Go Back  FlyerTalk Forums > Miles&Points > Airlines and Mileage Programs > Other European Airlines
Reload this Page >

Norwegian Air stability through summer?

Norwegian Air stability through summer?

Old Jan 26, 2019, 12:57 am
  #16  
 
Join Date: Jul 2001
Programs: Marriott LT Tit; Hyatt Explorist; Hilton CC Gold; IHG CC Plt; Hertz (MR) 5 star
Posts: 5,536
Originally Posted by Often1
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.
iflyjetz is offline  
Old Jan 28, 2019, 3:23 pm
  #17  
 
Join Date: Apr 2014
Posts: 1,635
Anyone know how far out for Norwegian the flight schedule is firm, vs placeholders?
ucdtim17 is offline  
Old Jan 29, 2019, 3:34 am
  #18  
 
Join Date: Jan 2013
Programs: BAEC GfL
Posts: 333

Norwegian Air seeks cash injection

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

Perhaps IAG walking away has had an impact
Royalscot is offline  
Old Jan 29, 2019, 7:53 am
  #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
iflyjetz is offline  
Old Jan 30, 2019, 3:07 am
  #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).
vincewy is offline  
Old Feb 7, 2019, 4:15 am
  #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.
iflyjetz is offline  
Old Feb 7, 2019, 11:07 pm
  #22  
 
Join Date: Nov 2014
Posts: 26
Originally Posted by iflyjetz
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
wf789 is offline  
Old Feb 8, 2019, 9:47 pm
  #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.
iahphx is offline  
Old Feb 10, 2019, 10:53 am
  #24  
FlyerTalk Evangelist
 
Join Date: Oct 2004
Location: SAN
Programs: Nothing, nowhere!
Posts: 23,223
Originally Posted by iahphx
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?
USA_flyer is online now  
Old Feb 10, 2019, 2:06 pm
  #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.
Often1 is offline  
Old Feb 10, 2019, 2:15 pm
  #26  
 
Join Date: Oct 2018
Location: Bay Area, CA
Posts: 223
There are reports of Norwegian selling planes and Emirates trying to poach their pilots. Can't imagine that either is a good sign.
bman1002 is offline  
Old Feb 10, 2019, 4:40 pm
  #27  
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
Originally Posted by iflyjetz
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.
GUWonder is offline  
Old Feb 10, 2019, 4:43 pm
  #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
Originally Posted by bman1002
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.
GUWonder is offline  
Old Feb 10, 2019, 7:29 pm
  #29  
FlyerTalk Evangelist
 
Join Date: Mar 2000
Posts: 17,377
Originally Posted by USA_flyer
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
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.
iahphx is offline  
Old Feb 11, 2019, 3:25 am
  #30  
 
Join Date: Jan 2010
Posts: 9,278
Originally Posted by GUWonder
Emirates is trying to grab EY pilots too.
Etihad have an excess of pilots and have agreed to loan them to Emirates.

https://eu.usatoday.com/story/travel...tes/734032002/
ft101 is offline  

Thread Tools
Search this Thread

Contact Us - Manage Preferences - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service -

This site is owned, operated, and maintained by MH Sub I, LLC dba Internet Brands. Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Designated trademarks are the property of their respective owners.