Valuation of Norwegian Air Shuttle ASA

Kine Kristin Kjærnes & Cornelia Qvist

Student thesis: Master thesis


The thesis conducts an in-depth analysis of Norwegian Air Shuttle ASA in order to determine a fair value of the Norwegian Air Shuttle ASA’s share price and conclude whether or not the value found is over- or underestimated. The internal and external environment of the company will be assessed in order to identify strategic and financial aspects with a significant influence on the share value. The findings in these analyses constitute the foundation for the forecasting of the future financial performance. Based on the forecast the value of the Norwegian Air Shuttle ASA’s stock is thereafter calculated. The analytical tools used throughout the thesis, are recognized academic theories and frameworks analyzing Norwegian Air Shuttle ASA’s strategic position in the market; the competitive environment; industry value drivers and historical financial performance. The share value is estimated by conducting a discounted cash flow and economic value added analysis, combined with a multiple and liquidation assessment. Throughout the entire period of study the business model of Norwegian Air Shuttle ASA is considered to be healthy and sustainable due to a solid overall performance and promising growth potential. Norwegian Air Shuttle ASA is expanding rapidly with strong growth prospects and extensive market capturing plans. The company has ordered 63 new Boeing 737-800 aircrafts which of seven have already been delivered and two 787s are scheduled for delivery in 2012. With an annual growth of 5 percent in passenger revenues for 2011-2020, and classified as the number one fastest growing LCC in Europe, Norwegian is considered to be a prominent investment cases according to our analysis. With these findings we initiate a strong buy recommendation as the share price is concluded to be undervalued. The price of the Norwegian share is set to be 182 NOK, and is therefore overestimated with 54 percent.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
Publication date2011
Number of pages169