Norwegian to fly between UK, Ireland and U.S. NE Coast cities. from Summer 2017.
May 24, 2018, 4:34 am
#391
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[left]
Remember that Bjorn Kjos owns 27% of the shares and he doesn’t want to sell up; it's his baby after all. And IAG owns 4.6%. So any bid - hostile or not - would have to be accepted by almost 67% of the remaining shareholders, some of whom are Bjorn’s buddies]
Remember that Bjorn Kjos owns 27% of the shares and he doesn’t want to sell up; it's his baby after all. And IAG owns 4.6%. So any bid - hostile or not - would have to be accepted by almost 67% of the remaining shareholders, some of whom are Bjorn’s buddies]
(However, if Kos chose to sell - which you seem to conclude is an impossibility based on past utterances
- one wonders why you think his "buddies" would frustrate the process by refusing to sell after he capitulated).Norway implements directive 2004/25/EC in which there is a "Right to Squeeze-out". After a certain threshold of the shares has been acquired, the remaining holders must sell for a fair price.
May 24, 2018, 5:01 am
#392
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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.
Jul 13, 2018, 12:26 am
#393
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Norwegian Air hits revenue high as buyers circle
Originally Posted by The Irish Times
Norwegian Air hits revenue high as buyers circle
Low-cost carrier says sales rose 32% in second quarter
Norwegian Air Shuttle posted an all-time high in revenue and an unexpected profit, helped by financial income, as potential buyers circle the low-cost carrier.
The company said sales rose 32 per cent to 10.2 billion kroner (€1.1 billion) in the second quarter from a year earlier, while net income was 296 million kroner, compared with a loss the year earlier, according to a report. Analysts had predicted a loss of 468 million kroner in the period.
“Despite being at the peak of our growth phase, we have been able to present a profit and decreased unit costs during the second quarter,” chief executive Bjorn Kjos said in a statement. “Going forward, the growth will slow down and we will reap what we have sown for the benefit of our customers, staff and shareholders.”
The airline carried 10 million passengers during the second quarter, representing a rise of 16 per cent, with a load factor of 86.8 per cent.
Low-cost carrier says sales rose 32% in second quarter
Norwegian Air Shuttle posted an all-time high in revenue and an unexpected profit, helped by financial income, as potential buyers circle the low-cost carrier.
The company said sales rose 32 per cent to 10.2 billion kroner (€1.1 billion) in the second quarter from a year earlier, while net income was 296 million kroner, compared with a loss the year earlier, according to a report. Analysts had predicted a loss of 468 million kroner in the period.
“Despite being at the peak of our growth phase, we have been able to present a profit and decreased unit costs during the second quarter,” chief executive Bjorn Kjos said in a statement. “Going forward, the growth will slow down and we will reap what we have sown for the benefit of our customers, staff and shareholders.”
The airline carried 10 million passengers during the second quarter, representing a rise of 16 per cent, with a load factor of 86.8 per cent.
Jul 13, 2018, 1:19 am
#394
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Norwegian Air Shuttle Conquers America
Originally Posted by Bloomberg
Norwegian Air Shuttle Conquers America
The doomsayers aren’t necessarily right about the budget transatlantic airline.
At this rate Norwegian Air Shuttle ASA is going to need a new name. Sales to American passengers have doubled in the past year, as they flock to its bargain transatlantic fares and snazzy new planes. It’s plausible that U.S. revenue will one day leapfrog Norwegian’s domestic sales. “American Air Shuttle” does have a ring to it.
Other assumptions about Norwegian may need to be rethought too. Second-quarter earnings published on Tuesday were surprisingly good, considering the airline’s breakneck — and expensive — transatlantic expansion.
American Air Shuttle
Norwegian's low cost, long-haul fares have won over U.S. customers
The 300 million kroner ($37 million) net profit eked out over the past three months benefited from one-off items and currency swings. But it was an answer of sorts to doomsayers such as Ryanair Holdings Plc’s Michael O’Leary, who says Norwegan isn’t “long for this world.” The shares rose as much as 8 percent.
Yet profit is only part of the story. Having ordered too many aircraft and failing to hedge adequately against rising fuel prices, the company is still in a parlous condition.
Net debt and capitalized leasing liabilities total more than 6 billion euros ($7 billion), while net assets are just 400 million euros — not far above the level it needs to comply with financial covenants. That’s worrying because free cash flow was negative by about 600 million euros in the first six months of 2018.
Chief executive Bjorn Kjos, a growth-mad former fighter pilot, does at least seem to be learning moderation. He has scaled back capital expenditure for this year and next and plans to divest some older aircraft. He’s done a reasonable job of cutting costs, in part by squeezing suppliers.
He’s also been helped by takeover interest from British Airways owner IAG SA and Deutsche Lufthansa AG, which has put a floor under the shares in recent months.
Kjos, who controls a quarter of the shares, has hinted he doesn’t want to sell but insists the decision is a matter for the board. That’s always seemed a little far-fetched as he and the chairman Bjorn Kise have been business partners for years. The board would be obliged to consider a bid if it looked like Norwegian was failing, but maybe not if Kjos can stop the rot.
“The desires of anyone investing in the shares may not always be similar to those of the largest shareholder,” cautioned the prospectus for Norwegian’s recent fundraising. There’s a risk of a “significant drop” in the stock price should a bid from IAG or another airline not materialize, the document added.
In the meantime, Kjos is working overtime to convince the market that the takeover froth in the share price can be replaced by investor belief in its future as a standalone company — namely, that it will one day generate enough cash to more than just cover its liabilities.
For now, that remains a hope rather than a reality. Norwegian has yet to prove that flying passengers long distances for peanuts is a winning formula. Bernstein analyst Daniel Roeska thinks it loses as much as 25,000 euros on each long-haul flight. Still, on current form, Norwegian could be a bit longer for this world than its critics thought.
The doomsayers aren’t necessarily right about the budget transatlantic airline.
At this rate Norwegian Air Shuttle ASA is going to need a new name. Sales to American passengers have doubled in the past year, as they flock to its bargain transatlantic fares and snazzy new planes. It’s plausible that U.S. revenue will one day leapfrog Norwegian’s domestic sales. “American Air Shuttle” does have a ring to it.
Other assumptions about Norwegian may need to be rethought too. Second-quarter earnings published on Tuesday were surprisingly good, considering the airline’s breakneck — and expensive — transatlantic expansion.
American Air Shuttle
Norwegian's low cost, long-haul fares have won over U.S. customers
The 300 million kroner ($37 million) net profit eked out over the past three months benefited from one-off items and currency swings. But it was an answer of sorts to doomsayers such as Ryanair Holdings Plc’s Michael O’Leary, who says Norwegan isn’t “long for this world.” The shares rose as much as 8 percent.
Yet profit is only part of the story. Having ordered too many aircraft and failing to hedge adequately against rising fuel prices, the company is still in a parlous condition.
Net debt and capitalized leasing liabilities total more than 6 billion euros ($7 billion), while net assets are just 400 million euros — not far above the level it needs to comply with financial covenants. That’s worrying because free cash flow was negative by about 600 million euros in the first six months of 2018.
Chief executive Bjorn Kjos, a growth-mad former fighter pilot, does at least seem to be learning moderation. He has scaled back capital expenditure for this year and next and plans to divest some older aircraft. He’s done a reasonable job of cutting costs, in part by squeezing suppliers.
He’s also been helped by takeover interest from British Airways owner IAG SA and Deutsche Lufthansa AG, which has put a floor under the shares in recent months.
Kjos, who controls a quarter of the shares, has hinted he doesn’t want to sell but insists the decision is a matter for the board. That’s always seemed a little far-fetched as he and the chairman Bjorn Kise have been business partners for years. The board would be obliged to consider a bid if it looked like Norwegian was failing, but maybe not if Kjos can stop the rot.
“The desires of anyone investing in the shares may not always be similar to those of the largest shareholder,” cautioned the prospectus for Norwegian’s recent fundraising. There’s a risk of a “significant drop” in the stock price should a bid from IAG or another airline not materialize, the document added.
In the meantime, Kjos is working overtime to convince the market that the takeover froth in the share price can be replaced by investor belief in its future as a standalone company — namely, that it will one day generate enough cash to more than just cover its liabilities.
For now, that remains a hope rather than a reality. Norwegian has yet to prove that flying passengers long distances for peanuts is a winning formula. Bernstein analyst Daniel Roeska thinks it loses as much as 25,000 euros on each long-haul flight. Still, on current form, Norwegian could be a bit longer for this world than its critics thought.
Jul 13, 2018, 1:38 am
#395
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For what it's worth, the Q2 report still showed an operational loss. Put quite simply, their CASK is still higher than their RASK and that's not viable solution for an airline so they will either need to increase revenue or lower costs dramatically.
The situation is fundamentally the same as the beginning of the year.
The situation is fundamentally the same as the beginning of the year.
Jul 13, 2018, 2:58 am
#396
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They managed to reduce CASK in the last quarter by 9% - given them their lowest CASK since at least 2009.
Jul 13, 2018, 5:07 am
#397
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Lets see how Q3 will look like with fuel...
https://www.bloomberg.com/news/artic...as-iag-circles
It doesn't look like the fuel prices receded much...
https://www.bloomberg.com/news/artic...as-iag-circles
Norwegian Air Shuttle ASA is entering the critical summer travel season with a bet that jet fuel prices will recede from 3 1/2-year highs -- a position that risks weakening Chief Executive Officer Bjorn Kjos’s hand as he negotiates a potential buyout by the owner of British Airways.
Jul 13, 2018, 6:58 am
#398
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First, they do admit that their unit revenue was down another 11% year over year. Here's my Captain Obvious statement: if you're losing lots of money as an airline, and you rapidly expand but then suffer another double-digit unit revenue decline, you're not going to magically become profitable.
But wait, you say, their costs are down! That seems curious given that fuel prices have skyrocketed. But they claim their non-fuel costs have dramatically declined. But again, this seems like smoke and mirrors. For example, they grew capacity 48% (wow), but didn't incur any additional maintenance expense on their fleet. What?
And there are lots more gems. Air Transport World notes that "second-quarter profit was helped by a one-off gain amounting to NOK455 million, reversed from a NOK197 million loss, resulting partly from translation of working capital in foreign currency and a gain of NOK 254 million from forward contracts on currency and fuel. " Say what? Who came up with this? This obviously isn't "real" income.
Charitably, what seems to be going on here is the proverbial putting lipstick on a pig. I'm not surprised that Irish Guy fell for it, but Bloomberg? C'mon. How bad is our financial press these days? Regardless, I don't think Walsh will be impressed.
Jul 13, 2018, 7:11 am
#399
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But wait, you say, their costs are down! That seems curious given that fuel prices have skyrocketed. But they claim their non-fuel costs have dramatically declined. But again, this seems like smoke and mirrors. For example, they grew capacity 48% (wow), but didn't incur any additional maintenance expense on their fleet. What?
As such, it is clear that both the actual revenue, and the actual costs, have both increased.
You seem to have no trouble about dividing the increasing revenue (+32%) by an increasing ASK (+48%) - but forget to factor that in for the costs, too.
And they've explained the reduction in CASK by the 22% reduction in wetlease costs, the 19% reduction in airport/ATC costs (increasing average sector length), the 32% reduction in maintenance costs (as all those one-off/exceptional checks reduce, and with newly negotiated contracts) [all expressed per ASK]
Jul 13, 2018, 10:17 am
#400
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And they've explained the reduction in CASK by the 22% reduction in wetlease costs, the 19% reduction in airport/ATC costs (increasing average sector length), the 32% reduction in maintenance costs (as all those one-off/exceptional checks reduce, and with newly negotiated contracts) [all expressed per ASK]
Jul 13, 2018, 10:53 am
#401
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http://nok.listedcompany.com/misc/MD...-1q2018-en.pdf
"The company had operating cost in amount of 4,348.91 million Baht, which decreased 0.75 percent in the same period of last year. Although fuel coststill increased from incremental Jet fuel price, the company can reduce aircraft maintenance expenses by cost saving according to the company’s turnaround plan. Consequently, Cost per Available Seat-Kilometers (CASK) decreased from 2.36 to 2.19 Baht/seat-kilometers, or decreased 7.37 percent from the first quarter in Year 2017."
Admittedly this is not the greatest example given all that has been going on at Nok Air, but looks possible?
Jul 13, 2018, 2:31 pm
#402
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Nok Air 1Q 2018
http://nok.listedcompany.com/misc/MD...-1q2018-en.pdf
"The company had operating cost in amount of 4,348.91 million Baht, which decreased 0.75 percent in the same period of last year. Although fuel coststill increased from incremental Jet fuel price, the company can reduce aircraft maintenance expenses by cost saving according to the company’s turnaround plan. Consequently, Cost per Available Seat-Kilometers (CASK) decreased from 2.36 to 2.19 Baht/seat-kilometers, or decreased 7.37 percent from the first quarter in Year 2017."
Admittedly this is not the greatest example given all that has been going on at Nok Air, but looks possible?
http://nok.listedcompany.com/misc/MD...-1q2018-en.pdf
"The company had operating cost in amount of 4,348.91 million Baht, which decreased 0.75 percent in the same period of last year. Although fuel coststill increased from incremental Jet fuel price, the company can reduce aircraft maintenance expenses by cost saving according to the company’s turnaround plan. Consequently, Cost per Available Seat-Kilometers (CASK) decreased from 2.36 to 2.19 Baht/seat-kilometers, or decreased 7.37 percent from the first quarter in Year 2017."
Admittedly this is not the greatest example given all that has been going on at Nok Air, but looks possible?
Jul 14, 2018, 7:47 am
#403
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Do you remember doing fractions in school? When the item below the line [ASK] increases much faster than the item above the line [costs], then CASK must reduce.
But they've shown that the share of CASK attributable to fuel has increased.
But fuel isn't the only cost. And you seem to think that an increase in fuel costs - of what, 10, 15, 20%? - is still enough alone to offset the 48% increase in ASK?
Their figures show that the share of CASK attributable to fuel increased by 30% (0.10 to 0.13).
Did any post double-digit growth in this measure?
Last edited by irishguy28; Jul 14, 2018 at 7:53 am
Jul 14, 2018, 11:47 pm
#404
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I get you like Norwegian, I like them, too. But the fact remains that you haven't addressed the fundamental issue that their growth is eating into their REVENUE. Their strategy is reducing costs, but it's reducing revenue even more and even according to them, they have to keep growing at a ridiculous rate.