Norwegian Air

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jd832
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Norwegian Air

#1 Post by jd832 » Thu Jun 21, 2018 9:29 am

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Eric Janson
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Re: Norwegian Air

#2 Post by Eric Janson » Thu Jun 21, 2018 10:20 pm

The expectation is that Norwegian will be out of cash by the end of the Summer.

A number of other Airlines have put in a bid for Norwegian.

Interesting times!
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Re: Norwegian Air

#3 Post by DanJ » Fri Jun 22, 2018 2:28 pm

From the article
With travel increasing between Europe and Canada, Dimanche said he believes direct flights could be successful if passengers are willing to drive to secondary airports.
That will require clear communication for European travellers who may not have heard about the airport almost 100 kilometres west of Canada's largest city.
I wonder if the flights will be marketed in Europe as Hamilton or Toronto, or maybe Toronto (Hamilton).
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Re: Norwegian Air

#4 Post by complexintentions » Sat Jun 23, 2018 10:09 am

Actually Eric, it was Michael O"Leary who said that Norwegian would run out of cash in 4-5 months. That was last September.

Norwegian is definitely burning through cash, I'd be surprised if there weren't some major changes coming.

But given that much of the negative press on them is presented by some of the prospective buyers/investors (IAG, LH) talking their book, or disgruntled competitors (one certain Ryanair CEO whose airline has provided 1/3 of new Norwegian pilots), I tend to discount them accordingly. Combined with the fact that "Norwegian" isn't only an airline but other entities such as a bank, who knows what the true financial picture really is. ALL airlines struggle with cash flow during times of rapid expansion. Yes, growing too fast, combined with the disaster that is the Trent 1000, could very well sink them. But I get the sense that in some of the doom-sayers there is more than a small element of wishful thinking.

I do think there will be some major consolidation in Europe over the next few years, the details I don't know, nor does anyone else. What I do know for certain is that the ULCC model is here to stay, no matter what the colour on the aircraft. Once people get a taste of flying SEA-LGW return for 500 bucks (or YHM-YXX for 200 bucks, lookin' at you Swoop!) they aren't quite so content with legacy fares anymore...

Interesting times indeed! :mrgreen:
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Re: Norwegian Air

#5 Post by Eric Janson » Sat Jun 23, 2018 11:06 am

complexintentions wrote:
Sat Jun 23, 2018 10:09 am
Actually Eric, it was Michael O"Leary who said that Norwegian would run out of cash in 4-5 months. That was last Septembe
There have been multiple articles about the state of Norwegian in the press. A number of senior management have also resigned including the CFO.

There's definitely something going on - it's not just Michael O'Leary.

https://www.ft.com/content/69612f36-755 ... da4279a601

https://www.cnbc.com/2018/06/18/lufthan ... -says.html

http://www.newsinenglish.no/2018/05/29/ ... lls-again/
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Re: Norwegian Air

#6 Post by complexintentions » Sat Jun 23, 2018 2:10 pm

Uhh...yes, your links do state exactly what I said, that LH and IAG have expressed interest in acquiring Norwegian.
Lufthansa is in contact with Norwegian Air Shuttle, also the subject of bid interest from British Airways owner IAG, the German group's chief executive told a German daily, sending Norwegian's shares higher.
Which, if anything, only validates the Norwegian business model. The fact that predators are emerging only underlines that they see Norwegian as a viable threat. These guys don't put money into companies to lose it. They either want to take it over to run it at a profit, or buy it to eliminate it, take your pick. I'm not sure how Norwegian loses: either they get bought out for a handsome price, costing their new owners a bundle, or force the incumbents to lower costs to compete. I believe the term du jour is "disruptor"...

O'Leary is the only one who's said they'd be broke by now. Whoops.

Not disputing something is going on or that Norwegian is in trouble and may not survive. Just that you betray your prejudice with your statement "The expectation is that Norwegian will be out of cash by the end of the Summer." when it's based on the remarks of a direct competitor who's lost market share and employees to them, and has in the past mused about removing all pax seats from his aircraft and charging to use the lav. Not exactly credible. :mrgreen:
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Re: Norwegian Air

#7 Post by Eric Janson » Sun Jun 24, 2018 12:44 am

complexintentions wrote:
Sat Jun 23, 2018 2:10 pm
Not disputing something is going on or that Norwegian is in trouble and may not survive. Just that you betray your prejudice with your statement "The expectation is that Norwegian will be out of cash by the end of the Summer." when it's based on the remarks of a direct competitor who's lost market share and employees to them, and has in the past mused about removing all pax seats from his aircraft and charging to use the lav. Not exactly credible. :mrgreen:
Those aren't my words - that comes from several financial articles about Norwegian based on Norwegian's own financial reports released earlier this year.

My company does a lot of flying for Norwegian which is why I keep an eye on developments.
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Re: Norwegian Air

#8 Post by complexintentions » Sun Jun 24, 2018 9:24 am

Ah yes, HiFly. I always thought Lisbon would be a nice place to be based in. Wet-leasing generally pisses off customers though, the don't seem to understand why when they bought a ticket on a shiny new 787 they're getting an old 330. People need to read their tickets! :mrgreen:

There is also a theory floating about that Norwegian is purposely taking a loss so they can restructure their Norwegian (as in, in Norway) entity through bankruptcy. There is no love lost between Kjos and the Norwegian unions, and they have so many subsidiary operations (UK, Argentina, Thailand, Ireland) each operating under separate AOC's and all crew via contract that it would be much preferable for them to operate under one of the other jurisdictions. Scandi labour laws ain't cheap.

They're like the poster child for globalization, which kinda fascinates me. If they go down, someone will pick up the slack, that's for sure.
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Re: Norwegian Air

#9 Post by sanjet » Sun Jun 24, 2018 10:24 am

Unless they get acquired by another airline (good possibility), I would be surprised if they continued operation after this summer.
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Re: Norwegian Air

#10 Post by complexintentions » Mon Jun 25, 2018 3:48 am

Thank you for your thorough, insightful analysis. :lol:
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Re: Norwegian Air

#11 Post by Jack Klumpus » Sun Jul 01, 2018 1:55 pm

Norwegian is publicly traded, therefore anyone can access their financial sheets.

I’m writing a paper on them now as part of my masters degree. Definitely interesting times ahead for them, specifically Q2 2018.

They’re selling planes and leasing them back, they’ve just sold a bunch of shares, and selling other parts of their company. They have a bank, loyalty program (that’s also part or all for sale), and a mobile operator. They definitely have a lot of options for cash.

They’ll receive 32 787s this year, their North American network is growing, and they have their Argentinian AOC in hand and ready to go.

Who ever says they’ll be out of cash soon is misinformed.

They’ve spent a lot of money on training pilots (most who came from Ryanair), fuel prices have somewhat increased, and the euro wasn’t as strong as their predictions.

Bookings are up, ASK are up, and so is their revenue. Also up is their operating expense. So yes, some change in the model did take place.

IAG has made two bids, so has Ryanair, and so did LH. they were all turned down, thus far.
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Re: Norwegian Air

#12 Post by Eric Janson » Tue Jul 03, 2018 1:48 am

Jack Klumpus wrote:
Sun Jul 01, 2018 1:55 pm

I’m writing a paper on them now as part of my masters degree. Definitely interesting times ahead for them, specifically Q2 2018.
I'd be interested in reading your paper once it's finished.
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Re: Norwegian Air

#13 Post by Jack Klumpus » Sat Jul 07, 2018 11:27 pm

No prob.
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Re: Norwegian Air

#14 Post by complexintentions » Fri Jul 20, 2018 3:21 pm

Norwegian reports solid profit in Q2
Published:12.07.2018 By:Astrid Mannion-Gibson

Norwegian (NAS) today reported its second quarter earnings for 2018 with a net profit of NOK 300 million, despite the highest growth in the company’s history. Going forward, the growth will slow down and ramp-up costs will decrease, in line with Norwegian’s strategy.

Click here to see a live stream from the Q2 presentation today at 8.30am CET.

Click here to see our Chief Financial Officer, Geir Karlsen, explain our Q2 results, and why he stresses that despite posting a profit this quarter it is more important than ever to remain focused on savings.

The net result was NOK 300 million compared to a loss of NOK 691 million the second quarter last year. The result is affected by a reduction in unit costs, which has decreased by nine percent this quarter, and with 19 per cent excluding fuel. One-offs have also this quarter contributed to the cost reduction. The costs are lower despite Norwegian’s highest ever production growth (ASK) of 48 per cent and increasing fuel prices. Norwegian’s traffic growth (RPK) this quarter was 46 per cent.

Stable load

The airline carried ten million passengers during the second quarter quarter, an increase of 16 per cent. The load factor for the second quarter was 86.8 per cent, down 0.9 percentage points compared to the second quarter last year.

Norwegian has grown rapidly over the past years, expanding international traffic and adding new bases, destinations and markets to its portfolio. In terms of total revenue, the US represents the strongest market outside Norway.

“Despite being at the peak of our growth phase, we have been able to present a profit and decreased unit costs during the second quarter. Going forward, the growth will slow down and we will reap what we have sown for the benefit of our customers, staff and shareholders,” said CEO of Norwegian, Bjørn Kjos.

“I’m also extremely happy and grateful that we during the past six months have received ten different awards. In June we were named Norway’s most innovative company and in July, we were awarded the “World Travel Award” for the best low-cost airline in Europe, and the “Ambassador’s Award” from the US Ambassador to Norway. The latter proves the importance Norwegian has had in terms of strengthening and building US – Norway relations and growing the countries’ economies. It shows that what we have achieved so far in the US is being appreciated and acknowledged by the US government,” Kjos continues.

During the second quarter, Norwegian has introduced three Boeing 787-9 Dreamliners and two Boeing 737 MAX 8 aircraft to its fleet. In total, this year Norwegian will take delivery of 11 Boeing 787-9 Dreamliners, 12 Boeing 737 MAX 8 and the two Boeing 737- 800 aircraft that have already been delivered. With an average age of only 3.7 years, Norwegian’s fleet is one of the “greenest” and most modern fleets in the world.
(300,000,000 NOK is about $37,000,000 USD)

Who knows, they may even be around beyond this summer... :roll:
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Re: Norwegian Air

#15 Post by leftoftrack » Sat Jul 21, 2018 8:41 am

the sale of aircraft, leasing back is something that is done by all airlines world wide from Emirates too IAG too Air Canada too WestJet. When WestJet started that about 10-15 years ago, some of the financial geniuses or here predicted that was a sign of their demise, its a financial tool used in a cash intensive business. nothing more nothing less
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Re: Norwegian Air

#16 Post by complexintentions » Mon Jul 23, 2018 11:27 am

I do not claim to have any crystal ball for anything aviation whatsoever, including my own career moves! :mrgreen:

My only point was that the vast majority of the negative press (wishful thinking?) was coming from threatened rivals like O'Leary and potential buyers who also have an obvious interest in Norwegian doing poorly. Aided by the usual uninformed bandwagon-jumpers.

The Q2 results would seem to indicate all is not quite so dire as painted. Who knows. Now if only RR could figure out a fix for their shitty engines...
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Re: Norwegian Air

#17 Post by broompusher » Fri Jul 27, 2018 3:14 am

complexintentions wrote:
Mon Jul 23, 2018 11:27 am
Now if only RR could figure out a fix for their shitty engines...
IMO, I believe the answer to that is to switch to GEnx...But hey, I'm just an over(under?) paid professional coffee drinker..

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Re: Norwegian Air

#18 Post by Redwine » Thu Aug 09, 2018 10:20 pm

This shit airline caters to the millennium travelers who have no clue what air travel used to be like.
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Re: Norwegian Air

#19 Post by complexintentions » Fri Aug 10, 2018 10:20 am

Redwine wrote:
Thu Aug 09, 2018 10:20 pm
This shit airline caters to the millennium travelers who have no clue what air travel used to be like.
You mean incredibly expensive and inaccessible?

I though elitism had been made illegal in Canada! :mrgreen:
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Re: Norwegian Air

#20 Post by rookiepilot » Fri Aug 10, 2018 11:48 am

Redwine wrote:
Thu Aug 09, 2018 10:20 pm
This shit airline caters to the millennium travelers who have no clue what air travel used to be like.
This is the funniest comment I'd read lately. Thanks!

I love the ULCC's. I won't fly them but they keep the pressure on pricing on overseas routes, with mainline carriers I do fly.
More the merrier!
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Re: Norwegian Air

#21 Post by Old fella » Fri Aug 10, 2018 5:10 pm

complexintentions wrote:
Fri Aug 10, 2018 10:20 am
Redwine wrote:
Thu Aug 09, 2018 10:20 pm
This shit airline caters to the millennium travelers who have no clue what air travel used to be like.
You mean incredibly expensive and inaccessible?

I though elitism had been made illegal in Canada! :mrgreen:
:lol:
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Re: Norwegian Air

#22 Post by Eric Janson » Fri Aug 10, 2018 10:21 pm

For the next 2 weeks you can travel in style between Gatwick and JFK on Norwegian.

https://www.businesstraveller.com/busin ... s-for-250/

https://www.forbes.com/sites/michaelgol ... 516860c580
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Re: Norwegian Air

#23 Post by complexintentions » Sat Aug 11, 2018 4:10 am

Now THAT's my idea of a wetlease! :mrgreen:
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Re: Norwegian Air

#24 Post by rookiepilot » Sat Aug 11, 2018 5:25 am

That's more like it. AC's upgrade price is ridiculous on this route. (Well YYZ - LHR anyway)
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Re: Norwegian Air

#25 Post by dumbbell daddy » Sat Aug 11, 2018 5:58 am

To Jack and Complex,

Do you think they will ever open up a Canadian base like they have in the US, and hire on the 737/787?

Might be wishful thinking but stranger things have happened........
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