditionsLease liabilities
NOK million

Right-of-use
buildings

Right-of-use
aircraft, parts andinstallations

Total

281.7

752.7

1,034.4

2.7

87.4

90.1

Terminations(12.3)(71.0)(83.3)

Acquisition cost at 31 December 2020

272.1

769.1

1,041.2

Acquisition costs 1 January 2021

272.1

769.1

1,041.2

Terminations(14.4)(762.5)(776.9)Acquisition costs 31 December 2021

257.7

6.6

264.3

Accumulated depreciation 1 January 2020

30.2

116.9

147.1

Depreciation

31.4

129.0

160.4

Depreciation terminations(0.9)(21.0)(21.9)

Accumulated depreciation 31 December 2020

60.7

224.9

285.6

Accumulated depreciation 1 January 2021

60.7

224.9

285.6

2021

2020

783.3
(523.4)19.7(19.7)(51.4)(16.7)
191.8

914.9
84.1
(70.2)(6.9)
50.4(50.4)(151.3)12.5
783.3

Due within one year

20.4

149.1

Due after one year

171.4

634.1

Opening balance
Additions
Terminations
Conversion to equity
Accrued interest expense
Interest paid
Payment of lease liabilities
Currency differences
Lease liabilities 31 December

Outstanding nominal minimum lease payments at the end of 2021 were NOK 242.4 million.
Besides aircraft leases, the Company had in 2021 short-term and/or leases of low-value
items for 12 cars and 18 properties in Oslo and other operating bases. The Company has
elected not to recognize right-of-use assets and lease liabilities for these leases. The
Company recognized expenses related to these lease contracts for which the recognition
exemptions of IFRS 16 were applied of NOK 34.1 million in 2021 (2020: NOK 3,207.9 million).

Depreciation

27.6

31.6

59.3

Depreciation terminations(4.3)(250.0)(254.3)

Accumulated depreciation 31 December 2021

84.0

6.6

90.6

The following amounts are recognized in the income statement in 2021:

Book value 31 December 2020

211.5

544.2

755.6

NOK million

2021

2020

Book value 31 December 2021

173.7

0.0

173.7

Expenses relating to short-term leases
Expenses relating to low-value leases
Variable lease payments

33.9
0.2
34.7

3,207.6
0.3
84.7

Total

68.7

3,292.6

In 2021, the Company leased Boeing 737 and 787 aircraft from other group entities. All
group-internal aircraft leases are classified as short-term leases as both contract partners
have an option to terminate the lease agreements with a notice period of three months. The
agreements do not foresee a termination penalty for either of the contract partners. The
Company makes use of the recognition exemption for short-term leases. At the end of 2021,
the Company has no aircraft on lease (2020: 37). During 2021 37 (2020: 13) aircraft wereredelivered to the lessor or novated to other Group companies.

For the Company’s leasing commitments on behalf of other Group Companies, see Note 25.

76

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 12: RECEIVABLESNOTE 14: SHAREHOLDER’S EQUITY AND SHAREHOLDER INFORMATION

Specifications of receivables
NOK million

Refer to Note 15 in the Group’s consolidated financial statements.
2021

2020

Trade receivables
Intercompany receivables
Credit card receivables
Deposits
Reimbursements claims maintenance costs
Other claims

15.8
5,622.5
18.7
(5.5)
96.6

203.6
731.3
1,480.4
116.6(15.0)
1,413.9

Trade and other receivables

5,748.2

3,930.8

Prepaid costs
Public duty-receivables
Prepayments to employees
Prepaid rent

206.6
73.2
6.0
-

524.8
54.8
(0.1)
14.1

Prepayments

285.8

593.6

Total

6,034.0

4,524.4

Maximum credit risk

5,632.8

3,805.5

Due dates, nominal value of receivables
NOK million
Within one year
After one year2021
2,201.3
3,832.72020
4.119.1
405.3

Total

6,034.0

4,524.4

Receivables denominated in foreign currency are converted using the prevailing exchange
rates on the reporting date. Refer to Note 25 for further information on transactions andoutstanding balances with other group companies.

NOTE 15: PENSIONSThe 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 21.1 million in 2021 (2020: NOK
29.8 million).
In addition, employees are included in the early retirement scheme (AFP), with the right toretire at the age of 62. The AFP is a multi-employer plan, where the Norwegian government
finances 1/3 of the contribution to plans. The AFP pension plan is a defined benefit plan
administered by a separate legal entity (“Fellesordningen”). The plan is temporarily
accounted for as a defined contribution plan, as the plan’s administrators have not beenable to calculate the pension obligation for each entity participating in the plan.
The scheme compliant with the Occupational Pensions Act.

NOTE 16: OPTIONS
Refer to Note 17 in the Group’s consolidated financial statements.

NOTE 13: INVENTORYNOK million

2021

2020

Consumables

-

63.3

Total

-

63.3

NOTE 17: PROVISION FOR PERIODIC MAINTENANCE
The Company pays a fee to maintenance funds held by the lessor on leased aircraft. The
accrued provisions in the accounts are estimated payments for periodic maintenances inexcess of payments to the maintenance funds and are provided on the basis of aircraft
utilization and estimates of current maintenance costs. For some of the contracts, there is

77

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

a degree of uncertainty about what kind of maintenance is covered by the maintenancefunds, and the provision for this increase in expenses for the Company is distributed overthe period until the maintenance is performed.
On 31 December 2021, the Company had NOK 16.9 million (2020: NOK 1,319.9 million) in
provision for maintenance reserves.

NOK million

2021

2020

Accrued vacation pay
Accrued airport and transportation taxes
Accrued expenses
Trade payables
Intercompany liabilities
Payables to related party (Note 25)
Public duties
Other current provisions

36.8
7.0
96.2
56.5
1,536.5
2.1
732.6

39.3
117.3
498.7
2,438.4
10,264.9
0.7
8.6(13.3)

Total

2,467.7

13,354.6

The current payables and provisions are non-interest bearing and are due within the next
twelve months. Accrued expenses are related to goods and services delivered and not
invoiced to the Company in 2021.

--

13,042.3

Assets as per balance sheet
Investments in financial assets
Trade and other receivables *)Cash and cash equivalents

3.7
3,930.8
2,443.2--

3.7
3,930.8
2,443.2

Investments in financial assets consist of an investment in shares of Norwegian Block
Exchange AS. Changes in the share price of Norwegian Block Exchange AS are not reflected
as a change in fair value in profit or loss due to immateriality of the investment.
Financial liabilities
at fair value throughprofit or loss

Financialliabilities atamortized cost

Total

Liabilities per balance sheet
Borrowings
Lease liabilities
Trade and other payables *)-3,428.6
191.8

3,428.6
191.8

2,465.6

2,465.6

Total 2021-

6,086.0

6,086.0

52.5-

5,539.8
783.3
13,346.0

5,539.8
783.3
52.5
13,346.0

NOK million

Borrowings
Lease liabilities
Derivative financial instruments
Trade and other payables *)Total 2020
52.5
19,669.0
19,721.5*) Public duties not included in trade and other payables was NOK 2.1 million in 2021 and NOK 8.6 million in
2020.

NOTE 19: FINANCIAL INSTRUMENTS
The accounting policies for financial instruments have been applied to the line items below:

Assets as per balance sheet
Investments in financial assets
Trade and other receivables *)Cash and cash equivalents

13,042.3

Total 2020
6,377.6
6,377.6*) Prepayments not included in trade and other receivables was NOK 285.8 million in 2021 and NOK 593.6
million in 2020.

NOTE 18: TRADE AND OTHER PAYABLESNOK million

Total 2021

Financial assets
at amortized
cost

Financialassets at fairvalue throughprofit or loss

Financial assets
at fair value
through OCI

Total

3.7
5,748.2
7,290.4--

3.7
5,748.2
7,290.4

The accounting policies for financial instruments have been applied to the line items below:
Credit quality of financial asset
NOK million

2021

2020

-

Trade receivables
Counterparties with external credit rating A or better
Counterparties without external credit rating

5,748.2

1,480.4
2,450.4

Total trade receivables

5,748.2

3,930.8

78

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Cash and cash equivalents
A+ or better
BBB +4,268.5
3,021.9

2,442.4
20.8

NOTE 19A: OTHER LOSSES / (GAINS) – NET

Total cash and cash equivalents

7,290.4

2,443.2

NOK million

Investments in financial assets
NOK million

2021

2020

1 January
Additions

3.7
-

3.7

31 December

3.7

3.7

Non-current portion
Current portion

3.7
-

3.7
-

Investments in financial assets consist of the investment in shares of Norwegian Block
Exchange AS.

Net losses/(gains) on financial assets at fair value through profit or loss
Foreign exchange losses/(gains) on operating activities
Losses/(gains) on asset sale
Total

2021

2020

(5.3)
(795.6)(4,588.2)(5,389.1)

882.9(4,952.1)
2,968.9(1,100.2)

Net gains of NOK 5.3 million (2020: losses of NOK 882.9 million) is related to net gains on jet
fuel derivatives. Losses/(gains) on asset sale in 2021 includes gains of NOK 3,783 million fromthe sale of airline and technical operations to Norwegian Air AS and gains of NOK 812 million
from the sale of the Company’s operations as a marketing carrier to Norwegian Air Shuttle
AOC AS.

NOTE 20: ASSETS PLEDGED AS COLLATERAL AND GUARANTEES
Liabilities secured by pledge

Derivative financial instruments
2021
NOK million

2020

AssetsLiabilities

AssetsLiabilities

Forward commodities contracts
Conversion rights

-

-

-

49.2
3.2

Total

-

-

-

52.5

Non-current portion:
Current portion

-

-

-

3.2
49.2

Trading derivatives are classified as current or non-current assets or liabilities dependingon the maturity profile and net value of individual forward contracts.
Forward commodities contracts
Forward commodities contracts relate to jet fuel derivatives. The net fair value of theoutstanding forward commodities contracts at 31 December 2021 were NOK 0 (2020:
negative NOK 49.2 million). At 31 December 2021, the Group had not secured any jet fuel(2020: 18,000 tons) through forward contracts.

NOK million

2021

2020

Bond issue
Bonds refinanced
Aircraft financing

700.0
-

242.5
968.0
581.9

Total

700.0

1,792.5

In 2021 the NAS07 and NAS08 bonds were replaced by the secured bond NAS13 following
approval by the bondholders. In order to secure approval of the restructuring, the Group
continued to pledge the following assets:••

Pledge of the shareholding by NAS Eire Invest AS in Norwegian Air Norway AS.
Pledged Account (including both present and future credit balances, any interest and any
commission payable thereon).

For references to pledged assets, see Note 10 and for borrowings related to those assets,
see Note 22.

79

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Book value of assets pledged as security and guarantees
NOK million

2021

2020

Buildings

-

246.8

Total

-

246.8

Bank guarantees are granted for leasing liabilities for aircraft, suppliers of fuel and handlingservices, as well as airport charges from airports and governments. There is also aguarantee/deposit in place to secure a pension program.

NOTE 22: BORROWINGS
Nominal value at 31 December 2021

NOTE 21: BANK DEPOSITS
Cash and cash equivalents

NOK million
2021

2020

Cash in bank
Cash equivalents

4,268.5
3,021.9

2,422.4
20.8

Term facility
Bond issue
Retained claims bonds
Other non-current debt

Total

7,290.4

2,443.2

Total

NOK million

Deposits in money market funds are classified as cash equivalents, as the underlying maturityof the deposits are 3 months or less. At 31 December 2021, the interest terms of the main
cash deposits in folio accounts for the two cash pools are 1 month NIBOR flat 0.0 percent
p.a. and NOWA -0.3 percent p.a.

Nominal value at 31 December 2020

Receivables from credit card companies are included in trade receivables for 2020. See
Note 12.

Loan with state guarantee
Bond issue
Other current debt
Aircraft financing

NAS has provided parent company guarantees for certain subsidiaries.

NOK million

Total

Restricted cash
NOK million

2021

2020

Guarantees for leases and credits from suppliers
Safety deposits on defined benefit plan
Slots proceeds
Taxes withheld

258.8
329.9
237.8
9.4

570.1
297.9
14.4

Total

835.8

882.4

Nominal Value

Unamortized
effective
interest cost

Book value

134.9
700.0
3,750.0
68.9
4,653.8(1,225.1)(1,225.1)

134.9
700.0
2,524.9
68.9
3,428.7

Effective
interest rate
3.9 %
0.9 %
9.4 %
0.0 %

NominalValue

Unamortized
effective
interest cost

Book value

2,989.0
2,434.8437.2
596.6
6,457.6(903.2)(14.6)(917.8)2,989.0
1,531.6437.2
581.9
5,539.8

3.9 %32.3 %
8.0 %
2.9 %

2021

2020

134.9
575.0
2,524.968.9
3,303.6-

Effective
interest rate

Classification of borrowings
NOK million
Non-current
Term facility
Bond issue
Retained claims bonds
Other non-current debt
Total

-

80

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NOTE 23: INVESTMENTS IN SUBSIDIARIES

Current
Loan with state guarantee
Bond issue
Other current debt
Aircraft financing

125.0
-

2,989.0
1,531.6
437.2
581.9

Total

125.0
3,428.7

Total borrowings

Name

Date ofestablishment

OfficeNorwegian Reward AS

14 Jan 2008

5,539.8

Norwegian Brand Limited

9 Dec 2013

Norwegian Air International Limited

5,539.8

Collateralized borrowings are detailed in Note 20.
Financial covenants
Bond issue (NAS13)•••

The bonds are secured by a pledge of the shareholding by NAS Eire Invest AS in
Norwegian Air Norway AS and via a pledged account, see Note 23.
No indebtedness and minimum liquidity of USD 2 million in Norwegian Air Norway AS
No dividend payment

Term facility•

Ownership

Fornebu, Norway

1,000,000

100 %Dublin, Ireland

151,711,820

100 %3 Apr 2013

Dublin, Ireland

1,036,449,936

100 %Norwegian Air Resources Latvia SIA

12 Aug 2020

Riga, Latvia

2,800

100 %

Norwegian Support Office Denmark ApS

21 Dec 2021

Kastrup, Denmark

40

100 %

NAS Property AS

1 Mar 2021

Fornebu, Norway

3,000

100 %

Norwegian Crew Services AS

15 Jul 2008

Fornebu, Norway

100

100 %

Norwegian Cabin Services Norway AS

27 Jan, 2014

Fornebu, Norway

30

100 %

Norwegian Pilot Services Norway AS

11 Nov 2014

Fornebu, Norway

1,000

Norwegian Air Resources Spain SL
Norwegian Crew Resources Denmark
ApS

6 Oct 2014

Madrid, Spain

3,000

100 %
100 %

21 Dec 2014

Kastrup, Denmark

40

Norwegian Crew Resources Finland OY

28 Apr 2021

Vantaa, Finland

2,500

Norwegian Crew Resources Sweden AB

21 Dec 2021

St.holm Arl., Sweden

10 Oct 2018

Fornebu, Norway

30,00028 May 2013

Fornebu, Norway

225

100 %
100 %
100 %

NAS Eire Invest
Norwegian Air Norway AS
Norwegian Air AS

No dividend payment

Retained claims bonds•

Number ofsharesNo dividend payment

NOK million
Borrowings
Total liabilities at 31 December 2021
Borrowings
Total liabilities at 30 December 2020

Between2 and 3 years

Over
3 years

125.0
125.0

154.5
154.5

162.2
162.2

4,212.1
4,212.1

6,457.6
6,457.6

-

-

-

100 %

Fornebu, Norway

4,000

23 Dec 2021

Barcelona, Spain

30

Norwegian Air Resources Sweden AB

28 Aug 2013

St.holm Arl., Sweden

50,000

Norwegian Air Shuttle AOC AS

1 Dec 2020

Fornebu, Norway

4,000

Norwegian Air Sweden AOC AB

15 Dec 2020

St.holm Arl., Sweden

11 Jun 2015

Madrid, Spain

26 Oct 2021

Kastrup, Denmark

9 Aug 2013

Dublin, Ireland

479,603,659

Oslofjorden Ltd

22 Aug 2013

Dublin, Ireland

1

100 %

Drammensfjorden Leasing Ltd

24 Sep 2013

Dublin, Ireland

1

Larviksfjorden Ltd

4 Sep 2013

Dublin, Ireland

1

100 %
100 %

Lysakerfjorden Leasing Ltd

5 Jul 2016

Dublin, Ireland

1

Ifjorden Ltd

25 Jun 2019

Dublin, Ireland

1

Arctic Leasing No.2 Ltd

2 Nov 2015

Dublin, Ireland

1

RED Maintenance Spain S.L.

27 Jan 2017

Madrid, Spain

3,000

100 %

Norwegian Air Resources SSC US Corp

8 Jun 2018

New York, USA

1

100 %

Arctic Aviation Assets DAC

Between1 and 2 years

100 %1 Dec 2020

Red Technics Denmark ApS

Less than
1 year

500

100 %NAS Support Office Barcelona SL

Norwegian Red Handling Spain S.L

Maturity of borrowings

100 %

500
3,000
40

100 %
100 %
100 %
100 %
100 %
100 %

100 %
100 %
100 %

81

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Transactions during the year
During 2021, the following transactions were carried out:
New establishments/investments:
•
•
•
•
•
•
•
•
•
•

Norwegian Support Office Denmark ApS
NAS Property AS
Norwegian Crew Resources Denmark ApS
Norwegian Crew Resources Finland OY
Norwegian Crew Resources Sweden AB
Norwegian Air AS
NAS Support Office Barcelona SL
Norwegian Air Shuttle AOC AS
Norwegian Air Sweden AOC AB
Red Technics Denmark ApS

Norwegian Block
Exchange AS

NorwayPayment
solutions

Fair value
31.12.19

Net gain in
OCI 2020

N/A-

6.20 %

Fair value
31.12.20
N/A

The Company’s related parties are key management personnel, close members of the familyof a person and entities that are controlled or jointly controlled by any of these and owners
with significant influence. The Company’s subsidiaries, and associates.

Red Handling UK Limited was sold December 23, 2021

Norwegian Air Resources SSC AS merged with Norwegian Air AS, 1 December 2021.

Liquidation/voluntary liquidation:•

Industry

NOTE 25: RELATED PARTIES

Merged:•Country

Norwegian Block Exchange AS (NBX) was introduced on Euronext Growth Stock Exchange
December 2021. The share was traded at NOK 8.60 per share on 31 December 2021.
Norwegian owns 2,446,400 shares in the company.

Sold:
•

EntityOwnership
interest
31.12.20

During the reconstruction process, a total of 42 entities with offices in Norway,
Sweden, Denmark, United Kingdom and Ireland entered into liquidation or voluntaryliquidation during 2021.

NOTE 24: INVESTMENTS IN FINANCIAL ASSETSNorwegian Air Shuttle ASA has the following investments in financial assets (NOK million):

EntityCountry

Industry

Norwegian Block
Exchange AS

NorwayPayment
solutions

Ownership
interest
31.12.21
3.77 %

Fair value
31.12.20
N/A

Net gain in
OCI 2021

Fair value
31.12.21-

21.0

See Note 7 in the Consolidated Financial Statements for details on key managementcompensations and Note 15 in the Consolidated Financial Statements for shares and options
held directly or indirectly by members of the Board of Directors, the CEO and the Executive
Management.
Transactions and balances with subsidiaries (NOK million):Intercompany balances 31 December 2021

Current

Non-current

Trade & other receivables – nominal amount

2,335.1

3,829.3

Trade & other receivables – book value

1,793.2

3,829.3

Payables

1,536.5-

Intercompany balances 31 December 2020

Current

Non-current

Lease receivables
Trade & other receivables – nominal amount
Trade & other receivables – book value
Payables

10,716.6
346.3
10,998.6

498.9
386.4
386.4
-

82

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Intercompany sales (-) and purchases (+)

2021

2020

Sales and financial revenue
Purchases and financial expenses
Dividend
Impairment of trade and other receivables
Impairment of investment in subsidiaries

795.0
2,195.5
2.5
903.6
46.0

1,908.2
6,927.8
323.5
10,370.3
19,412.3

Norwegian Air Shuttle ASA has provided some of the Group’s external stakeholders withparent company guarantees for some of the obligations of subsidiaries. The issued
guarantees are mainly in relation to aircraft financing and leasing contracts. To the extent
subsidiaries receive an economic benefit from the issued guarantees, the guarantee ispriced according to the risk undertaken by the parent company. Guarantee fees are includedin the above intercompany transactions.
Impairment
Investments in subsidiaries and intercompany trade and other receivables from groupcompanies under restructuring have been assessed to have a recoverable amount of zeroand were consequently fully impaired in 2021.

NOK million (incl VAT)
Year-end balances arising from sales/purchases of goods/services
Payables to related parties
OSM Aviation Ltd. (incl. subsidiaries; crew management services)

There are no other contingencies or legal claims that might have a significant effect on theparent company financial statements.

NOTE 27: COMMITMENTS
For details regarding aircraft commitments, please see Note 27 in the Consolidated Financial
Statements. The 100 percent owned subsidiary Arctic Aviation Assets DAC was establishedin 2013 for the purpose of leasing aircraft to internal and external operators. All futuredeliveries of aircraft on order will be received in Arctic Aviation Assets DAC and its
subsidiaries, and the Company as operator will receive aircraft on operating leases.
For details on commitments for aircraft leases, see Note 11.

Refer to Note 28 of the Group’s consolidated financial statements.

Transactions and balances with related parties:

Sales (-) and purchases (+) of goods and services
OSM Aviation Ltd. (incl. subsidiaries; crew management services)

Refer to Note 26 of the Group’s consolidated financial statements.

NOTE 28: EVENTS AFTER THE REPORTING PERIOD

No loans or guarantees have been issued to related parties in 2021 or 2020.

NOK million

NOTE 26: CONTINGENCIES AND LEGAL CLAIMS

2021

2020

-

1.6

2021

2020

-

0.7

There have been no other material events subsequent to the reporting period that might
have a significant effect on the parent company financial statements.

83

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

ANALYTICAL INFORMATION
Including
IFRS 16
2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

Operating revenue (NOK million)

5,068

9,096

43,52240,26630,94825,951

22,491

19,534

15,58012,85910,532

EBITDAR* (NOK million)-1,516-4,755

7,313

2,171

3,948

5,958

3,694

1,186

2,784

1,822

1,540

EBITDAR* excl other losses/(gains) (NOK million)-2,254-1,751

6,468

3,165

3,516

5,278

4,169

1,770

2,295

2,150

1,316

EBIT (NOK million)-2,786-23,768856-3,851-2,002

1,821

348-1,412

970

404

416

EBIT excl other losses/(gains) (NOK million)-3,524-20,764

10-2,857-2,434

1,140

822

-828

480

732

192

Profit (loss) before tax (EBT) (NOK million)

1,876-22,133-1,688-2,490-2,562

1,508

75-1,627

438

623

167

Net profit (loss) (NOK million)

1,871-23,040-1,609-1,454-1,7941,135

246-1,072

319

457

122

Earnings per share (NOK) - Basic

3.5-1,022.1

-12,6

-19.5

-28.5

18.0

4.0

-17.3

5.2

7.4

2.0

Earnings per share (NOK) - Diluted

2.7-1,022.1

-12,6

-19.5

-28.5

17.9

3.9

-17.3

5.1

7.4

2.0

Equity ratio

17.4%

-13%

5%

3%

5%

11%

9%

9%

19%

20%

22%

Net interest-bearing debt*

1,683

40,222

24,00831,91722,265

21,151

17,131

11,273

4,346

3,797

3,145

Cash and cash equivalents (NOK million)

7,695

2,667

3,096

1,922

4,040

2,324

2,454

2,011

2,166

1,731

1,105

Yield

0.57

0.47

0.41

0.38

0.39

0.42

0.44

0.43

0.50

0.55

0.52

Unit revenue (RASK)

0.41

0.36

0.35

0.33

0.34

0.36

0.38

0.35

0.39

0.43

0.41

Unit cost (CASK)

0.91

0.94

0.44

0.43

0.45

0.43

0.44

0.44

0.44

0.47

0.47

Unit cost (CASK) excluding fuel

0.76

0.83

0.32

0.31

0.35

0.34

0.34

0.30

0.30

0.32

0.33

ASK (million)

9,437

18,168100,031

99,22072,341

57,91049,02846,47934,31825,92021,958

RPK (million)

6,869

13,68086,616

85,124

63,32050,79842,284

37,61526,881

20,353

17,421

Load factor

72.8%

75.2%

86.6%

85.8%

87.5%

87.7%

86.2%

80.9%

78.3%

78.5%

79.3%

Passengers (million)

6.2

6.87

36.2

37.3

33.1

29.3

25.8

24.0

20.7

17.7

15.7

Block hours

9.0

9.8

12.4

12.5

11.4

11.3

11.6

11.6

11.5

10.9

11.0

1,035

1,385

1,876

1,843

1,607

1,473

1,407

1,338

1,168

1,048

1,000

Fuel consumption (1,000 metric tons)

193

362

1,918

1,956

1,465

1,190

1,015

966

735

569

498

Number of operational aircraft (at year-end)

51

131

156

164

144

116

99

95

85

68

62

Average sector length (km)*) For definitions see last pages of the reportNORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

KEY OPERATIONAL FIGURES84

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

FLEET PLANHISTORIC, CURRENT AND PLANNED FLEET PLAN
Number of aircraft operated by Norwegian at year-end 2013-2021 and planned fleet summer 2022-2023

85

86

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

CORPORATE RESPONSIBILITY
Norwegian strives to be a good
corporate citizen in all areas of its
operation. The Company is committed tooperate in accordance with responsible,
ethical, sustainable and sound businessprinciples, that respects people andenvironment.
Norwegian’s business activities bringpeople,culturesandeconomies
together. Travel boost local tourism andcreate new jobs, and is a key driver of
economic growth and social progress.
Since 2002, Norwegian has safely
carried around 300 million passengers
to destinations all over the world. Safety
is the number one priority and at theheart of all our operations. It is essential
for customers and staff, and imperative
for the sustainability of air travel. In
addition to safety, we focus our policies

and actions within three pillars ofcorporate responsibility:••

Local development and humanitarian
engagement: Norwegian creates
economic and social value for ourinvestors, customers, employees andother businesses in the travel andtourism industry. In 2021, we
renewed our 15 year partnership with
UNICEF for another three years to
help giving children all over the world
basic human rights and better living
conditions.
Responsible
peopleculture:Norwegian’s goal is to create apositive working environment anddevelop a sound corporate culture
marked by openness, tolerance andhigh ethical standards. We arecommitted
topromotean•environment
free
from
any
discrimination. Norwegian aspires tobecome a more diverse and inclusivecompany to reflect the diversity ofour people – both customers andemployees, in addition to equal
opportunities and fairness for all as
we consider this business critical.
Environmental sustainability: In 2019
we pledged to become carbon
neutral by 2050, and in 2020 welaunched
ourenvironmental
sustainability strategy targeting 45
percent emission reduction perpassenger kilometer by 2030
compared to 2010.

Our policies and actions support thefollowing UN Sustainable Development
Goals:••••# 1: End poverty in all its forms
everywhere# 8: Promote sustained, inclusive
and sustainable economic growth,
full and productive employment anddecent work for all# 13: Take urgent action to combat
climate change and its impacts# 17: Strengthen the means of
implementation and revitalize theglobal partnership for sustainable
development
The next sections provide more detail toour work on local development,
humanitarian
engagement
andresponsible people culture. A more
extensive update on environmental
sustainability is provided in the next
section of the report.

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NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

LOCAL DEVELOPMENT AND
HUMANITARIANENGAGEMENT
Creating economic and social value atcrew bases and destinations underlines
Norwegian’s ambition to be a good
corporate citizen. This ambition is also
realizedthroughtheSignature
Partnership with the humanitarianorganization UNICEF, to help children inneed.

website. As part of the reorganizationcreditors donated NOK 765,000.
Norwegian also gave NOK 300,000 as a
Christmas gift to employees.
The total amount for contribution to
UNICEF’s work for children was NOK
2,408,500 in 2021. This amount can i.e.
contribute to the following:••

POLICIES
Our goal is to involve staff in their local
communities, as Norwegian believes that
employee involvement creates greater
quality of work life for staff. For
Norwegian, it is important to enable
employees and customers to make adifference. Through activities, relief
flights and other projects, Norwegian iscommitted to supporting UNICEF andthe important work the organization
does for children in need all over theworld.

ACTIONS
Norwegian and UNICEF have had a
Signature Partnership since 2007.
Norwegian's support to UNICEF primarily
consists of donations from passengers
and fundraisers from Norwegian’s
employees. In 2021 we signed a newcollaboration agreement extending thepartnership for another three years.

RESULTSIn 2021, Norwegian’s customers donated
NOK 1,343,500 to UNICEF’s work forchildren when booking flights on the•••

Almost 615,000 children can be fully
vaccinated against polio
Installing more than 755 wells
equipped with water pumps that can
supply and entire village or refugee
camp with clean water. Often it is thegirl`s job to get water, which may
mean that they do not have time to
go to school. If the water pump is
located near to the school, it
increases girls’ chance to receive an
education.
Help
save
6,800
severelymalnourished children with amonth`s supply of high-energy
peanut paste
Provide 1,650 School-in-a-box sets,
which provide education to children.
Full COVID-19 vaccination for 9,400
people.

RESPONSIBLE PEOPLE
CULTUREThe airline business is a service industry
where good relations and respect
between people are key success factors.
Norwegian has a long-term focus on
creating an attractive workplace for staff
which offers exciting opportunities in a
globalenvironment.
Norwegian’s
success rests on the ability to maintain atalented workforce of highly skilled staff
and leaders, who are motivated tocontribute to Norwegian’s growth and todeliver on the vision of affordable fares
for all.
At the end of 2021, the total workforce
in the Norwegian Group amounted to
3,310 people (headcount), compared to
6,365 at the end of 2020. Figures
includeapprentices,
temporaryemployees in administrative positions
and employees in companies that are ina bankruptcy process due to thediscontinuation of long-haul operations(UK, France, US and Italy).

POLICIES
Our people’s rights, diversity, inclusion
equality, non-discrimination, businessethics and anti-corruption are key
priorities regardless of location. We
place great importance in ensuring
compliance with basic human rights asoutlinedby
theUNs
Universal
Declaration of Human Rights. We arecommitted to ensure compliance withhuman rights as outlined in theInternational Labour Organisation's (ILO)
Conventions. No employees or suppliers
shall in any way cause or contribute to
the violation or circumvention of humanrights.
Our goal is to offer unique opportunities
to the people working for Norwegian aswell as a corporate culture that helps theCompany attract and retain the mosttalented people in the industry,
regardless of location. Creating effective
arenas for organizational learning andprofessional development at all levels of

the organization is a goal, guiding thework with organizational development
All aspects of the Group’s operations are
subject to extensive safety controls andcertification. Our operations meet thestrictest standards and the highest levelof regulations in the industry, set by theEuropean Aviation Safety Agency (EASA).
A safe and healthy workplace is afundamental right for all of us and abusiness imperative. One of our top
priorities is therefore to support healthand well-being (psychological andphysical), and minimize absence due toill-health or injury, through advice,awareness programs and proactive
initiatives.
Norwegian’s corporate vision, values andoperational priorities form the basis oftheGroup’s
ethicalguidelines.
Norwegian’s Code of Ethics provides
guidelines and directions for a goodworking environment and highlights theGroup’s guidelines for corporate andindividual behavior, sound businessprinciples, rights and duties, and safety
for all - including staff, customers andpartners.
According to our Group People Policy
the culture we strive for in Norwegian is
to include conduct that is professional,
impartial, positive and contribute to arespectful, open and including working
environment. We shall all behave withrespect and integrity towards anyone we
encounter through our work. We shallhelp create an environment free fromany discrimination and free frombullying, harassment or similar. We do

88

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

not tolerate any behavior that can beperceived as degrading or threatening.
Our remuneration policy strives to beequitable, fair, neutral and nondiscriminatory. Norwegian has an equal
gender pay policy and encourages
diversity in its daily business.
In Norwegian everyone has a joint
responsibility to create a healthy
working environment and develop asound organizational culture marked byrespect, openness and tolerance and becompliant with the Code of Ethics.
Any violations of the rules and guidelinesof the Code of Ethics and other company
policies shall be reported to Norwegian’s
Whistleblowing channel in accordancewith the Group procedure for reporting.
The procedure is set up to facilitate
internal whistleblowing and clarify theprocess for reporting.

HEALTH, SAFETY ANDENVIRONMENT (HSE)
Norwegian has a well-functioning HSEorganization throughout the group incompliance with relevant laws andregulations. All HSE-activities are
conducted in compliance with labor
laws, corporate policies, and guidelines.
This includes HSE risk assessments,
audits,handlingofGrievance,
Whistleblowing and occurrence reports.
Trend analyzes are presented anddiscussedinWork
Environment
Committees and preventative actions
are taken as deemed.
2021 has been another challenging year
due to still ongoing pandemic and theCompany reconstruction process. Travel
restrictions has impaired production,
but the Company has a sound ramp up
project where HSE has participated. The
occurrence report rate has naturally
been low due to the low production, but
has gradually increased throughout theyear. There have been no serious or
critical personnel injuries reported.
HSE has completed numerous COVID-19
HSE safety risk assessments in close
cooperation with relevant stakeholders.
HSE has been responsible for making
sure that the Company has been
updated on and compliant to COVID-19
governments regulations, supporting thewhole Company with COVID-19 related
issues including updated informationand procedures Norwegian has been
compliant to a strict COVID- regime.
Focus on employees wellbeing has beena priority throughout the pandemic
period.
HSE has been a key contributor inensuring that Norwegian is compliant to
new EASA regulations, especially related
to re-establishing a sound Pilot Peer
Support Program and a test regime upon
employment (test of psychoactive
substance (Regulation (EU) No 965/2012(2018),
Appendix
A-EASA
Regulations CAT.GEN.MPA.170 (14.02.21)
Psychoactive
substances).
Activemonitoring of relevant HSE indicators,
focus on maintaining a healthy andpositive work environment, reduction ofsickness rate in close cooperation withinternal and external stakeholders
remains a priority.

REMUNERATION

DIVERSITY

Norwegian’s competitiveness in themarket involves consideration of theentire reward package – not just basesalary or pay scale, but also benefits
such as health benefits, pension andinsurance schemes. During 2021 we havebeen implementing a salary matrix for
positions at the support offices to makesure that all Norwegian’s employees
receive a fair salary based on their role,
experience and level of education.
Salaries are benchmarked versus salarystatistics provided by global third party
provider.

The airline industry has historically beenmale dominated, but Norwegian has astrong tradition of practicing equality
since its inception in 2002. Norwegian
has talented and highly competent staff
and is committed to recruiting both
women and men to key positions.

Norwegian Air Shuttle ASA is a memberof NHO Aviation, which is a member of
NHO, The Confederation of NorwegianEnterprise. General salary levels areusually reviewed annually in accordancewith the relevant collective bargaining
agreements and based on considerationof the following criteria: (i) the
Company’s financial performance, (ii)productivity, (iii) competitiveness, (iv)the future market outlook.
Individual salaries are usually reviewed
on an annual basis based on theindividual’s performance and behavior.
In 2021, the salary increases carried out
in Norwegian were below the average
market increase for the year. People
working at Norwegian are employed in
the country they are based and follow
the laws and regulations of theirrespective country in addition to theglobal policies and guidelines provided
by Norwegian.

EQUALITY, DIVERSITY AND
INCLUSION
Norwegian constantly aspires to become
even more diverse and inclusive toreflect the diversity of our people,
customers and employees, and toensure equal opportunities and fairness
for all.
Norwegian recognize that diversity isfound in any social identity, such as
gender, age, culture, nationality,
ethnicity, physical abilities, political andreligious beliefs, sexual orientation, andother attributes. Norwegian involves,
accept and value all people in theworkplace
regardlessof
theirdifferences and social identity and all
customers that we are in contact withthrough our work, respecting and valuing
our equality and different ways ofcontributing to and sharing ourcommons goals and Norwegian’s
product.
In addition to various People and Culture
Policies and Guidelines, Norwegian isfinalizing an Equality, Diversity andInclusion
Policywhich
describes
Norwegian’s commitment to equality,
diversity and inclusion, including
specifying expectations and approach,as well as focus areas. Norwegian aim tohave a fully transparent and including

89

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

working environment and Norwegian will
not unlawfully discriminate, nor accept
any instruction from our customers,
contractors or any third party to direct
or indirect discriminatory actions andcontributes to equality and inclusion.
The commitment of Norwegian toequality,
diversity
andinclusionconcerns all aspects of the employment
relationship, including, but not limited
to; recruitment & selection, training,
promotion and career advancement,
renumeration and working conditions.
For instance, Norwegian’s TalentAcquisition team and all recruiting
managers are committed to creating
equal employment opportunities for all
potential employees and to ensure thatcandidates to offered employment,
embrace Norwegian’s equality, diversity,and inclusion goals and commitments,
and do not discriminate or treat people
differently based on a protected status.
Further, Norwegian is committed toensure
that
there
are
equal
opportunities for all employees todeveloptheir
potential
throughpromotions and career advancement
and through training and development.
The People Business Area aim tocontribute to the empowerment of
women, minorities, and different ethnic
groups, by providing training and/or
mentoring that offers employees of all
backgrounds the opportunity, skills,
experience, and information necessary
to perform well and to advance toupper-level jobs.
Consideration is given to equal
opportunity principles in all work

processes including, but not limited to,evaluating employees’ performance,
making recommendations on internaltransfers and promotions, evaluation of
employeeskillsorprofessional
development opportunities.
The People Business Area aims to put inplace a performance evaluation system
under which no advancement is blocked
or favored due to favoritism (see Code of
Ethics and Performance Management
Policy) and under which unbiased
individuals evaluate an employee forpromotion and/or advancement basedon objective and job-related criteria.
Norwegian is committed to provide
working conditions that are free of, andthat prevent, any kind of unlawful
harassment,
includingharassment
related to any non-discrimination basis
protected by anti-discrimination laws asfrom time to time in force, amongst
others ethnicity, religion, gender, sexual
orientation/
LGBTQ+
andallies,community, national origin, citizenship,
ancestry,age,
disability,
genetic
information(ref.
PreventionofHarassment Policy).
Norwegian promotes equal pay for equal
work and ensures that no worker isunlawfully discriminated against in termsof salary, benefits, incentives, or otherformsofcompensationor
remuneration.
Norwegianmonitorremuneration/compensation practices
to identify areas of potential concern interms of equal pay and put in place
remedial measures when deemed
appropriate
andconsistent
withapplicable law. Norwegian also ensuresthat leaves of absence related topregnancy and parental leave, among
other types of leaves, or other events
linkedtoparenting/familycarestatus/care tasks, do not result in a
violationofNorwegian’s
equal
employment opportunities commitment
and equal pay commitment.
Norwegian aims to promote policies andworking arrangements that prevents
involuntary
parttime/temporary
employment. Further, Norwegian strived
to ensure work life balance to benefit
the Company as well as employees interms of their family, personal and work
time – encouraging efficiency in the useof work time and making effective
measures and tools available for thispurpose.

ANTI-COMPETITIVE PRACTICES
Everyone working for Norwegian is
expected to exercise sound judgment
and discretion and observe professionalsecrecy. We shall never offer or accept
illegal or inappropriate monetary gifts or any other gifts - in order to achievebusiness or personal advantage. Gifts
should not be accepted if they in any way
can be seen to influence businessdecisions. All forms of conflict ofinterest are to be avoided.
It is not permitted for employees ofNorwegiantooffer
Norwegian’s
products or services to friends, family orcolleagues at a reduced rate or free ofcharge and it is not permitted for
Norwegian’s employees to accept any.

RESULTS
2021 was a very challenging year for
Norwegian due to the impacts of COVID19. Management in cooperation with thePeopledepartment
has
madecontinuous assessments of personnel
needs in a very reduced operation andscaled the furloughs up and down
according to needs in each country. At
year end, Norwegian had called back all
crew that was furloughed/temporary
laid-off and mostly all our non-crew.
Non-crew includes technical operation
responsible for aircraft maintenance.
Sickness leave for the Group across allunits was 6.9 percent in 2021, a decreaseof 0.7 percentage points from 2020.
In 2021, 43 percent of staff were female
and 57 percent male, compared to 45
percent female and 55 percent male in2020. Most pilots are male, and women
represent around a 4 percent share ofpilots, compared to around 5 percent in2020. Most cabin personnel are female,while males account for approximately
30 percent in 2021, compared to 34
percent in 2020. Among administrative
staff there is roughly an equal ratio ofmale to female staff. Technicians andengineers have historically been men,but in the past few years, the number offemale employees is increasing. The
Group’s Board of Directors has a 38
percent female representation, reduced
from 44 percent in 2020.

90

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

AMBITIONS AND PLANS FOR 2021
Norwegian will continue its commitment to operate in accordance with responsible,
ethical, sustainable and sound business principles, with respect for people and theenvironment.

EMPLOYEE GROUP HEADCOUNT
Percentage Percentage
femalemale

Female

Male

Total

Board of Directors

3

5

8

38 %

62 %

Executive Management

2

5

7

29 %

71 %

Non-Crew

409

745

1,154

35 %

65 %

Cabin Crew

988

387

1,375

72 %

28 %

Flight Deck
Total

32

742

774

4%

56 %

1,434

1,884

3,318

43 %

57 %

TOTAL HEADCOUNT BY AGE GROUP
Employees > 50 years

639

Employees 41-50 years

1,031

Employees 31-40 years

1,120

Employees < 30 years

520

Total

3,310

PARENTAL LEAVE AND PART-TIME BY GENDER
Total number of employees
Headcount per
gender
Employee Group
Total ell employees, ex.
Board of dir.

Parental Leave
Average number ofweeks

Part-timePart-time
employees

FemaleMale

FemaleMale

Female

Male

1,432

1,878

30

11

252

246

91

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Area

Back-ground for action

ActionRecruitment and The Airline Industry is traditionally, A performance evaluation system preventing thatcareergender specific based on positions, in advancement is blocked or favored due to favoritism,
possibilities
particular for flying personnel.
cf. Code of Ethics and Performance Management
Policy.
Salary /Based on the gender differences in the To ensure equal pay for equal work and to prevent
employment
Airline Industry, Norwegian continuously unlawfully discrimination in salary, benefits etc.,
terms
strives to monitor and correct Norwegian has dedicated specific functions in the
differences in salary and employment People
Remuneration
Team
that
monitorterms for various positions.
remuneration practices throughout the Group,
including in-placing all new hires on a correct salaryscale ensuring equal treatment.
Work life
Feedback related to work life balance Trial period with guideline Flexible workplace autumn
balanceand some employee’s concerns related 2021 – spring 2022 (prolonged due to Governmental
to returning to the office due to sickness restrictions to work from home during part of the trial
etc.
period).
Harassment
Norwegian constantly work with Norwegian has implemented a Prevention of
prevented all kind of not none Harassment Policy.
appreciatedbehavior,
includingchannels for Whistleblowing, Grievanceand Safety reporting, but also found it
necessary to include a specific antiHarassment Policy.
Based on our People and Culture Norwegian is finalizing an Equality, Diversity and
Policies and Guidelines, we see the Inclusion Policy.
need of an independent Equality,
OthersDiversity and Inclusion Policy.

Goals

Responsible

Deadline

Result and status

Continuously
monitored

Implemented

A fully transparent and including working EVPPeopleand Continuously
environment concerning all aspects of the Compensation & Benefits monitored
employment
relationship,including, teamremuneration and working conditions.

Implemented

Equal opportunities for all in recruitment & EVP People
selection, training, promotion and careeradvancement.

Flexibility for most employees, including those EVP People
who have family responsibilities, sickness or
disability reasons etc. to work from home up to
two days a week.
Provide working conditions free of and prevent, EVP People
unlawful harassment, including harassment
related to any non-discrimination basis
protected by anti-discrimination laws as fromtime to time in force.

Permanent
Implemented
Guideline fromMay 2, 2022

Describes Norwegian’s commitment to EVP People
equality, diversity and inclusion, including
specifying expectations and approach, as well
as focus areas.

ASAP – spring Focus
on2022
positivity’s due todifferentsocialidentities.

Implemented

Implemented

We focus on all social identity, such as gender, age, culture, nationality, ethnicity, disability, parental leave rights, physical abilities, political and religious beliefs, sexual orientation, andother attributes.

92

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

ENVIRONMENTAL SUSTAINABILITY
Flying brings people together and is ofgreat value to society. But flying alsocomes at an environmental cost thatmust be reduced. Norwegian is wellpositioned to tackle the transition to a
low carbon economy. Over the last
decade, our business model has reduced
fuel and resource consumption mainly
through fleet renewal and operational
efficiency – cutting costs, ticket prices
and carbon emissions at the same time.

OVERALL GOAL
Since 2007, Norwegian has had anambition to help aviation becomecarbon neutral by 2050. In 2019, we
became the first airline in the world tojoin the UN Climate Secretariat’s(UNFCCC)
ClimateNeutralNowinitiative,
pledging
toworksystematically to become carbon
neutral. The pledge commits us tomeasure, reduce and offset ourremaining CO2-emissions by 2050.
Although we are on the right track, wemust do more to deliver environmental
performance at an acceptable level. In
2019,
westartedintegrating
environmental sustainability into allparts of our business. The overall goal of
the environmental sustainability strategy
is to use fewer natural resources andincrease profitability. The goal rests on
the principle that environmental actions
must deliver a profit to be economicallysustainable and operationally scalable.

TARGETSTo measure how we perform, we havedecided upon the following three key
performance indicators:•••

Carbon efficiency
Waste resource optimization
Accountability

CARBON EFFICIENCYNorwegianwill
improvecarbonefficiency by 45 percent per revenue
passenger kilometer (RPK) by 2030
compared to 2010 levels, in line withrecommendations
fromtheInternational Panel on Climate Change
1.5°C-report from 2018. That means that
we are going down from 97 grams in 2010
to 53 grams in 2030.
The 45 percent reduction target can bereached through a mix of fleet renewal,
operational efficiency and sustainableaviation fuels. Future projections andprofitability
assessments
remainuncertainundercurrent
marketconditions and regulatory framework.
Greater
visibility
andreduceduncertainty of key variables arenecessary before deciding upon themost cost-efficient way to achieve thecarbon efficiency target.

WASTE RESOURCEOPTIMIZATION
Unnecessary waste will be designed out
from our product offer. Norwegian willstop all consumption of non-recyclable

plastics by 2023. In the same period,
consumption of single-use plastics will
be reduced by 30 percent and all singleuse plastics in Scandinavia will berecycled.

ACCOUNTABILITY
Our targets are action oriented andmeasurable. Norwegian will be open andshare our progress actively. Climaterelated risks and targets will be
integrated into corporate governance,risk management and annual reporting.

ACTIONSWe know where we are and where wewant to go. The big question now, is how
to get there in the most cost-efficientway. To reach our targets we areprioritizing the following actions:

FLEET RENEWAL
The single most important action anairline can take to improve carbon
efficiency today is to invest in new
aircraft. Norwegian operates a modern
and fuel-efficient fleet. In 2021 weentered into agreement to lease two
Boeing 737 MAX 8. The average age of theaircraft fleet was seven years and six
months at year end 2021.
Aviation also causes local noise
pollution. Norwegian’s modern fleet
plays an important part in the efforts to
reduce the negative impact on the local
environment. The Boeing 737 MAX 8
reduces noise with 40 percent

compared to the previous generation
Boeing 737-800. Norwegian’s operations
follow all international environmental
regulations. All of Norwegian’s aircraft
meet The International Civil Aviation
Organization’s (ICAO) Chapter 4 andChapter 14 requirements for local noise
pollution.

OPERATIONAL EFFICIENCY
The second most important action anairline can take to improve carbon
efficiency today is to improve fuelefficiency in operations.
In aviation an empty seat is a waste ofresources. Competitive prices givehigher load factor and less emissions perpassenger. Direct point-to-point flights
use less fuel and reduce emissions.
Norwegian is an industry leader indeveloping and implementing smart
data-tools to improve our pilot’s fuelefficiency performance. Our SkyBreathe
mobile application help pilots to fly more
fuel efficient. Our pilots also use a
Cruise Profile Optimizer developed by
AVTECH to make better route choices,helping our pilots to calculate the mostfuel-efficient altitude depending on theprevailing
winds
and
aircraftperformance. In 2021, we intensified
training
to
scale
and
improveperformance.

SUSTAINABLE AVIATION FUELS
The third most important action to
improve carbon efficiency is blending in
more sustainable aviation fuel (SAF).

93

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

Norwegian’s aircraft can fly on up to 50
percent certified SAF today.
In
2021,
Norwegianconsumed
approximately 0.3 percent sustainableaviation fuel of total Jet A-1 uplifted, incompliance with the Government of
Norway’s and Sweden’s blending
mandate requirements.
The Company continued its active
engagementwith
producersofsustainable aviation fuels with the aim toaccelerate production of affordable SAF
with high sustainability performance.
Norwegian also entered into acollaboration agreement with Neste, theworld’s leading producer of sustainableaviation fuel, enabling our corporate
customers to reduce life cycle
greenhouse gas (GHG) emissions frombusiness travel by up to 80 percent.

WASTE MANAGEMENT
To make sure that we only procure
recyclable plastics by 2023 we haveupdated tender and qualification
requirements in our procurement
system. We also planned a pilot test to
reduceconsumptionofinflight
disposables by 30 percent in December.
The pilot test was postponed due to
COVID-19.

REPORTING
In 2021, we reported our assessment ofclimate-related risk and opportunities
to the Carbon Disclosure Project for the
first time. We have also for the first time
prepared a carbon accounting report inline with the Greenhouse Gas Protocol.

CUSTOMER OFFSETTING
Since 2019 Norwegian have offered ourcustomers an easy way to voluntaryoffset their emissions seamlessly in thebooking process through a partnershipwith climate-tech company CHOOOSE.
The initiative was warmly welcomed bytheUnitedNations
Framework
Convention
on
ClimateChange(UNFCCC).
The money funds purchasing of carbon
offsets issued from three carefully
selected projects in Laos, Vietnam andThailand. The projects are certified by
the United Nations and the Gold
Standard, which sets the standard forclimate and development interventions
to quantify, certify and maximize theirimpact.
In 2021, an estimated 168,000
customers compensated for 19,800 tonsofCO2-emissions
throughthe
CHOOOSE-solution in our booking
process. That is equal to 2.7 percent of
total customers in 2021, up from 2.5
percent in 2020.
Read more about the projects and ourpartnershipwith
CHOOOSEat
norwegian.com/choose.

RESULTS
Below is a summary of our carbon
efficiency performance. The input data
is based on consumption data frominternal and external sources, which areconverted into tonnes CO2-equivalents(tCO2e). The carbon accounting is basedon the Corporate Accounting andReporting Standard developed by theGreenhouse Gas Protocol Initiative (GHG
Protocol).
In 2021, the Company emitted 606,881
tonnes of CO2 equivalents (CO2e) under
Scope 1 and Scope 2, the two mandatory
reporting scopes under the GHG
Protocol. Total GHG emissions, including
voluntary Scope 3, was 733,766 tonnes
CO2e.

SCOPE 1
Scope 1 accounts for emissions
stemming from direct operations where
the organization has operational control.
This includes use of fossil fuels formobile and stationary combustion,
whether they are owned, leased, or
rented. Scope 1 includes emissions fromconsumption of Jet A-1, diesel andpetrol from facility cars and natural gas
from the Company’s hangar in
Copenhagen.
In 2021, the Company consumed 192,485
metric tonnes of fossil Jet A-1 fuel,equivalent to absolute emissions of
606,328 metric tonnes CO2e, compared
to 355,000 metric tonnes of Jet A-1 fueland 1.1 million tonnes of CO2 in 2020. Jet
A-1 fuel consumption constituted over
99 percent of Scope 1 emissions andnearly 83 percent of total GHG emissions
in 2021. GHG emissions from diesel andpetrolconsumption
bygroundoperations was 103 tonnes in 2021, while
stationary combustion from natural gas
emitted 44 tonnes of CO2e.
Moreover, as seen in Figure on the next
page, the Company had relative fossile
emissions
from
JET
A-1
fuel
consumption of 88 grams of CO2 perrevenue passenger kilometer in 2021,
compared to 83 grams of CO2 perrevenue passenger kilometer in 2020.
The figure for 2021 does not include
biogenic emissions, as these areaccounted separately under the GHG
Protocol.
Norwegian’s absolute Scope 1 emissions
decreased by 46 percent compared to2020, mainly due to lower load factor
and shorter average sector length.
Moreover, our relative emissions
increased by 6 percent compared to2020, mainly due to a lower load factor
because of COVID-19.

SCOPE 2
Scope 2 accounts for emissions
stemming from indirect consumption ofpurchased energy, split between
electricity and heating/cooling. This
category includes buildings/locations
owned, leased, and rented. Scope 2
includes emissions from electricity anddistrict heating consumption for all
locations, including hangars, offices andcrew
rooms,
andelectricity
consumption from one electric vehicle.
Location-based Scope 2 emissions,mainly from electricity consumption at
facilities, was 406 tonnes CO2e in 2021.
In sum, location-based scope 2
emissions accounted for 0.06 percent of
Norwegian’s total GHG emissions in
2021. According to the location-based
method, the renewable energy share of
the Company’s Scope 2 energy
consumption was 75 percent.
Scope 2 emissions can also be reported
according to market-based emission

94

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

factors. The Company’s market-based
Scope 2 emissions was 1,938 tonnes
CO2e in 2021. The difference is
explained by the effect of Guarantees ofOrigin in the electricity market, which isincluded in the market-based method
but not in location-based method.

accounted for a little over 17 percent of
Norwegian’s total GHG emissions in
2021. Energy consumption in MWh has
not been calculated for Scope 3.

BIOGENIC EMISSIONS

Scope 3 accounts for indirect emission
connected parts outside of theCompany’s direct activities. This
includes but is not limited to upstream
emissions from the supply chain.

The consumption of sustainable aviationfuel is accounted for as a separate item
under biogenic emissions, in accordancewith guidance from the GHG Protocol
and based on a standard emission factor
from the Department of Environment,
Food and Rural Affairs (DEFRA) in the
United Kingdom.

Norwegian has included upstream
emissions from fuel-and-energy-related
activities. Scope 3 emissions, mainly
from production and transportation of
Jet A-1, was 126,885 tonnes CO2e in
2021. In sum, Scope 3 emissions

In 2021, Norwegian consumed 517
tonnes of SAF under the Norwegian andSwedish blending mandates, and 7
tonnes under the voluntary market. As
seen in the table below, the total
biogenic
emissionsfrom
SAF

SCOPE 3

Greenhouse gas emissions

MWhTonnes CO2e2,358,589
2,358,349
387
21
2,357,941
240
7,780
7,081
698
0,5
N/A
N/A

606,475
606,43198
5606,328
44
406
350
57
0
126,885
126,885

2,366,369

733,766

Biogenic emissions

MWhTonnes CO2e

SAF under blending mandates
SAF under voluntary market
Total biogenic emissions from SAF

5,558
80

1,370
20

5,638

1,390

Scope 1
Transportation
DieselPetrolJet A-1 (Jet kerosene)
Stationary combustion from natural gas
Scope 2
Electricity
District heating
Electric vehicles
Scope 3
Upstream emissions from fuel-and-energy related activities
Total

consumption were 1,725 tonnes CO2e in
2021. When accounting for SAF
consumption the total renewable energy
share for Scope 1 and 2 is nearly 0.5
percent of total energy consumption.

[Formatthiskilometer]

page?ue

FIGURE X: GRAMS CO2 PER REVENUE PASSENGER KILOMETER

97

90

88

86

81

76

74

73

83
72

88

70

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

passenger

95

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

CORPORATE GOVERNANCE
Norwegian is subject to Corporate
Governancereportingrequirements
according to the Norwegian Accounting
Act, section 3-3b, the Norwegian Code ofPractice for Corporate Governance (“theCode”) as revised on 14 October 2021 andthe Continuing Obligations of Listed
Companies as approved by Oslo Børs ASA,
available at www.lovdata.no, www.nues.noand www.oslobors.no, respectively.

defined division of responsibilities androles between the shareholders, the Boardand the Management, and respect for theCompany’s other stakeholders as well as
open and honest communication with thecommunities in which the Company
operates.

This report follows the system used in the
Code and deviations from the Code, if any,is addressed under each section.

BUSINESSIMPLEMENTATION ANDREPORTING OF CORPORATE
GOVERNANCE
Norwegian’s objective for Corporate
Governanceis
accountability,transparency, fairness and simplicity withthe goal of maximizing shareholder value
while creating added value for all
stakeholders. The objectives are designed
in compliance with laws, regulations andethical standards.
Norwegian’s Board of Directors promotes
and support open and clear communicationof the Company’s Corporate Governanceprocesses.
The Board believes that good Corporate
Governance is distinguished by responsible
interaction between the owners, the Board
and Management in a long-term, productive
and sustainable perspective. It calls for
effective cooperation, which means a

No deviations from the Code.

Norwegian’s scope of business is defined in
its Articles of Association section 3: “TheCompany’s objective is to be engaged inaviation, other transport and travel related
business activities as well as activities
connected therewith. The Company may
also be engaged directly or indirectly inother 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 asmentioned may take place throughcooperationagreements,
ownership
interests or by any other means.”
The Articles of Association is published infull on the Company’s website.
Policies and procedures have been
established to manage risks and the Boardof Directors evaluate the overall risk
management systems on a regular basis.
The Board of Directors evaluates theCompany’s objectives, strategies and risk
profile every year. Norwegian strives to bea good corporate citizen in every area of its
operation.
The Company is committed to operating inaccordance with responsible, ethical,
sustainable and sound business principles,with respect for people, the environment
and the society.
The Company’s core values are clearly
defined and are reflected in the Company’s
Code of Ethics. The Code of Ethics includes
ethical guidelines and guidelines forcorporate social responsibility, hereunder
bribery and anti-corruption, unlawful
discrimination and human rights, health,safety and environmental issues.
More information on how Norwegian
integrates Corporate Responsibility in its
operations can be found in the separate
report of Corporate Responsibility at
Norwegian, presented in a separate sectionof the annual report and available on the
Company’s website www.norwegian.com.
No deviations from the Code.

adequate considering the Company’s
objectives, strategy and risk profile.

DIVIDEND POLICYThe Board of Directors recommends not to
distribute dividends in order to retain funds
in line with the Company’s objective torestore profitability. Dividends should
under no circumstances be paid if equity is
below what is an appropriate level. The
Company's debt facilities restricts dividend
payments, repurchase of shares or othercontributions or loans to shareholders(except repurchase of shares in connection
with any option or similar incentive
program made for the benefit of theemployees and/or management and/or
directors) until maturity of the last bond in
April 2027.

BOARD AUTHORIZATIONSThe General Meeting of the Company on 04
June 2021 granted the Board of Directors
the following authorizations•

EQUITY AND DIVIDENDS
CAPITAL STRUCTURE
The Company shall have an equity capitalwhich, over a period of time, is at an
appropriate level for its objective, strategy
and risk profile. Total equity at year end
2021 was NOK 3,270 million. The Board of
Directors deems the capital structure to be•

An authorization to acquire treasury
shares with an aggregated nominal
value of 11,344,836 at a maximum
price of NOK 200 and a minimum priceof NOK 0.10. The Board may at its
discretion determine the method ofacquisition and any disposal of theshares.
An authorization to increase theCompany’s share capital by up to NOK
11,344,836
comprising
capitalincreases
againstnoncashcontributions and the right to incur96

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021••

special obligations, including mergers
and demergers. The authorization
replaces all previous authorizations toincrease the share capital.
An authorization to increase the sharecapital by up to NOK 2,268,967. The
authorization can only be used toissue new shares in connections with
the Company’s incentive programs.
An authorization to borrow up to NOK
2 billion (or a corresponding amount inanother currency) in convertible
bonds.

The authorizations are valid for a period up
until next Annual General Meeting, however
not beyond 30 June 2022.
No deviations from the code.

EQUAL TREATMENT OFSHAREHOLDERS AND
TRANSACTIONS WITH CLOSEASSOCIATES
CLASS OF SHARESNorwegian Air Shuttle ASA has only one
class of shares and all shares have equal
rights in the Company. The articles ofassociation impose no voting restrictions.

RESTRICTIONS ON SHAREHOLDERS
THAT ARE NOT BEING DOMICILED
WITHIN EEA
TheNorwegian
Civil
AviationAct(“Luftfartsloven”)
withaccompanying
regulations pertaining to adoption of the EC
Regulation NO. 1008/2008 set forth arequirement that non-EEA nationals may

not own more than 50 percent of theshares in companies that are subject to said
regulation. In the general meeting in May
2016, the Articles of association wasamended in order to ensure that theCompany in an efficient manner could
intervene if it is a risk that the license(s) of
the Company may be revoked.

TRADING IN TREASURY SHARES
Share buy-back transactions are generally
carried out via stock exchanges. Buy-backsof treasury shares are carried out at market
prices. Employee share allocations are
granted at a discount to market value. The
Company holds a total of 134,588 treasury
shares.

TRANSACTIONS WITH RELATEDPARTIES
Material transactions between the Groupand key stakeholders, in particular theshareholders, the members of the Boardand the Executive Management, are subject
to the approval of the Board of Directors.
Such transactions are duly noted in theminutes from the Board meeting and arealso explicitly stated in the notes to theconsolidated accounts.
In cases where members of the Board of
Directors or the Executive Management
have other direct or indirect materialinterests in transactions entered into by theGroup, this is stated in the notes to theconsolidated accounts. Note 25 to theconsolidated
financialstatements
describes
transactions
with
close
associates (related parties). Financial
relationships related to the Directors andExecutive personnel are described in Note
7 and 15.

GUIDELINES FOR DIRECTORS ANDEXECUTIVESNorwegian’s code of ethics includes
guidelines for handling possible conflicts ofinterest. The code applies to all Board
members and Norwegian staff. In addition,
the Board has drawn up specificprocedures for handling of conflicts ofinterest for Board members and membersof the corporate Management Board.
No deviations from the Code.

FREELY NEGOTIATED SHARES
There are no restrictions on owning, tradingor voting for shares in the Company.

General Meetings and allows for voting oneach individual matter.
The shareholder can nominate the Chair of
the Board or appoint a person to vote on
their behalf as proxy. The Board of
Directors, Nomination Committee and the
Auditor will attend the meeting. To theextent possible, the Executive Management
is represented by the Chief Executive
Officer and the Chief Financial Officer andother key personnel on specific topics.
The agenda is set by the Board of Directors,
and the main items are specified in Article
7 of the Article of Association. The minutesof the General Meeting are available on the
Company’s website. The General Meeting
elects the chair of the Annual General
Meeting.
No deviations from the Code.

No deviations from the Code.

NOMINATION COMMITTEE
GENERAL MEETINGS
The notice of calling the Annual General
Meeting is given in writing no later than 21days prior to the meeting.
Relevant documents, including proposals
for resolutions to be considered by theGeneral Meeting and recommendations by
the Nomination Committee, are available at
the Company’s website from the samedate.
The Board of Directors has ensured that theshareholders may exercise their rights at
the General Meeting by facilitating proxyattendance. Forms for the granting ofproxies are enclosed in the summons to the

The duties of the Nomination Committee
are to make recommendations to theGeneral Meeting for the election ofshareholder elected board members andmembers of the Nomination Committee,
and the remuneration to the members of
the Board of Directors and Nomination
Committee.
The Nomination Committee will justify its
proposal on each candidate separately andpresent relevant information about thecandidates together with an evaluation of
their independence. In connection with theCommittee’s
work
with
proposingcandidates, the Committee stays in contact
with major shareholders, the Board of
Directors and the Executive Management.

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NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

It follows from Article 8 of the Articles of
Associations that the Committee consistsof minimum three members, who shall beshareholders
or
representativesofshareholders. Committee members areelected for two years at a time.
The current composition of the committee
consists of:••••

Mr Nils A. Foldal (chair
Nomination Committee)
Mr Tor Svelland
Mr Jakob Iqbal
Mr Nils Bastiansen

of

the

None of the members of the Nomination
Committee
represent
Norwegian's
Management. The members are considered
as independent of Management and theBoard.
No deviations from the Code.

other competitive consumer sectors,
relevant
network
connections
andexperiences from businesses, finance,
capital markets and marketing.
The Board members are elected for aperiod of two years. The majority of theshareholder-elected members of the Board
are considered to be autonomous andindependent of the Company’s executive
personnel and material business contacts.
The five members of the Board who areelected by shareholders are consideredautonomous and independent of theCompany’s main shareholder(s). Among theshareholder elected Directors, there arethree men and two women.
Detailed information on the individual
director can be found on the website atwww.norwegian.com. None of the directors
are members of the executive management
team. Directors of the Board areencouraged to own shares in Norwegian.

BOARD OF DIRECTORS,COMPOSITION AND
INDEPENDENCE

Participation in Board meetings in 2021 has
been:

According to the Articles of Association, theBoard must consist of between five andtwelve members. At year end 2021 theBoard of Directors had eight members.

NameIngrid Elvira Leisner

The Company has three Directors electedby the employees on the Board of
Directors.
Theshareholder-elected
members of the Board of Directors havebeen nominated by the Nomination
Committee to ensure that the Board of
Directors
possesses
thenecessaryexpertise, capacity and diversity. The Board
members have competencies in andexperiences from the transport sector andNumber ofmeetings
24

Sondre Gravir

24

Katrine Gundersen

24

Geir Olav Øien24

Chris Browne

23

Eric Holm

23

Niels Smedegaard

13

Vibeke Hammer Madsen

13

Jaan Albrecht Binderberger

13

Svein Harald Øygard

11

Name
Lars Boilesen

Number ofmeetings
11

No deviations from the Code.

THE WORK OF THE BOARD OF
DIRECTORSThe Board of Directors perform their workin accordance with the rules andrequirements as set out in Norwegian law.
The Board of Directors issues instructions
for its own work. If the Chair of the Boardof Directors is or has been actively engaged
in a given case, another Board member will
normally lead discussions concerning thatparticular case. There is a clear division of
responsibilities between the Board and the
Executive Management.
The Chair is responsible for ensuring thatthe Board's work is conducted in an
efficient,correctmannerandinaccordance with the Board's terms ofreference. The Chief Executive Officer is
responsible for the Company’s operational
management.
The Board has drawn up special
instructions for the Chief Executive Officer.
The Board of Directors conducts an annual
self-assessment of its work competence
and cooperation with the Management.
The Board of Directors has established an
Audit Committee, consisting of two
shareholder-elected members of theBoard. The Board ensures that nominees
meet requirements of expertise, capacityand diversity.

No deviations from the Code.

RISK MANAGEMENT AND
INTERNAL CONTROL
Quarterly financial reports are preparedand made available to the capital market inaccordancewiththereportingrequirements
applicabletolistedcompanies on Oslo Børs.
The quarterly financial reports are reviewed
by the Audit Committee prior to Board
approval and disclosure. Moreover,financial reports, risk reports and safety
reports are drawn up, all of which are
subject to review at Board meetings. The
auditor meets with the entire Board inconnection with the presentation of theinterim annual financial statements, andwhen otherwise required.
The auditor also participates in Audit
Committee
meetings.
Policies
andprocedures have been established to
manage risks.
The Company’s Board of Directors reviewsand evaluates the overall risk management
systems and environment in the Company
on a regular basis. The Board ensures soundinternal controls and systems for risk
management through, for example, annual
Board reviews of the most important risk
factors and internal controls. Risk
assessment and the status of theCompany’s compliance and corporatesocial responsibility are reported to theBoard annually.
The Company’s financial position and risks
are thoroughly described in the Board of
Directors’ Report.

98

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

No deviations from the Code.

REMUNERATION OF THE BOARD
OF DIRECTORS
Based on the consent of the General
Meeting, it is assumed that the
remuneration of Board members reflects
the respective members’ responsibilities,
expertise, time commitments and thecomplexities of the Company’s activities.
In cases where Board members take on
specific assignments for the Company,
which are not taken on as part of theiroffice, the other Board members must be
notified immediately and, if the transaction
is of a substantial nature, this will be
explicitly stated in the notes to theconsolidated accounts.
Details of the remuneration of individual
Board members are available in the notes tothe consolidated accounts. The Board of
Directors are not entitled to performance
related compensation.
The Board members are not granted shareoptions.
No deviations from the Code.

REMUNERATION OF EXECUTIVE
MANAGEMENT
In accordance with the Public Limited
Liability Companies Act, section 6-16 (a),the Company prepares guidelines for salaryand other remuneration of its executives,
which is presented to the Annual General
Meeting for approval.

The principles of executive remuneration in
Norwegian are to stimulate a strong andlasting performance-oriented culture,enabling the Company to deliver on its
business strategy.
Remuneration design shall align the interestof the executives with those of theshareholders. The remuneration policy
shall reward performance that contributes
to the Company’s business strategy, longterm interests, and financial sustainability.
The remuneration must not have negative
effects on the Company, nor damage thereputation and standing of the Company
the public eye.
In accordance with the Public Limited
Liability Companies Act, section 6-16 (b),the Company prepares a report on salaryand other remuneration of its Executive
Management. The report will be presented
at the 2022 Annual General Meeting for
consultative voting.
Deviations from the guidelines on salary andother remuneration will be covered in the
remuneration report.
Details of salary and other remuneration ofindividual members of the Executive
Management are available in the notes tothe consolidated accounts.

requirement of equal treatment of allparties in the market.
The Board of Directors annually reviews
these guidelines. A financial calendar isprepared and published on the Company’s
website and is also distributed inaccordance with the rules of the PublicCompanies Act and the rules applicable tocompanies listed on the Oslo Stock
Exchange.
Information distributed to the shareholders
is also published on the Company’s
website. The Company holds regularinvestor meetings and public interim result
presentations and has a VP of Investor
Relations.
Norwegian has separate instructions forinvestor
relationsregardingcommunication with investors and how
insider information shall be treated.
The Board of Directors has preparedguidelines for the Company’s contact withshareholders outside the General Meeting.
The Board considers that these measuresenable and ensure continuous informativeinteractions between the Company and theshareholders.
No deviations from the Code.

No deviations from the Code.

INFORMATION AND
COMMUNICATIONSNorwegian has established guidelines for
the Company’s reporting of financial
information based on transparency and theshareholders and in compliance with all therules and regulations applicable for such an
event as well as practices recommended in
the Code.
In the case of a take-over bid, the Board will
refrain from taking any obstructive action
unless agreed upon by the General Meeting.
No deviations from the Code.

AUDITORThe auditor annually presents the mainfeatures of the audit plan for the Company
to the Audit Committee.
The auditor participates in the meetings ofthe Board of Directors that deal with theannual accounts. At these meetings theauditor reviews any material changes in the
Company’s
accounting
principles,
comments on any material estimatedaccounting figures and reports all material
matters on which there has been adisagreement between the auditor and the
Executive Management of the Company.
The auditor presents a review of theCompany’s internal control procedures atleast once a year to the Audit Committee,
including identified weaknesses andproposals for improvements.

There are no limitations with respect to thepurchases of shares in the Company.

The auditor participates in meetings with
the Audit Committee and present thereport from the auditor that addresses theCompany’s accounting policy, risk areasand internal control routines.

The Board has established guidelines for
how it will act in a take-over situation. In
the event of a take-over bid the Board of
Directors will act in the best interest of the

The Chief Executive Officer and the Chief
Financial Officer are present at all meetings
with the Board of Directors and the auditor,
except for one meeting a year, in which only

TAKEOVERSNORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

the auditor, the Board and the Audit
Committee are present. The Management
and the Audit Committee evaluate the useof the auditor for services other than
auditing.
The Audit Committee and the Board
receives annual confirmation that theauditor continues to meet the requirementof independence.
The Board of Directors reports the
remuneration paid to the auditor at theannual General Meeting, including details of
the fee paid for audit work and any fees
paid for other specific services.
No deviations from the Code.

99

100

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

DECLARATION FROM THE BOARD OF DIRECTORS AND CEO
We confirm to the best of our knowledge that:••the consolidated financial statements for 2021 have been prepared in accordancewith International Financial Reporting Standards (IFRS) as adopted by the EU, as wellas additional information requirements in accordance with the Norwegian
Accounting Act,the financial statements for the parent company for 2021 have been prepared inaccordance 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 21 January 2008,
the information presented in the financial statements gives a true and fair view of
the Company’s and Group’s assets, liabilities, financial position and results for theperiod viewed in their entirety, the board of directors' report, including thechapters on corporate governance and corporate responsibility, gives a true andfair view of the development, performance and financial position of the Company
and group, and includes a description of the key risks and uncertainties thecompanies are faced with.

Fornebu, 28 April 2022
The board of directors of Norwegian Air Shuttle ASA/s/ Svein Harald Øygard
Chair/s/ Ingrid Elvira Leisner
Director/s/ Eric Holm
Director(elected by the employees)/s/ Lars Boilesen
Director/s/ Katrine Gundersen
Director(elected by the employees)/s/ Chris Browne
Director/s/ Torstein Soland
Director(elected by the employees)/s/ Sondre Gravir
Director/s/ Geir Karlsen
Chief Executive Officer

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

101

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

102

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

103

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

104

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NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

BOARD OF DIRECTORSSVEIN HARALD ØYGARDLARS BOILESENINGRID ELVIRA LEISNER

Chair

Director

Director

Mr. Lars Boilesen (born 1967) is the CEO of
Otello Corporation (formerly Opera
Software ASA). He has previous experiencein both sales and marketing from the LegoGroup, Tandberg and Alcatel-Lucent. Mr.
Boilesen served on the Board of Directors
for Opera from 2007 to 2009 until hebecame CEO. He has been the chairman of
Napatech ASA since 2018 and is currently aboard member at Airthings ASA. Mr.
Boilesen has a Bachelor's degree inBusiness Economics from Aarhus School ofBusiness in Denmark and a Postgraduate
Diploma from Kolding Business School. He
has been elected for the period 2021-2023
and is an independent board member.

Ms. Ingrid Elvira Leisner (born 1968) has
long experience as head of audit
committees and member of several boards,
currently including Self Storage Group ASA,
Techstep ASA, Maritime and Merchant ASA,
Elliptic Laboratories ASA and XploraTechnologies AS. Over several years, she
has held several positions with Statoil,
including Head of Portfolio Management
Electric Power, Portfolio Manager andTrader. Ms. Leisner has a Bachelor's inBusiness Administration from University ofTexas in Austin, USA. Ms. Leisner has been aboard member since 2019 and is elected forthe period 2021-2023. She is anindependent board member.

Mr. Svein Harald Øygard (born 1960) has
many years of experience from both the
public and private sector. In 1985, he joined
the Ministry of Finance where he held
several positions, including State Secretaryof Finance. Between 1995 and 2016, Mr.
Øygard worked at McKinsey & Company. In
2009, he was called to serve as the Interim
Central Bank Governor of the Icelandic
Central Bank where he also headed theBankrestructuring
Coordination
Committee. Mr. Øygard later worked as
Senior Partner Corporate Finance at
Sparebank1 Markets, and as industry
advisor until the beginning of 2021. Today,
he is an independent advisor and holds
board
appointments
invariousinternational companies like TGS-NOPEC,
Seadrill, DBO Energy, AGR Petroleum

Services, Holu, Nettbil, Labrida andAkershus University Hospital. He has adegree in Economics (Cand. Oecon);Microeconomics,
Macroeconomics,
Finance, Industrial Economics, Statistics
and Econometrics. Mr. Øygard has been
elected for the period 2021-2023 and is anindependent board member.

106

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

SONDRE GRAVIRCHRIS BROWNE

KATRINE GUNDERSEN

ERIC HOLM

Director

Director

Director, employee representative

Director, employee representative

Mr. Sondre Gravir (born 1977) is CEO of
SATS, a position he has held since 2018.
Prior to this, he was CEO of Schibsted
Marketplaces, Executive Vice President of
Schibsted Established Markets, as well as
CEO of Finn.no, Aftenposten and Bergens
Tidende. He has also worked as amanagement consultant in McKinsey. Gravir
holds a Master of Science in Economics andBusiness
Administration
fromtheNorwegian School of Economics (NHH) andselected MBA courses in international
finance and business from the National
University of Singapore. Gravir has
experience from several Schibsted boardsinternationally both as chairman and board
member, and has also had board
appointments
in
FrendeForsikring,Fædrelandsvennen and Finn.no. Mr. Gravir
has been a board member since 2018 and iselected for the period 2020-2022. He is anindependent board member.

Ms. Chris Browne (born 1960) has extensive
experience from the airline and travelindustry, including Iberia, First Choice
Airways and TUI. At TUI, Ms. Browne was theManaging Director of Thomson Airways forseven years and then took on the role as
Chief Operating Officer at TUI Airlines from2014 to 2015. Ms. Browne also held theposition of Chief Operating Officer at
easyJet from 2016 until she stepped downin 2019. She was awarded an OBE forservices to aviation in 2013. Ms. Browne iselected for the period 2020-2022. She is
an independent board member.

Ms. Katrine Gundersen (born 1974) holds
the position as Crew Tracker at
Norwegian’s
Integrated
Operational
Control Centre (IOCC). She started working
in the airline industry in the late 1990s andhas been with Norwegian since August
2002. She holds a bachelor’s degree in
economics from the University of BI. Ms.
Gundersen was Deputy member to theboard from 2016-2018 and has been aboard member since 2019. Ms. Gundersen
is elected for the period 2022-2024. She is
an independent board member.

Mr. Eric Holm (born 1967) joined Norwegianin March 2010 and is currently employed in
Norwegian Cabin Services Norway AS. Mr.
Holm holds a MA degree in International
Security Studies from the University ofLeicester. Mr. Holm has been Deputy Board
Member at Norwegian Cabin Services
Norway, Chairman at Parat Luftfart andBoard Member (employee representative)
at Lufthansa Service Group Norway. He has
been a board member since 2019 and iselected for the period 2022-2024. He is anindependent board member.

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

TORSTEIN HIORT SOLAND
Director, employee representative

Mr. Torstein Hiorth Soland (born 1987)
joined Norwegian's Technical Operations
Department in 2014. He holds a BSc in
Aeronautical Engineering from Mälardalen
University and a MSc in Wind Energy. In
2017, he transferred to the Network
department
withinCommercial
Department as Fleet Manager. Mr. Soland
accepted the role as Vice President Fleet
Strategy in 2019 and during the pandemic
he was asked to take the role as Director of
Lean. Mr. Soland was deputy member to theboard from 2019-2022 and is now electedboard member for the period 2022-2024.
He is an independent board member.

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NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

MANAGEMENTGEIR KARLSENADRIAN DUNNEGURO H. POULSEN

ANNE-SISSEL SKÅNVIK

Chief Executive Officer and Acting
Chief Financial Officer*)

EVP Operations

EVP People

EVP Communications and Public Affairs

Mr. Geir Karlsen (born 1965) has been Chief
Executive Officer in Norwegian since June
2021. He held the position of Chief
Financial Officer (CFO) since April 2018, andserved as Acting Chief Executive Officer
from July to December 2019. He has
extensive
experiencefromlistedcompanies within shipping and offshore.
Mr. Karlsen has over the last 12 years held
various CFO positions at international
companies such as Golden Ocean Groupand Songa Offshore. Before Norwegian, heheld the position Group CFO at Londonbased Navig8 Group, the world's largest
independent pool and managementcompany. Geir Karlsen has a degree inBusiness Administration from BI NorwegianBusiness School.

Mr. Adrian Dunne (born 1968) was
appointed Executive Vice President (EVP)
Operations (COO) in March 2021. Adrian has
more than 30 years of experience in airline
operations initially at Aer Lingus (1989 –
2005) where he held several senior
operations leadership roles in both the UK
and Ireland, and with Ryanair from 2005 –2021 where he held a number of seniorleadership roles including Director of
Ground Operations and Director ofOperations. Mr Dunne has a Master of
Science Degree in Aviation Managementand Leadership from Dublin City University.

Ms. Guro H. Poulsen (born 1975) was
appointed Executive Vice President (EVP)
People in June 2020. She has been with
Norwegian since 2010, starting as a
Financial Controller and later working as
the Finance Manager for Norwegian Air
Resources and SVP Crew Management. She
has several years of experience from large
international
companies,
including
Goodyear Dunlop and Wrigley as BusinessController. Ms. Poulsen holds a Master ofBusiness Administration within Marketingfrom Griffith University in Australia and a
Bachelor of Business Administration within
Travel and Tourism Management from BI
Norwegian Business School.

Ms. Anne-Sissel Skånvik (born 1959) was
appointed Executive Vice President (EVP)
Communications and Public Affairs in June
2020. She was Norwegian’s Chief
Communications Officer 2009 – 2020. Ms.
Skånvik joined Norwegian from a position as
Senior Vice President at Telenor ASA,
responsible for corporate communications
and governmental relations. Ms. Skånvik
was the Deputy Director General in The
Norwegian Ministry of Finance between
1996 and 2004. She has also years ofexperience from Statistics Norway (SSB)and various media. Ms. Skånvik has a
Master's degree in political science (”Cand.
Polit”) from the University of Oslo, a degree
in journalism from Norwegian College of
Journalism and the Executive Management
Course at Norwegian Defence University
College*) Hans-Jørgen Wibstad has been appointed new Chief
Financial Officer and will take up the position in May
2022.

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NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

KNUT OLAV IRGENS HØEGCHRISTOFFER SUNDBYMAGNUS THOME MAURSUNDEVP IT & Business Services

EVP Marketing, Sales & Customer CareEVP Network, Pricing & Optimisation

Mr. Knut Olav Irgens Høeg (born 1973) was
appointed Executive Vice President (EVP)
IT, Supply Chain & Process improvement inJune 2020. He jointed Norwegian in August
2019 as SVP Procurement and has been
acting in the role as SVP IT and Customer
Care from February 2020. Mr. Høeg has
extensive experience in procurement and IT
from several large operations, like Circle K,
TINE, Storebrand and Skandia. He has also
been a Management Consultant at Deloitte.
Mr. Høeg has been driving several different
Change and Cost-Out Projects and in
addition building up organizations both
locally and Near-Shore. He has a Master of
Science Degree in Economics from
Norwegian School of Management (BI) andan MBA from the Norwegian School of
Economics (NHH).

Mr. Christoffer Sundby (born 1978) was
appointed Executive Vice President (EVP)
Customer in September 2020 and EVP
Sales, Marketing & Customer Care in March
2021. Christoffer has 10 years of leadershipexperience in merchandising, including
operations, marketing, sales, product &concept development and customer
service. He was Senior Vice President of
Circle K Norway in 2017-2019 before he wasappointed CEO of the healthcare company
Unicare in August 2019. Christoffer started
his professional career as a consultant at
McKinsey & Company in 2006, after several
years as a member of the Norwegian
Olympic team in sailing. Christoffer has a
MSc in Economics from BI NorwegianBusiness School.

Mr. Magnus Thome Maursund (born 1981)
was appointed Executive Vice President(EVP) for Network, Pricing & Optimisation in
October 2021. Mr Maursund started
working in Norwegian in 2007. He has held
several management positions over a
decade and has experience in supply chain
management, route planning, charter andpartnerships. From 2019 to 2021 he held
the position of SVP for short haul network
in Norwegian. Mr Maursund has a MSc in
Economics from BI Norwegian Business
School, with a specialization in strategy.

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NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

DEFINITIONSALTERNATIVE PERFORMANCE MEASURESNorwegian Air Shuttle’s financial information is prepared in accordance with International
Financial Reporting Standards (IFRS). In addition, the Company presents alternative
performance measures (APM). The APMs are regularly reviewed by management and their
aim is to enhance stakeholders’ understanding of the Company’s performance. APMs arecalculated consistently over time and are based on financial data presented in accordancewith IFRS and other operational data as described in the table below.

amortization and impairment, restructuring, and share of profit (loss) from associatedcompanies) is no longer presented as it is not comparable to previous periods and in essence
very similar to EBITDAR (see definition below). EBITDAR excludes both depreciation andaircraft lease expenses and is hence a more consistent measure for operational
performance over time, excluding ownership costs and the most significant changes arisingfrom the adoption of IFRS 16.

The Company has updated its definitions considering the adoption of IFRS 16. EBITDA(Earnings before net financial items, income tax expense (income), depreciation,

Prior to 2018, the Company presented unit cost primarily excluding depreciation. Since
2018, the Company has included depreciation in unit cost.

MeasureDescription

Reason for including

EBIT(operating profit)

Earnings before net financial items, income tax expense (income) and share of profit (loss)
from associated companies. Equivalent to operating profit in the consolidated income
statement in the annual report

Enables comparability of profitability regardless of capital structure or tax
situation

EBIT excl other losses/(gains)

Earnings before net financial items, income tax expense (income) and share of profit (loss)
from associated companies, adjusted for other losses/(gains)-net

Enables comparability of profitability regardless of capital structure or tax
situation, excluding effects for certain volatile operating expenses

EBITDAR/Operating profit excluding
lease, depreciation andamortization ("EBITDAR")

Earnings before net financial items, income tax expense (income), depreciation, amortizationand impairment, restructuring, aircraft leasing expenses and share of profit (loss) fromassociated companies

A measure of operating performance that enables comparison between
airlines as it is not affected by the method used to finance aircraft

EBITDAR excl otherlosses/(gains) /Underlying operating result

Earnings before net financial items, income tax expense (income), depreciation, amortizationand impairment, restructuring, aircraft leasing expenses and share of profit (loss) fromassociated companies, adjusted for other losses/(gains)-net

A measure of operating performance that enables comparison between
airlines as it is not affected by the method used to finance aircraft,
excluding effects for certain volatile operating expenses

EBT(profit/(loss) before tax)

Earnings before income tax expense (income). Equivalent to profit (loss) before income tax
expense (income) in the Consolidated Income Statement in the annual report

Enables comparability of profitability regardless of capital structure or tax
situation

Net interest-bearing debt

Non-current debt plus current debt less cash and cash equivalents

Measurement of the ability to pay all debt with available cash and cash
equivalents, if all debt matured on the day of the calculation. It is therefore
a measure of the risk related to the Company’s capital structure

Other losses/(gains)

Gains and losses from foreign currency contracts, forward fuel contracts, adjustment ofmarket value for total return swaps, translation of working capital in foreign currency, net
gain or loss from sale of fixed assets and restructuring costs

Included as a specification to operating expenses to separate certain
volatile effects from other operating expenses

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NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

ALTERNATIVE PERFORMANCE MEASURES – RECONCILIATIONSOTHER DEFINITIONS*Other losses /(gains) is defined in table above and is a part of operating expenses, see consolidated
income statement.

NOK million

2021

Item

Description

Aircraft lease expenses

Lease and rental expenses on aircraft including both dry leases and wetleasesAncillary revenue / PAX

Ancillary passenger revenue divided by number of passengers

ASK

Available seat kilometers. Number of available passenger seats multipliedby flight distance. Note that blocked mid-seats on domestic routes in
Norway following virus containment measures do not count as available
seats

Average sector length

Total flown distance divided by number of flights

Book equity per share

Total equity divided by number of shares outstanding

Block hours

Time of block off to block on – industry standard measure of aircraft
utilization

2020

Operating profit (EBIT) to EBIT excl other losses/(gains)
Operating profit (EBIT)(2,786.0)(23,768.4)- Other losses/(gains) *EBITDAR excl other losses/(gains)(737.5)(3,523.5)

3,004.7(20,763.7)

EBITDAR(1,516.0)(4,755.2)- Other losses/(gains) *EBITDAR excl other losses/(gains)(737.5)(2,253.5)

3,004.7(1,750.5)

CO2 per RPK

Amount of CO2 emissions divided by RPKConstant currency

A currency exchange rate that excludes the impact of exchange rate
fluctuations from comparable period, e.g. last year as comparable period

1,876.0(22,133.0)

Equity ratio

Book equity divided by total assets-

12,815.7(737.5)
1,138.5

3,004.7(6,312.6)

Fixed asset investment

Consists of the following non-current assets presented in the statementof financial position in the annual report: Investments in financial assets,
investment in associate and other receivables

Fuel consumption

Aviation fuel consumed, presented in metric tons

Load factor

RPK divided by ASK. Describes the utilization of available seats

Passengers

Number of passengers, including no-show*. *Note that during the
COVID-19 outbreak, no-show passengers are not included

RPK

Revenue passenger kilometers. Number of sold seats multiplied by flight
distance

Unit cost

Total operating expenses, excluding
losses/(gains)-net, divided by ASK

Unit cost excl fuelTotal operating expenses, excluding impairment, other losses/(gains)-net
and aviation fuel expenses, divided by ASK

Unit revenue

Passenger revenue divided by ASK

Yield

Passenger revenue divided by RPK. A measure of average fare perkilometer

EBITDAR to EBITDAR excl other losses/(gains)

Net profit (EBT) to EBT excl other losses/(gains) and impairment
Profit /(loss) before tax (EBT)- Impairment assets held for sale
- Other losses/(gains) *EBT excl other losses/(gains) and impairment

impairment

and

other

NORWEGIAN AIR SHUTTLE – ANNUAL REPORT 2021

NORWEGIAN AIR SHUTTLE ASA
Organization number
NO 965 920 358 MVA
Postal address
P.O. Box 113
NO–1366 Lysaker
Visiting address
Oksenøyveien 3, Fornebu
Telephone+47 67 59 30 00
www.norwegian.com

Investor Relations
Geir Karlsen
Chief Executive Officer and Chief Financial Officer
Jesper Hatletveit
Investor Relations
investor.relations@norwegian.com

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