Originally Posted by
usbusinesstraveller
On those numbers I share your pessimism about whether they’ll last the summer, though I reckon they’ll scrape through with some more asset sales, and then maybe post a small profit in Q3. But the fall/winter (Q4), no chance.
I've contemplated asset sales but that doesn't fix their bond covenant problem. Norwegian will breach bond covenants when the company's net assets fall below 1.5B NOK ($185M USD). They were close on that number in the last quarter; I expect them to drop below required assets sometime this quarter.
For reference on bond covenants, here's a Jan 2018 presentation. Page 19:
https://www.norwegian.com/globalasse...nuary-2018.pdf
Once Norwegian breaches that bond covenant, the bondholders are almost certainly going to want to liquidate the airline in order to minimize losses. Kjos is really pushing his luck by spurning IAG's buyout offer.
One thing that needs to be considered with Norwegian's financials going forward is that other airlines are circling like vultures and pricing their tickets so that Norwegian isn't able to sell tickets in higher fare buckets. Airlines are adding competing flights and taking losses on a lot of seats in order to take away some of Norwegian's customers. An example of this is Norwegian's Denver to London nonstop. As soon as that route was launched, United countered with Denver to London nonstop service on a 787. United's willing to take the hit on the coach seats to hasten Norwegian's demise. I'm sure if one looks at most of Norwegian's other routes, they'll see the same thing - competing airlines adding capacity in order to take passengers away from Norwegian.