usbusinesstraveller

This from the Wall Street Journal yesterday. Likely behind a paywall after the first read, so make sure you have time to read it.

Norwegian Air May Survive After All (But its stock is still pricing in hopes of a takeover that may not happen) -

https://www.wsj.com/articles/norwegi...all-1542025947

southpac

can't access the link. Can you copy & paste here or send via a PM

iahphx

It might pull up in incognito mode or by googling the title in a newspaper that uses the WSJ's stories.

Not much shocking here. The complete and sudden collapse in oil prices definitely increases the chances of Norwegian making it through the winter. The problem remains, however, that their transatlantic business model is fatally flawed. Other than abandoning it, and reverting to short haul, I don't know what they can do to survive.

southpac

business model fatally flawed ? How ?

iahphx

This has been discussed many times in this forum. No airline has ever been successful by specializing in low fare transatlantic service. Most of the money made on transatlantic routes is made in premium cabins, and airlines that don't have this revenue fail and go out of business.

It is possible, of course, that this could change someday. Norwegian's terrible financial performance suggests that time has not yet come, and that the airline will, in all likelihood, eventually fail.

southpac

please stop making your opinion sound like fact. The massive worldwide recession, will have a huge impact on airlines. Many won't survive. They are already dropping like flies in Europe. One of the big boys might fail next ?

GFrye

You should take you own advice.

southpac

maybe, but many here don't want to acknowledge that recession is here now & it will have major impacts on air travel

eg.

some business types, will not longer fly(business goes belly up) or travel budgets cut, so will look for cheaper fares/cheaper airlines

GFrye

Thank you for proving my point.

You think that accurate statements such as "No airline has ever been successful by specializing in low fare transatlantic service" are opinions, but you're convinced that "recession is here now" is a factual statement.

iahphx

There is an article in today's WSJ that suggests that the world economy -- other than the USA -- is cooling, but that most economists do not expect a global recession. Of course, you could be right and these economists wrong, but I would suggest that you not be so certain of your convictions. History indicates that the vast majority of "recession forecasts" are wrong.

Regardless, in the real world, we have a situation where an upstart and financially unsuccessful Norwegian is trying to establish a market niche against established financially successful airlines. This niche has been tried before and failed, and so far Norwegian's results mirror past results. So while I'm not so good at predicting recessions (nobody is), I know enough about the airline industry to suggest that Norwegian's future is very much in doubt. Recession or no recession. And I would suggest that this is a Captain Obvious statement, that you can choose to believe or not.

iahphx

New worries this week about the ability of Norwegian to keep flying. A Norwegian newspaper reports that the airline will likely violate their loan covenants on January 1.

Oh, and they've probably lost more than $200 million on a fuel hedge this quarter.

My guess is this isn't quite the end of Norwegian, but that's a guess and not a certainty. I would NOT buy a ticket to travel on them for next year right now.

https://www.newsinenglish.no/2018/12/20/norwegian-air-lands-in-more-trouble/

southpac

Plenty of airlines inc big ones will go belly up in the massive depression of 2019-21. It's going to be the biggest bloodbath the world has even seen. many banks will fail so buying with a credit card might not save you.

GFrye

southpac

Ignore recession/depression at your peril

GFrye