Valuation of Norwegian Air Shuttle ASA

Charlotte Paul & Oda Elise Eriksson

Student thesis: Master thesis


The purpose of this paper is to conduct a valuation of Norwegian Air Shuttle ASA to find a fair value of the company. The Norwegian airline is based in Oslo and provided flights for over 36 million passengers in 2019. To date, the company has undergone significant changes in its management and moved its core focus from growth to profitability. Many years of growth and development has increased the size of the company and subsequently led to an increase in debt levels. Moreover, in the last two years, the company has faced numerous challenges related to the grounding of the new Boeing MAX8 aircraft, troubles with Rolls Royce engines on the Dreamliner aircraft, and the global Covid-19 crises.
Strategic analysis, consisting of macro, industry and company-level analysis, revealed that consumer demand and the oil price pose a significant threat to the business performance of Norwegian. Moreover, industry analyses revealed that the nature of the aviation industry is highly competitive with a large number of airlines competing for the same customers making it increasingly difficult for Norwegian to turn a profit with a low contribution margin. Rules and regulations from the government also possess a significant impact on Norwegian, this is specifically related to the flight-seat-fine affecting customer demand through increased flight ticket prices.
Financial analyses, based on historical figures publicly available and a comparison with two other airlines, revealed that Norwegian has significantly higher growth than competing airlines but this is not displayed in their profitability. The liquidity and profitability numbers highlight Norwegian’s weak business performance historically unlike its competitors. However, Norwegian has in the last year started to improve business performance, moving towards industry average.
Strategic and financial analysis, together with up-to-date reports and articles, forms the foundation of forecasting. The present value approach using the DCF method and WACC as a discount rate revealed a share price of 15,76 NOK. The Norwegian shares are according to these analyses undervalued by the 10th of March 2020.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
Publication date2020
Number of pages114