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Norwegian Air stability through summer?

Norwegian Air stability through summer?

Old May 15, 2019, 5:58 am
  #211  
 
Join Date: Jan 2006
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I agree. Norwegian are not always in full compliant with the EU regulations on how to accommodate passengers. That is why I would never consider Norwegian long haul - only short haul in Europe, where you always can find a cheap alternative...
H.J.Simpson is offline  
Old May 16, 2019, 8:10 am
  #212  
 
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Any speculation on reasons behind today's stock price surge?
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Old May 16, 2019, 1:49 pm
  #213  
 
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I share most of the views about long term stability of Norwegian and agree with everyone on the need for a plan B. I have done quite a few flights with them with mostly good results.

Did fly them SFO-LGW in Premium this week with a close in booking @ 550 GBP or so. From flightaware this route has been running like clockwork.

Swissport are the handling agents for SFO and the checkin was better than United would have been even with status. No moaning about my obviously overweight carry on on the scale and a PRE BP, so they do pick up Nexus/GE. No lounge on the cheap Premium tickets any more. A huge improvement over OAK though!

Very attentive crew and a fine onboard experience. You do not fly Norwegian for the dining experience but it is better food than United Economy Plus .. but not by much! Wifi (free I think) did not work but it never does on United either. Nice to see that they added it and crew seemed a bit surprised it was busted.
I have not flown United in the new Premium Economy but for sure the seats are better than the equivalent BA WT+ 787 product, which I have done.

For those who have not done LGW, the car rental there is instant in terminal including the cars, so a huge win over LHR.

I have not flown them economy except for intra-Europe but the config on the 787 in economy is the same as everyone else. For anyone who does make sure you fully meet the bag limits or pay up. Expect to pay for everything on board.

My advice would be to enjoy it while it lasts, great premium product for the money! No self control by management and they are stuck with the aircraft, so have to fly them anyway. From the fare matrix, it looks like they are flying LGW-SEA all this month with horrible loads. No interline, so they cannot cancel and reroute the way the legacy carriers would. I am not in the airline business but they really need to focus on the core routes and shrink down if they want to make it through next winter!
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Old May 17, 2019, 1:42 am
  #214  
 
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Originally Posted by phil94028
I have done quite a few flights with them with mostly good results.
Same here. My biggest complaint is the consistently late departure. We've flown 9 TATL flights with DY in the last 16 months, all in Premium Economy. I think the most timely departure was about 45 minutes late, most are an hour to two hours late. And none have been a result of late incoming aircraft because the plane has always been at the gate when we arrived at the stated boarding time.

Other than that, the flights have been fine, seats / space in premium is comfortable, cabin crew polite and attentive (especially appreciate the water being served multiple times throughout the flight, even at night), food is acceptable even if the presentation is basic (delivered in cardboard boxes). IFE could be better as it is repetitive once one has flown multiple times in a year, but I always have an iPad full of books and downloaded Netflix videos. Nice that they have USB / power connections to keep my device charged. I'm surprised there is no basic amenities kit in Premium (just an eye mask, ear plugs and socks would be nice), but now I know so I take one with me.

I'm really disappointed that all CPH routes to the US are cancelled for the upcoming winter season. The advantage of DY for us has been the direct flights to CPH. That, plus the ability to book one-way flights for the same fare as if booking a return flight. That has been invaluable, as we've had to make a number of trips back and forth without knowing a return date in advance.

I have not found another airline where I can book a one-way ticket in premium (or business) for a remotely reasonable fare.

I hope they survive.
SusanDK is offline  
Old May 17, 2019, 10:25 am
  #215  
 
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Originally Posted by duvin
Any speculation on reasons behind today's stock price surge?
Another unsubstantiated takeover rumor from another nameless entity. https://www.euronews.com/2019/05/16/...eover-interest
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Old May 29, 2019, 1:57 pm
  #216  
 
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Originally Posted by SusanDK
According to Danish newspaper ExtraBladet, the Norwegian flight (787) from Copenhagen to Orlando yesterday was diverted to Goose Bay, Canada due to an engine failure. Not sure if they are still there or when they will be on their way again.
That took longer than I expected. They ended up changing the engine in Goose and flew it back to Oslo last night.
https://flightaware.com/live/flight/LNLNB
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Old May 29, 2019, 2:00 pm
  #217  
 
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Originally Posted by duvin
Any speculation on reasons behind today's stock price surge?


Originally Posted by iflyjetz
Another unsubstantiated takeover rumor from another nameless entity. https://www.euronews.com/2019/05/16/...eover-interest
It looks like that unsubstantiated rumor was just a pump and dump - the stock has gone down ever since that price pop.
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Old May 30, 2019, 6:45 am
  #218  
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The cooling of speculation in the oil market is almost certain to help Norwegian get through the summer and, I suspect, the fall. Fuel is a huge expense for them, and a 15 cent decline in jet fuel prices (which we've seen in the past week) is a big deal for a struggling transatlantic airline. I also suspect the huge demand for summer transatlantic travel will result in more "spillage," as budget conscious consumers will balk at sky-high "last minute" fares from the "full service" carriers.

Norwegian's real problem is the non-peak transatlantic season, which I'd say is about 8 months of the year. There's more supply than demand for coach seats during that time, and the big boys make their money (to the extent they make money) on premium cabin travellers after the summer leisure rush. Coach seats sell cheap during this time period. I just bought seats on DL to Spain for $250 roundtrip for April yesterday. UA, AA and Iberia had similar fares, and it's pretty easy to buy such seats under $400 to most of Europe in winter. This is the fundamental flaw in Norwegian's business model that won't be going away.
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Old May 30, 2019, 7:31 am
  #219  
 
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Originally Posted by iahphx
The cooling of speculation in the oil market is almost certain to help Norwegian get through the summer and, I suspect, the fall. Fuel is a huge expense for them, and a 15 cent decline in jet fuel prices (which we've seen in the past week) is a big deal for a struggling transatlantic airline. I also suspect the huge demand for summer transatlantic travel will result in more "spillage," as budget conscious consumers will balk at sky-high "last minute" fares from the "full service" carriers.
.
Actually, lower oil prices might end up shutting them down quickly, as Norwegian is overhedged. Let's wait until we see how much they're carrying in unrealized hedging losses in the May traffic figures report which will be released in the next couple of weeks. Anything over a billion NOK in unrealized losses and they'll likely have blown through their minimum capitalization covenants.

In addition, Norwegian has been running nearly nonstop fare sales through the summer. This indicates to me that they are running very low on cash and are struggling to just meet payroll.

Someone's been selling the stock aggressively in the last few weeks.
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Old May 30, 2019, 7:55 am
  #220  
 
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Originally Posted by iahphx

Norwegian's real problem is the non-peak transatlantic season, which I'd say is about 8 months of the year. There's more supply than demand for coach seats during that time, and the big boys make their money (to the extent they make money) on premium cabin travellers after the summer leisure rush.
While my data point is admittedly small and anecdotal, having flown transatlantic on Norwegian 9 times in a little over a year, I have not seen a single empty seat in either class (prem or econ) on any flight. This has been all from CPH to Florida (FLL or MCO), but in January (twice), April (twice), May, August, October, November and December. I know they offer premium economy upgrades for a reasonable price close to (or on?) the day of travel, but having booked several of our flights fairly late (i.e. within a few weeks of travel), I can attest that the premium seat map was nearly full when we booked. And they've usually announced during boarding that the flight is full. (Although our last flight at the end of April did have some last-minute bookings by people who were affected by the SK strike.)

That's why it is surprising to me that they are dropping all winter flights from CPH. MCO was always seasonal (summer) and the FLL flight was only twice per week in winter, but was full whenever we took it.
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Old May 30, 2019, 8:31 am
  #221  
 
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Originally Posted by SusanDK
While my data point is admittedly small and anecdotal, having flown transatlantic on Norwegian 9 times in a little over a year, I have not seen a single empty seat in either class (prem or econ) on any flight. This has been all from CPH to Florida (FLL or MCO), but in January (twice), April (twice), May, August, October, November and December. I know they offer premium economy upgrades for a reasonable price close to (or on?) the day of travel, but having booked several of our flights fairly late (i.e. within a few weeks of travel), I can attest that the premium seat map was nearly full when we booked. And they've usually announced during boarding that the flight is full. (Although our last flight at the end of April did have some last-minute bookings by people who were affected by the SK strike.)

That's why it is surprising to me that they are dropping all winter flights from CPH. MCO was always seasonal (summer) and the FLL flight was only twice per week in winter, but was full whenever we took it.
Susan, you are hitting on the item that has bugged me about Norwegian for quite a while now. It is likely that almost all of the tickets you purchased were sold at below operating cost. In essence, Norwegian's investors subsidized your ticket. The company did a great job as a regional European carrier of turning a profit, but whoever is responsible for Norwegian's yield management is completely incompetent. Norwegian's load factors have not been an issue; they are flying nearly full aircraft. But they're selling tickets at below cost. When a company does this, they eventually run out of investor money. Norwegian's run out of investor money twice in the last 18 months and has done two recapitalizations to keep operating. The last recapitalization of 3B NOK was half burned through in the first quarter of this year.

I stated in the last couple of months that Norwegian needed to raise their ticket prices a minimum of 10% just to get to breakeven and keep operating as a going concern. Instead, they have been having weekly fire sales of their seats through this entire summer. They have essentially put themselves out of business by doing this because they will need an even larger capital raise this fall in order to survive.

To me, it appears that Norwegian management gave up on running an airline and simply decided to make a roulette bet on the price direction of oil by taking such a large fuel hedge position. And at the moment, that bet is going very poorly for Norwegian.
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Old May 30, 2019, 8:43 am
  #222  
 
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Thank you for that clear explanation, iflyjetz. It's a shame to hear, but understandable. We have been able to fly premium economy, booking one-way fares, this past year+ precisely because the fares have been so reasonable. Sad to realize it will be their demise.

And you are correct, I receive an email several times a week offering sale prices on seats. I hope they find a way to survive while also retaining a competitive price, even if it has to increase somewhat.
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Old May 30, 2019, 2:57 pm
  #223  
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Oh, jeez, is Norwegian still playing the oil hedging game? I forgot about that. If so, I take back my comments about fuel helping them. These guys manage to get everything wrong. Brent crude fell another 3 bucks today. That will cost them a lot of money.

As far as the planes being full, that's pretty meaningless. Air Berlin's planes were full. As are most failing airlines. Unless you're flying 777s to Peoria, you can usually sell all your inventory. The hard part is selling it for a profit. I also don't understand why an airline would sell at a loss when their planes are full, but it's common.
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Old May 30, 2019, 5:37 pm
  #224  
 
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Originally Posted by iahphx
Oh, jeez, is Norwegian still playing the oil hedging game? I forgot about that. If so, I take back my comments about fuel helping them. These guys manage to get everything wrong. Brent crude fell another 3 bucks today. That will cost them a lot of money.
Even the legendary oil trader Andy Hall blew up his hedge fund a couple of years ago by getting his directional bet wrong.

At the end of Q1, Norwegian had 3.1B NOK in equity; bond covenants require a minimum of 1.5B in equity. https://www.norwegian.com/globalasse...rt_2019_q1.pdf
In their end of April traffic report, it showed Norwegian pretty deeply hedged at ~$680/mt of jet fuel. https://www.norwegian.com/globalasse...april-2019.pdf
24 May (from IATA's website) spot price is $641.13/mt of jet fuel, with the price being a bit lower in Europe. https://www.iata.org/publications/ec...ges/index.aspx

At this point, I'd think it's up to the bondholders whether or not Norwegian operates through the summer. At this point, I would think that Norwegian has to get bondholders to accept a debt to equity swap. However, a complicating issue is that a decent amount of Norwegian's assets are impaired in value (Rolls Royce Trent-1000 powered 787s and 737 Maxes). The impairment on those assets alone probably makes Norwegian insolvent, as I suspect they're being marked with a level 3 valuation.
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Old May 30, 2019, 5:52 pm
  #225  
 
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Originally Posted by SusanDK
Thank you for that clear explanation, iflyjetz. It's a shame to hear, but understandable. We have been able to fly premium economy, booking one-way fares, this past year+ precisely because the fares have been so reasonable. Sad to realize it will be their demise.

And you are correct, I receive an email several times a week offering sale prices on seats. I hope they find a way to survive while also retaining a competitive price, even if it has to increase somewhat.
You're welcome. At this point, I won't even venture a guess as to how much they would need to raise their fares in order to breakeven - it would likely need to be a significant increase along with discontinuing the fire sales.

Given how quickly they've been able to burn through their last capital raise, I would think that they'll have an extremely hard time finding an investor willing to throw more money at them.
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