In addition, there is the big chunk of psychology involved here. Many people do realize that things are not quite well right now for DY and they may have some doubts while planning. Me too, I could have flown with them a couple of times this year, but finally have chosen another carrier. Still have an option to make a group reservation with them later this year, but... try to accommodate and reroute some 25 people if things go wrong and cover the costs involved... too stressful to consider. Obviously, that does not help the carrier either.

https://www.theguardian.com/business...a-rights-issue

787 and Max issues you will stop paying loans for aircraft until they sorted plus someone else will be picking up the costs and it will be coming all in cash or cash equivalent. Boeing jets were all puchased using US EXIM, basically US taxpayer funded export agency. What will they do ? Reposess aircraft that can't fly and sell to whom ?

The $45 million initial hit will be way more than because the quoted costs are going to get added to massively because of non delivery etc.

One of the reasons Sir Beardy was always first in for new aircraft, never going to be delivered on time and substantial damages paid for non delivery and you then sell your delivery slot.

They couldn't have come at a better time because it buys Norwegian another year with either a huge injection of damages cash from Boeing and RR or loans written off.

I agree with many things that you say Racedo, but I disagree strongly in relation to the last point. BA is a well admired brand and have a huge following. I agree that there are enormous swathes of people wanting to fly Norwegian, but it all about price.

BA can command a strong premium in price, whether from corporates who want the scale of network, with aligned frequent flier programmes, or the higher yielding leisure traveller, or indeed the flier who flies on a BA holiday, there is a huge market for BA.

Norwegian is a great airline, and you'd have to admire the scale they have in such a short time. However, they don't have enough of the higher yielding passengers that they need 'all year round', and this is their challenge, I'd say one of their biggest. The winter months are particularly difficult, to a much greater degree than their Long Haul peers. It is also difficult to achieve significant cost advantage in long haul, where you are not getting greater utilisation than your competitors, where you are using primary airports, and where you do not have a well developed corporate customer base.

I wish them well, but I am still struggling to see how their model is sustainable.




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nguba - The leases are for the whole summer to cover 787 maintanance.

UGH Just seen that my JFK-LGW 30 JUL 11.25am is now on an Evelop A330 - trying to make sure I am not downgraded from Premium

Norwegian in last week’s schedule update filed leased aircraft operation for Trans-Atlantic service to/from London Gatwick, gradually commencing from the week of 29APR19. Planned leased aircraft operation for Norwegian Air UK (DI) as follows.

Evelop Airlines A330-300 to be used on the early flight/day flight back
London Gatwick – New York JFK eff 03MAY19 6 weekly (DI7013/7014)

Hi-Fly A340-300
London Gatwick – Orlando eff 29APR19 7 weekly

Privilege Style 777-200
London Gatwick – Miami eff 29APR19 6 weekly

Wamos Air A330-200
London Gatwick – Chicago eff 01MAY19 3 weekly
London Gatwick – Denver eff 30APR19 3 weekly

Separately, the airline last week extended Evelop A330-300 service for Norwegian Air International (D8) on following route:
Dublin – Newburgh/Stewart Evelop A330-300 service extended till 14SEP19, instead of 31JUL19

https://thepointsguy.co.uk/news/norw...don-us-routes/

Just seen that Evelop has just taken or about to take delivery of an ex SQ A330-300 with 30C/255Y seats - this will be at LGW all summer for the early morning JFK.

Given Norwegian's perilous position I'd say its very interesting.

Norwegian is a house of cards. Their most recent accounts bases reduced losses on compensation from Boeing!
Previous accounts have been destroyed by analysis from the likes of Cranky Flyer.

Norwegian's April load factor: 86.1%
Ryanair's April load factor: 96%
EasyJet's Q1 load factor: 89.7% [EZY seem to have stopped reporting theirs monthly]

Load factor does not reflect profitability. Was it not recently reported that they were making a loss of €16 on every passenger that flies with them..... that's a lot of money!!

I would see losses in 2019 BUT there is going to be a huge cash flow benefit in that RR and Boeing will be paying sizeable compensation, the 45 million quoted will not even be close to the final figure, lost profitability, damage to brand, management time etc etc. Cash cost I would expect to be close to this years rights issue.

Events not of your own making can change an airlines future...... 9/11 and Ryanair for an example.

Also from a passenger point of view they are a bit more forgiven when it is not airline causing the issue but manufacturer.

So where/when has any possible compensation from RR and Boeing been confirmed as being in cash? Quite often the compensation from will be in the form of reduced prices for future orders/ free training/ etc etc.

That doesn’t helped an airline struggling for cash. Also, passengers care not who’s at fault for flight cancellations and disruption. It will always be the airline to take the blame.

No chance will discounts for future orders be accepted as an equivalent unless you double the amount you talking of.

Airline paid the cash out so it requires repaying, refuse to pay and then Airline no longer pay for planes, cancel leases, handback aircraft and state unwilling to use because do not believe they are safe. Every other airline will then ask "Why and What do they know" and watch Boeing collapse.

I posted in another thread that a minor chip issue in 1994 cost Intel $500 and almost the company, it affected hundred users at most but everybody wanted it changed and other people stopped using Intel chips in their equipment.

Boeing go to court and will eventually get a final judgement in 2035 because that is how long it will take and Norwegian take Boeing to court for selling unsafe planes. Lawyers get rich and both go bust.

Boeing has no high road to take because only needs one Airline to hand back and refuse to fly as unsafe and watch everybody following.

Depends on the price they charge. But a £16 loss at 86% load is not the sign of a healthy airline. And they aren't healthy.

Norwegian's finances are a lot more precarious than Boeing. If 737 Max compensation goes into a prolonged court battle, Norwegian will most likely end up declaring bankruptcy first and any post-bankruptcy administrators are far less likely to have the desire for a multi-year court fight than existing execs. Both sides know this, and they also know that Boeing will be more than capable of finding some spurious reason as to why SouthWest in the USA (who have strong finances and can play a waiting game in court) should get cash compensation while Norwegian should get only a discount off the next order. Of course if IAG shoukd buy Norwegian then Boeing might change their mind - perhaps unfair but that's called capitalism

If either side think they might go bankrupt, they will be much more inclined to settle out of court for whatever derisory terms the other side proposes.

Boeing as a major defence contractor has the implicit backing of the US Govt who will regard Boeing as a strategic US asset - they can play tough if Boeing is nearing Chapter 11. When Deepwater caught fire, the UK Govt went into bat for BP as a strategic asset against Obama. I am not sure how far the Norwegian Govt will want to go down the route of diplomacy in comparison

I agree with racedo that airlines will want significantly extra compensation as discounts in the future compared to compensation in cash now. I do not however believe that if 1 airline throws their toys out of the pram saying the Max is unsafe to fly that other airlines will take them seriously; Norwegian is very likely not privileged to info on the 737 Max which American does not have. Once the FAA, EASA and others recertify the 737 Max in the next 12 months then barring a hull loss, Norwegian would have to be very convincing for American to ground their aircraft on Norwegian's say so.

I think it has been well reported that RR has put aside 100's of millions of £ to pay 787 affected airlines compensation due to the engine issues.

I could assume to pay means cash compensation, rather than offer future sweeteners...BUT we do not have that info, nor likely will we.

So far there hasn't been credible reports of Boeing doing the same as yet, re the MAX, but surely brand new planes do have some sort of warranty attached to them - ?
Most MAX are leased and not owned by the airlines - so do the lessors stop paying the lease fees, and the airlines stop paying the lessor?
I guess the MAX affected airlines at this stage do have to pay now for the ACMI leases they are scrabbling around to find uplift with for most likely the rest of the summer season at least.

We really cannot pontificate anymore as we are simply not employed in the Accounts, or the Commercial Departments of any of these airlines, nor are we privy unless they publicly announce exactly what their terms are with RR & Boeing in these unforeseen circumstances.

Boeing have stated in Q1 results that it has already cost them $1 billion, they then refused to provide a single piece of financial guidance on the rest of the year. Basically telling everybody it is going to be bad and we have no idea how bad.

Most Airlines sold via US are financed via EXIM................. basically US Govt funded Export Credit, if Lease co's and Airlines decide not to pay then US Govt on the hook.

Airline buy an aircraft at Book prices of $50 million for $25 million, sell to Lease co for $50 million, in effect pocketing $25 million in cash and pay the lease co over the life of the asset with an agreed future resale value.

While Boeing is a strategic asset for US Govt the issue will be that US Govt will not wish to put €10 billion directly into them as that is State aid and EADS would be in court.

The longer it goes on the more damage to Boeing as it is future orders that will be the issue, I think anybody with a Max order for Q4 this year will be lucky to get it in Q4 2020.

Maintenance

All Transatlantic routes from Ireland scrapped. Blame is being cast on the 737 Max issues, but as regular followers of this thread will know, that's only part of the story.

In terms of the airports, it represents a loss of 242K passengers at Dublin, 82K at Shannon and 28K at Cork. The Shannon figure is close to 5% of all traffic and represents a big loss. For Cork and Dublin, it's closer to 1% and will get lost in this year's growth, although the loss of Cork's only transatlantic link is symbolically important.

According to this article, at TUI the full cost of having grounded Max jets could reach 300 million Euros in 2019. http://www.travelweekly.co.uk/articl...it-uncertainty

Norwegian, who have a similar number of Max jets reckon it will be a €30-40 million hit. Norwegian Airlines management is either smoking the good stuff or deliberately deluding investors and customers alike.

But TUI will lose out on the whole package revenue as opposed to just the flight rev for Norwegian

Not sure if that's true. Wet lease has been brought in to make sure people get their holidays.

I agree with 840. If it were simply a max issue Norwegian would suspend its Irish flights for the winter months and reinstate them next summer when (hopefully) the Max will be flying again. They are clearly unprofitable.

Network wide I assume that most of Norwegian's problems are long haul - certain the low cost model works far better for SH than LH. The new CEO is going on about profitability rather than growth but how many of their LH routes are actually profitable?

The Irish routes were especially popular with Americans, although Irish preferred to fly with Aer Lingus - so maybe that was a part of play. However, Norwegian’s line is that it isn’t profitable running them with weight restricted 737-800’s and there is no certainty in the MAX situation - so they would rather cancel them.

I wouldnt think it is a weight restriction issue, more like a range issue.