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Norwegian Air stability through summer?

Norwegian Air stability through summer?

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Old Jan 25, 19, 5:15 pm
  #16  
 
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I would say it is not looking good for them! The bonds are now yielding over 30% ... way beyond even junk, so the price must have gone down to 1/2 just in the last few days after halving in Dec. Anyone looking for a bunch of cheap 787s would be buying the bonds ... IAG seem to have figured out the equity is worthless, so probably doing just that. They look to be senior debt so first in line in a BK.

See the Bloomberg link below from today, which is not pay walled. I'm flying them to LGW-OAK Tue and not even certain they will make it that, far at this point. The fall in advance bookings on this kind of news have to be devastating for cash flow.

https://www.bloomberg.com/opinion/ar...-ba-walks-away

Having said all they the have their act together now on operations, and are pleasant to fly. You would want to have a mileage ticket on another carrier you can use last minute and obviously use a credit card to book. I would suggest waiting as long as you can too to book too.. They do seem to open cheaper fare buckets back up close in to flights. For example the lowest possible Premium fares for Tue 29 Jan are currently still being offered LGW to both LAX and OAK.
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Old Jan 26, 19, 12:57 am
  #17  
 
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Originally Posted by Often1 View Post
All a matter of risk tolerance. A recent cash infusion assures operations through March. After that is reading tea leaves unless one has inside information. And even then.

This is a way of saying that there is no person on FT who can tell you what will happen with anything April or later. Brexit, US interest rates, China trade, weather, and volcanic ash, may all combine to keep it afloat or sink it.
Recent cash infusion? Are you referring to leases/renewed leases on aircraft where they claim they got cash from? The problem there is that the leasing company that Norwegian uses is Arctic Aviation Assets. Arctic Aviation Assets is a wholly owned subsidiary of Norwegian Air. No cash injection, just moving money from one pocket to another.

Besides, their hedging losses are enormous for the size of their balance sheet. This is from December's traffic figures with respect to their fuel hedges:
The Group has entered into term contracts and options during the period. By the end of December, the Group estimates a quarter-to-date loss of NOK 1,836 million including losses of NOK 1,989 million related to unrealized hedge positions.

That's USD $233 million in unrealized hedging losses. When those losses are realized (assuming oil prices don't rise), that's enough to cause Norwegian to liquidate. I am waiting until the Q4 earnings call to see how they plan on resolving that shortfall.
According to a Jan 2019 presentation, they're 52% hedged for 1H 2019 and 22% hedged for 2H 2019.
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Old Jan 28, 19, 3:23 pm
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Anyone know how far out for Norwegian the flight schedule is firm, vs placeholders?
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Old Jan 29, 19, 3:34 am
  #19  
 
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Norwegian Air seeks cash injection

https://www.bbc.co.uk/news/business-47039303

Perhaps IAG walking away has had an impact
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Old Jan 29, 19, 7:53 am
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… and in steps a savior who will be sending some of his assets to 'money heaven'* (because this investment is not going to go well for Mr Fredrikson).
This may be enough cash to get the company to the summer season; we'll have to see what's announced in the earnings call.

Article: https://www.bloomberg.com/news/artic...ag-drops-offer

This will be a significant dilution of the stock so I don't think they'll be able to get away another secondary offering after this one. However, if this goes through, It will keep the airline operating for a while longer.


* Money heaven - I love that term; and have used it whenever I see malinvestments after reading the former Icelandic billionaire explaining where peoples' Icesave money went. Short article: https://www.telegraph.co.uk/finance/...ey-heaven.html

I rank an investment in Norwegian Air as even worse than bitcoin, beanie babies, baseball cards, and tulips. It's been more than 175 years since 'Extraordinary Popular Delusions and the Madness of Crowds' was first published and the public still hasn't learned. PT Barnum was correct. https://en.wikipedia.org/wiki/There%...n_every_minute
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Old Jan 30, 19, 3:07 am
  #21  
 
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I have booking of 1 way ticket during the summer (KEF-BGO) and I'm considering buying another FI ticket and try to get the taxes and bag fee back from Norwegian booking ... or simply outright abandoning the ticket. Given FI flight will save me money on car rental during stay in Reykjavik.

If I sit back and watch the airfares (FI) will rise significantly, I barely got the W fare on another FI flight which next bucket is T (fares doubles).
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Old Feb 7, 19, 4:15 am
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Wow. That was a very bloody quarter. Q4 2018 losses were ~35% higher than Q4 2017 - not a good trend. Cash/equivalents less than half of Q4 2017; definitely not enough to get through Q1 without breaching covenants.

If this rights issue doesn't go well (and I didn't like the statement about it in the slide deck),. Norwegian will be out of business in short order.

I missed the conference call (waiting for it to be posted on Norwegian's website) but the stock is sliding in trading which bodes poorly for the rights issuance. Bloomberg's quote (NAS:NO) indicates that the stock is above a 52 week low, but I don't see it. I expanded out the chart and it appears to be at, as a minimum, a 5 year low. More likely it's at an all time low. Issuing stock rights at this point is a huge share dilution.

In addition, the airline is now shrinking (deferred 2019 aircraft orders along with trying to get an Asian partner to take delivery of a lot of future deliveries and selling aircraft) which will increase their cost per seat mile.

This is what the end of a death spiral looks like in the airline industry. Caveat emptor.
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Old Feb 7, 19, 11:07 pm
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Originally Posted by iflyjetz View Post
Wow. That was a very bloody quarter. Q4 2018 losses were ~35% higher than Q4 2017 - not a good trend. Cash/equivalents less than half of Q4 2017; definitely not enough to get through Q1 without breaching covenants.

If this rights issue doesn't go well (and I didn't like the statement about it in the slide deck),. Norwegian will be out of business in short order.

I missed the conference call (waiting for it to be posted on Norwegian's website) but the stock is sliding in trading which bodes poorly for the rights issuance. Bloomberg's quote (NAS:NO) indicates that the stock is above a 52 week low, but I don't see it. I expanded out the chart and it appears to be at, as a minimum, a 5 year low. More likely it's at an all time low. Issuing stock rights at this point is a huge share dilution.

In addition, the airline is now shrinking (deferred 2019 aircraft orders along with trying to get an Asian partner to take delivery of a lot of future deliveries and selling aircraft) which will increase their cost per seat mile.

This is what the end of a death spiral looks like in the airline industry. Caveat emptor.
Far from ATL, but lowest since 2012

15 years chart
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Old Feb 8, 19, 9:47 pm
  #24  
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Many of us who know about the airline business (and not just the airline frequent flyer game) have been saying for two years now in this forum that Norwegian would ultimately fail. And that's simply because their business model is clearly unsustainable. What we don't know is WHEN they will fail. That's difficult to predict for any business, and throw in everything "we" (USA-based commenters) don't know about European business practices, and we're left with nothing more than guesses. And that's still the case, although the end is obviously closer now than a year ago. I personally would not buy a ticket on Norwegian for future date travel. That said, I still think it more likely than not that they will be in business this summer. But it's certainly a material risk. If you're already holding a ticket, I don't see what there is to do now except "hope." It probably will work and, if it doesn't, THAT will be the time to go back to your credit card company and hope to get a refund.
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Old Feb 10, 19, 10:53 am
  #25  
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Originally Posted by iahphx View Post
Many of us who know about the airline business (and not just the airline frequent flyer game) have been saying for two years now in this forum that Norwegian would ultimately fail. And that's simply because their business model is clearly unsustainable. What we don't know is WHEN they will fail. That's difficult to predict for any business, and throw in everything "we" (USA-based commenters) don't know about European business practices, and we're left with nothing more than guesses. And that's still the case, although the end is obviously closer now than a year ago. I personally would not buy a ticket on Norwegian for future date travel. That said, I still think it more likely than not that they will be in business this summer. But it's certainly a material risk. If you're already holding a ticket, I don't see what there is to do now except "hope." It probably will work and, if it doesn't, THAT will be the time to go back to your credit card company and hope to get a refund.
I hope you're wrong for the sake of those with tickets and employees who rely on Norwegian for their livelihood.

out of curiosity, where do you think they've gone wrong?
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Old Feb 10, 19, 2:06 pm
  #26  
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The ULCC's have uniformly failed on the TATL market.

Business travelers who are the backbone of the market will pay legacy carrier fares and this means that the ULCC eventually starves.

I agree with IADPHX, don't purchase a ticket far out. If you need something quick and cheap, grab it, fly it and be done with it.
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Old Feb 10, 19, 2:15 pm
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There are reports of Norwegian selling planes and Emirates trying to poach their pilots. Can't imagine that either is a good sign.
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Old Feb 10, 19, 4:40 pm
  #28  
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Originally Posted by iflyjetz View Post
Wow. That was a very bloody quarter. Q4 2018 losses were ~35% higher than Q4 2017 - not a good trend. Cash/equivalents less than half of Q4 2017; definitely not enough to get through Q1 without breaching covenants.

If this rights issue doesn't go well (and I didn't like the statement about it in the slide deck),. Norwegian will be out of business in short order.

I missed the conference call (waiting for it to be posted on Norwegian's website) but the stock is sliding in trading which bodes poorly for the rights issuance. Bloomberg's quote (NAS:NO) indicates that the stock is above a 52 week low, but I don't see it. I expanded out the chart and it appears to be at, as a minimum, a 5 year low. More likely it's at an all time low. Issuing stock rights at this point is a huge share dilution.

In addition, the airline is now shrinking (deferred 2019 aircraft orders along with trying to get an Asian partner to take delivery of a lot of future deliveries and selling aircraft) which will increase their cost per seat mile.

This is what the end of a death spiral looks like in the airline industry. Caveat emptor.
I wouldn't say this is the end of a death spiral in the airline industry. But some may say that it's rather telling that Norwegian pilots are prime recruiting targets for airlines facing pilot shortages for even some equipment already in hand.
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Old Feb 10, 19, 4:43 pm
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Originally Posted by bman1002 View Post
There are reports of Norwegian selling planes and Emirates trying to poach their pilots. Can't imagine that either is a good sign.
Emirates is trying to grab EY pilots too.
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Old Feb 10, 19, 7:29 pm
  #30  
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Originally Posted by USA_flyer View Post
I hope you're wrong for the sake of those with tickets and employees who rely on Norwegian for their livelihood.

out of curiosity, where do you think they've gone wrong?
Originally Posted by Often1 View Post
The ULCC's have uniformly failed on the TATL market.

Business travelers who are the backbone of the market will pay legacy carrier fares and this means that the ULCC eventually starves.

I agree with IADPHX, don't purchase a ticket far out. If you need something quick and cheap, grab it, fly it and be done with it.
There has never been a successful low cost airline flying across the Atlantic. Which isn't to say it's impossible, but it's very hard. There's a reason why all the major airlines fight for the premium class pax on these routes. That's where the money is made.

In Norwegian's case, the management mistakes have been mind-boggling. Not only did they embrace a dubious concept, but they did it at a break-neck pace from secondary airports on tertiary routes where their prospects were the bleakest. The proper course of business, if they believed their model could work, was start slow, refine the product and see what happens. Instead, they went all out on a strategy that couldn't possibly work. Why anyone gave money to these guys to do this is even more mind-boggling than the business plan.
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