Originally Posted by
RexBanner
Have you not even read any of the links Bondi posted (admittedly in Norwegian but there’s plenty of others elsewhere)? Investors are bailing fast. The easyJet versus BA Short Haul likened to Norwegian versus BA Long Haul is completely apples and oranges. For one thing easyJet had a sound business model. We’ve already spoken about why low cost works on short haul hence the rise of easyJet etc but that same model can’t be applied to long haul. That’s why easy were able to steal a march on BA whereas airlines like Laker weren’t.
Couple of points. Can see it wont be too much longer before they become too big to fail, with a significant impact on investor and bank worth if they do go TU.
Second, most of their model is set up on lease and on a service agreement basis. This also leaves a lot of OEM and service providers also in the dwang if the market is suddenly flooded by 20+ 787 and 40+ engines. Surely better to cut profit, even turn a slight loss than have 20+ 787-9 parked up somewhere arid in America. Thats not to mention their 737 MAX. Any trouble and the used market is going to depress the price of a brand spankers jet for a while.
Thirdly, Norwegian has the world's largest sovereign wealth fund. Its bigger than any Middle Eastern equivalent. This should be a worry to BA, as they could very suddenly find themselves getting deep into a price war that is mutually destructive, against a company backed by a country with a very, very, very deep pocket.
Finally, although they have lost cash, they are not losing lots of cash... yet. They are still establishing route structure, cargo capability and wider networks. The efficiency will always take time. The Scandinavians are exceptionally good at the digital thing, so expect business analysis to increase profits in the future. Be interested to see how their cargo business develops and if they can develop a decent hedge strategy.