Norwegian Air stability through summer?
#16
Join Date: Jul 2001
Programs: Marriott LT Tit; Hyatt Explorist; Hilton CC Gold; IHG CC Plt; Hertz (MR) 5 star
Posts: 5,536
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.
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.
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.
#19
Join Date: Jul 2001
Programs: Marriott LT Tit; Hyatt Explorist; Hilton CC Gold; IHG CC Plt; Hertz (MR) 5 star
Posts: 5,536
… 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
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
#20
Join Date: Dec 2011
Location: DTW
Programs: TK E+, WY, Radisson R
Posts: 2,360
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).
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).
#21
Join Date: Jul 2001
Programs: Marriott LT Tit; Hyatt Explorist; Hilton CC Gold; IHG CC Plt; Hertz (MR) 5 star
Posts: 5,536
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.
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.
#22
Join Date: Nov 2014
Posts: 26
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.
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.
15 years chart
#23
FlyerTalk Evangelist
Join Date: Mar 2000
Posts: 17,377
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.
#24
FlyerTalk Evangelist
Join Date: Oct 2004
Location: SAN
Programs: Nothing, nowhere!
Posts: 23,223
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.
out of curiosity, where do you think they've gone wrong?
#25
Suspended
Join Date: Aug 2010
Location: DCA
Programs: UA US CO AA DL FL
Posts: 50,262
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.
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.
#27
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Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
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Posts: 102,103
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.
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.
#28
Suspended
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 102,103
#29
FlyerTalk Evangelist
Join Date: Mar 2000
Posts: 17,377
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.
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.
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.
#30
Join Date: Jan 2010
Posts: 9,278
Etihad have an excess of pilots and have agreed to loan them to Emirates.
https://eu.usatoday.com/story/travel...tes/734032002/
https://eu.usatoday.com/story/travel...tes/734032002/