Originally Posted by
iahphx
Oh, jeez, is Norwegian still playing the oil hedging game? I forgot about that. If so, I take back my comments about fuel helping them. These guys manage to get everything wrong. Brent crude fell another 3 bucks today. That will cost them a lot of money.
Even the legendary oil trader Andy Hall blew up his hedge fund a couple of years ago by getting his directional bet wrong.
At the end of Q1, Norwegian had 3.1B NOK in equity; bond covenants require a minimum of 1.5B in equity.
https://www.norwegian.com/globalasse...rt_2019_q1.pdf
In their end of April traffic report, it showed Norwegian pretty deeply hedged at ~$680/mt of jet fuel.
https://www.norwegian.com/globalasse...april-2019.pdf
24 May (from IATA's website) spot price is $641.13/mt of jet fuel, with the price being a bit lower in Europe.
https://www.iata.org/publications/ec...ges/index.aspx
At this point, I'd think it's up to the bondholders whether or not Norwegian operates through the summer. At this point, I would think that Norwegian has to get bondholders to accept a debt to equity swap. However, a complicating issue is that a decent amount of Norwegian's assets are impaired in value (Rolls Royce Trent-1000 powered 787s and 737 Maxes). The impairment on those assets alone probably makes Norwegian insolvent, as I suspect they're being marked with a level 3 valuation.