Originally Posted by
iahphx
I've always assumed that Norwegian's finances were now OK through summer, but the continued grounding of the MAX has got to hurt. I've read this is costing Norwegian $1.5 million/day -- money they definitely don't have. Honestly, I think it's a miracle they're still flying: they have a horrible transatlantic business plan that's been hurt further by some very bad airplane luck (first the engine issue and now this MAX problem). I'm sure they're going to quickly get out of crazy places like Newburgh but it's not like flying from the major airports is going to help much. Logic tells me they've got about a year left, but who knows.
The question is how much of the ~$330M Norwegian raised was used to cure bond defaults. I thought I had read that Norwegian was going to use a decent chunk of that money to pay down debts. We won't know until the Q1 conference call near the end of April.
$1.5M/day sounds correct. They're doing some wet leases as equipment substitutions - that's additional cost to Norwegian.
American and Southwest announced this morning that they're taking the Max off of their schedule through early June. The word I've gotten is that the Max fix is going to be harder than initially anticipated.
Originally Posted by
oliver2002
The max grounding can be claimed from Boeing, so I wouldn't factor this into their business plans. Also the ma fiasco can be used to cancel flights that didn't sell well... add to that the WOW bk, which takes out one of the direct competitors in the TATL market.
While Norwegian will likely be reimbursed from Boeing, we don't know what form those credits will take. If they're credits toward future purchases - which seems to be what Boeing has favored in the past - that won't do Norwegian any good. Norwegian needs cash and doing yet another secondary stock offering doesn't seem very viable at the current price of their stock.
The fact that Norwegian's CEO Bjorn Kjos flew out to Seattle to have a face to face with Boeing execs smacks of desperation in that he's trying to get Boeing to do something that they're likely not contractually required to do. It also indicates that Norwegian isn't happy with the current settlement terms that has been offered by Boeing.
The bottom line with Norwegian is that they're just a larger version of WoW. Both WoW and Norwegian have/are selling tickets at below their cost. Eventually Norwegian will run out of investor money to subsidize the cheap ticket prices and will go out of business like so many TATL discount carriers before them.