With oil at a 2019 high this morning and the Max grounding how much longer can Norwegian continue?

Perversely it may help insofar that they have already booked a loss based on hedge positions that were higher than they year end oil price, I think they are fairly well hedged for at least the first part of this year, but overall it won’t be helpful.

Norwegian have wet leased in capacity to cover some of the shortage of aircraft due to the max grounding, they have also delayed some airframe disposals and changed certain flight frequencies, the announcement of various base closures has already resulted in dozens of pilots leaving with many more working their notice, so the headcount is well down already.

With it looking like mid late summer before the MAX is back it will certainly make next winter a huge challenge, all the more so given the need to crew and train for S20 and just where do they think they’ll get the pilots from?

There is no short term correlation between growth and success. They are in a bit of a hole with their operation and have yet to deliver anything like a consistent operational profit.

Stock market don’t seem to have much confidence that there is any likelihood of improvement in the near future.

Every airline in Europe loses money during the first three months of the year

While stock market investors are not 100% rational, over a long enough time frame they get it reasonably right. The share price trajectory is totally rational, the absolute value of the shares is still debatable.

What is going to change in Norwegian’s short term to allow them to become profitable?

Do they have any specific reasons to expect strong yield growth? (ie failure of competitors or large increase in demand)

If not, is there a reasonable expectation that they are going to dramatically reduce their cost base? Still no?

I am genuinely interested to find out what I am missing here.

The product is very polished and professional, but the inconvenient truth is that it costs the shareholders a stack of money every time one of their aircraft pushes back from the gate.

They’ll be paying Norwegian’s creditors at this rate. Reimbursement from Boeing doesn’t help if the company has gone to the wall in the meantime. The money won’t be paid immediately.

They would almost certainly keep it afloat even if in just a scaled down form that serves the Norwegian regions and trunk routes out of and around Scandinavia.

The money isn’t going to run out at Norwegian (much to the dismay of the majority of people on this forum).

Except the money very nearly did run out at the back end of last year, only saved by an emergency rights issue. By the way a rights issue is the last resort when trying to raise finance. It’s the only thing left after nobody else, including the banks, will touch you with a barge pole. According to these latest financial results they have already burnt their way through a sizeable chunk of this money. You’d have to be an ostrich with your head in the sand to not be able to see that there are major problems with the ongoing solvency of this company, however much you like to imply anyone who questions the business model is some sort of “hater”.

The money didn’t come anywhere near running out.

Dont worry Rex, we all know Cruz has brainwashed you all into believing Norwegian is the reason for your depleting T&Cs and pathetic pay offer. I assume he promised you all big bonuses if Norwegian ‘went away’ too?

Whatever makes you feel better. Attacking BA instead of providing an actual rebuttal of the argument presented here is a bit straw man at best and indicates you’re losing the argument. I don’t think anybody from Norwegian has the right to point fingers at other company’s “depleting” Ts and Cs. Coming from the company that pays £80k to a 787 skipper and has its crews slipping in the Days Inn and Park Inn downroute together with the god awful Copthorne at Gatwick. The fact that they’re doing those things and still can’t turn a profit should give you a clue that there is something seriously wrong with their model.

Norwegian’s customer base is the low hanging fruit. They’ve pinned virtually their entire business model on it. Exactly the same customer base that is the first to suffer and stop travelling in any downturn and the same people that all the legacies have to do to pilfer is to unbundle their product and they can thus match if not beat Norwegian on price and they’re still coining it in from their premium cabins.

This is the fundamental problem with the model. It’s clear for anyone to see who has taken their head out of the sand. Are you seriously trying to tell me that a rights issue indicates a healthy company?

Intertola,

Thats just it, you’ve highlighted the problem with Norwegian. A far superior product, at a significantly cheaper price, but no premium class. A reason why IAG make a profit and Norwegian have total debt greater than the market valuation of some of the biggest European airlines.

Well that’s going to be a challenge. Further 787 issues, Max groundings, cash being raised via rights issues (not normal), rising oil prices, lower demand. This is all at the end of the recent airline boom times, Norwegian need to make profit now. The competition have been making profit, raising cash, paying off debt for years now.