Valuation of Norwegian Air Shuttle ASA

Line Marie Kjellstad Johansen

Student thesis: Master thesis


The main objective of this thesis has been to determine the theoretical value of the share of Norwegian Air Shuttle ASA per 04.12.2013. The valuation was performed through a strategic and financial analysis that formed the foundation for a forecasted budget of the company’s future financial performance. This budget was then used as the basis for the valuation of NAS’ share. The analyses showed that the airline industry is heavily influenced by the development in the global economy and is marginal in terms of profitability. The industry is also characterized as highly competitive and many players targets the same customers. This implies a need for a sustainable competitive advantage to survive the fierce competition. The analyses revealed that Norwegian Air Shuttle has a higher cost level and lower load factor than the international airlines that apply the same business model. This was especially significant in terms of labor costs. Norwegian Air Shuttle has recently changed the organizational structure of the company and established a new subsidiary in the EU. These actions has been undertaken so the company can gain the necessary traffic rights abroad and ensure growth in the future. With this restructuring, the company hopes to use foreign labor on the newly launched long-haul routes. The ultimate objective is to compete on an equal ground as the international competitors with regards to cost level. The valuation was conducted through a present value approach, more precisely the Discounted Cash Flow model, and was evaluated through a sensitivity analysis. Additionally a relative valuation approach and liquidation approach was conducted. The theoretical value of Norwegian Air Shuttles share was found to be NOK 290 per 04.12.2013. The share was traded at NOK 232 on Oslo Stock Exchange the same date which indicates that the share is undervalued by the market compared to the finding in this thesis.

EducationsMSc in Accounting, Strategy and Control, (Graduate Programme) Final Thesis
Publication date2013
Number of pages102