Hard times for Norwegian

[Treelover]

Well said Elephant and Castle!
If your an airline and you keep having to sell off your aircraft in order just to survive you clearly have a flawed business.

[D9009]

TUI, Virgin and Easy are doing it. (sale and leaseback)

[MCDU2]

I wouldn't read to much into WW's comments concerning Norwegian. They were likely made back when he was attempting to buy the airline.

[Plastic787]

I flew Willie to Dublin around the time of the proposed takeover and we had him up on the flightdeck for a bit before the flight. I won’t go into great detail of the conversation but suffice to say the impression was given that the model was extremely niche and that had they completed any purchase most (not all) of the LH Ops would have been shut down immediately and the 787s deployed elsewhere in the group. Whatever noises made to the media that’s what came from the horse’s mouth off the record.

[EIFFS]

Plastic787

Few doubt that WW would have closed many of Norwegians 787 routes, I have no idea about how successful these routes were, but one thing was clear is that a lot of BA traffic was bleeding across to Norwegian, some will have been geographical in choosing LGW over LHR, the flights were better value for money and the product was considered to be positive and I've flow on both.

WW would have closed the routes to protect its own margins, just as it tried to kill off Laker and Virgin.

Norwegian still seem intent on starting up LH again from LGW and yet i don't know one person who seriously sees how that can be achieved.

[MCDU2]

From memory the Norwegian take over was attractive for IAG largely due to the latters much lower cost of capital. As alluded to above many LH routes would have been culled and aircraft would be transferred across the IAG group. Norwegian also had an attractive order book for aircraft. Once you refinanced the debt/offloaded it then Norwegian had a much lower cost base than some of the IAG opcos and would have been a good fit in the loco segment.

[Kirks gusset]

On 15 December 2020, AerCap Holdings N.V. ("AerCap") has, through its wholly
owned subsidiary Ballyfin Aviation Limited, sold 41,605,161 shares in Norwegian
Air Shuttle ASA ("NAS"). Following this transaction, AerCap has, through certain
of its indirect wholly owned subsidiaries, as well as certain other companies in
which AerCap has an interest, an interest in a total of 177,893,106 ordinary
shares, representing approximately 4.5% of the share capital and voting rights
in NAS.

This explains why the shares are so volatile and under observation.

Of note is the fact Air Asia has also tabled a similar debt/equity swap .

AirAsia X (AAX), the long-haul unit of budget airline AirAsia Group, has proposed to reconstitute $15.3 billion of debt into a principal amount of 200 million ringgit ($48 million) and have the rest waived. The airline, which has posted losses since June 2019, said the alternative was to face liquidation with no returns to creditors. It is now seeking court approval to convene a meeting with creditors to vote on the scheme.

[vikingivesterled]

Kirks gusset

Its under observation because its under court protection.
And a sale of 42 million shares is hardly substantial when the daily churn of Norwegian shares was in the the 1 to 1.5 billion last week and in the 500 million this week:
https://live.euronext.com/nb/product/equities/NO0010196140-XOSL/overview

[Plastic787]

EIFFS

The elephant in the room with that argument being that BAs profits had been increasing every year since Norwegian started LH Ops. They can’t have been that much of a thorn in the side. The reason they would have canned most the LH routes is that they weren’t profitable and BA could have made more money doing it themselves.

[Dave Gittins]

Can say that a few Norwegian trips from LGW - DEN were a significant improvement on the BA offering from LHR - DEN (comparing Norwegians Premium class with BAs Economy Plus) and about the same price at £1800 for the round trip. To get the same standard with BA (Club World) was about £4000.00.

[srjumbo747]

That’s not in question and has been raised on this forum when it worked, it worked well.
There are, however, thousands of disgruntled passengers who were left to fend for themselves when things went wrong.
Everything was outsourced and the ground handling staff just couldn’t cope.
I witnessed this on many occasions.
Pay peanuts...,

[Plastic787]

Dave Gittins

Yet the financial failure of such flights just proves the point that they were selling the product below cost. You might argue that BA overcharged but at least it was more realistic for making money. Norwegian were trading profitability for future market share and you leaped at it, as most people would. But if they’d ever achieved that market share you’d better believe those prices would have been a thing of the past.

[733driver]

No doubt Norwegians'd premium class offers a nice recliner seat often at competitive prices but I don't think it's comparable to a fully flat business class seat to be honest.

[vikingivesterled]

The management of Norwegian must be both relieved over that all their proposals where approved by the shareholder general meeting today, and also disappointed that only shareholders representing less than 2% of the stock actually bothered to vote. That do not show neither shareholder interest in the future of the company nor potential for collecting much extra capital from same. Also thought provoking that the chairman of the board only could muster up voting rights for 34 million out of a total of 3.7 billion shares to ensure the proposals was voted through.
Many small shareholders are blocked from voting by the way they hold their share through financial institutions but if this is representative then less than 2 million Euro would have bought you a blocking stake in the company.

[vikingivesterled]

The management of Norwegian must be both relieved over that all their proposals where approved by the shareholder general meeting today, and also disappointed that only shareholders representing less than 2% of the stock actually bothered to vote. That do not show neither shareholder interest in the future of the company nor potential for collecting much extra capital from same. Also thought provoking that the chairman of the board only could muster up voting rights for 34 million out of a total of 3.7 billion shares to ensure the proposals was voted through.
Many small shareholders are blocked from voting by the way they hold their share through financial institutions but if this is representative then less than 2 million Euro would have bought you a blocking stake in the company.

[Kirks gusset]

Is this 80% of the 2%?
"Norwegian Air Shuttle ASA (the “Company”) is pleased to announce that the
Extraordinary General Meeting (EGM) voted in favor of all proposed resolutions.
The Company achieved over 80% votes in favor of the proposed rights issue.
With respect to the subscription rights, the last day the shares are traded
including the rights, together with the corresponding ex-date and record date,
shall be set by the board of directors following the determination of the
subscription price.

Fornebu 17 December 2020
Norwegian Air Shuttle ASA"

[Vokes55]

Plastic787

Wondering how you know which flights were a “financial failure”. Did Willie tell you that as well?

By all accounts, the majority of LGW-US routes were successful by the back end of 2019. There were many questionable decisions and unprofitable parts of the business but LGW long haul wasn’t one of them.

[vikingivesterled]

Is this 80% of the 2%?

Yes,
see attachement (vedlegg in pdf) of https://newsweb.oslobors.no/message/520947
Between 44 and 63 million shares voted for each resolution and between 1 and 18 million against.

[Plastic787]

Vokes55

I know for a fact that Denver and Chicago to name two were massive loss makers, Singapore (not US obv but proves the point) was so successful it lasted a matter of months. The rest were marginally profitable in summer and a big drain in winter, similar to low fare long haul full stop. IAG took one look at the books and walked away saying “nah thanks”. That’s the reality. You can beat the drum as much as you like saying that they had bums on seats but ignore the yield totally forgetting it’s not load factor but profitability that determines success and a profitable operation. Every financial analyst bar none says that Norwegian’s problems began and ended with the 787 misadventure. I get that you wanted it to work and I admire the passion - believe me despite flying BA’s jets I have no love for this company and would love to be in a place where I could feel that again too - but financial reality has bitten hard and if the Gatwick 787s ever take the air again it will be because some other fool with too much money has decided to part with their senses and is being taken for a ride.

There is a reason O’Leary and the Orange lot haven’t touched Long Haul with a barge pole and it’s not because they’re feeling charitable towards BA..

[Luke258]

I would disagree with a few points here:
BA didn't just look at the books and walked away. There are also some that say the complicated company structure was one of the biggest obstacles. And I would agree to that to a certain point. Old Management were setting up a too complicated structure. I have much more faith in the new management that seemed to try to clean up the mess.
The JFK and LAX flights were profitable to my knowledge. Have also a look at the revenue per origin of pax. second place after scandi is the US market. Problematic were most likely the huge amount of aircraft they ordered, plus the big amount of issues they had with the RR engines and the subsequent cancelations. it was a deep spiral which the new management tried to escape from. but then corona came along.
Also regarding O'leary: He is not the Guru of Aviation. Many times he predicted the bankruptcy and it didn't come along. He can be wrong as well.

[uncle-traveling-matt]

This discussion will never end. Fact is LH lowcost worked :

“He’s proven, if not to everybody but certainly to us, that the market exists and the customer will embrace the business model.”
Wille Walsh

Two full takeover attempts were made by IAG, both were flatly denied as they “undervalued” the company. This is not flight deck chat, but information directly aimed and related to the financial markets.

Norwegian were badly let down by Boeing and Rolls/R with staggering costs as a consequence ,billions of kr. Never received a penny in compensation. Still haven't. Then covid hit, and here we are.

[Plastic787]

uncle-traveling-matt

“The customer will embrace the business model” is not the same thing as “Norwegian’s business model is financially viable“. What Willie was saying is that nobody was certain whether the punters would be keen on unbundling the Long Haul product. WW was already on record as saying that the model only worked with Level as they were able to get a quite frankly astonishingly cheap price for some end of line A330s. It was a quote more related to IAG and Level’s aspirations than a ringing endorsement of Norwegian’s attempts. In any case I’ve said it before but a market where hundred pound notes were being sold for £50 would be wildly popular but not particularly profitable!

Norwgian may or may not have been unlucky. It was their decision to order the Max just as it was their decision to opt for RR powered 787s with other providers available. If the model is not robust enough to be able to withstand shocks (and yes COVID is a rather big one but the point still stands) in an industry known to lurch from one shock to the next with alarming regularity then quite frankly the business model is fundamentally unsound and saying “we’ve been unlucky” is unwittingly a tacit admission of this fact.

[Kirks gusset]

The maths form the 2019 Annual Report does not make much sense, but such is the ways of complex business models, based on the revenue per "head" the whole operation should move to the US. Of course we know this is smoke and mirrors. But looking at Spain (only SH) they did 34% more revenue with 17% less staff than the UK which perhaps reflects the impact of LH on the operation..
The LH operation has Never made a profit and the loss would have been more significant if the ground services and other resources were not shared between LH and SH.
The market for LC LH maybe does exist, but is not feasible when the debt ratio is more than 10 times the industry average.

Revenue Per country/Headcount

Norway 8,643.8 Headcount 2424
US 8,313. headcount 4 514
Spain 6,005.0 Headcount 1697
UK 4,458.1 Headcount 2026
Sweden 3,430.4 Headcount 733
Denmark 2,976 .6 Headcount 734


The board was still debating whether to keep the company’s long-haul routes or return to a Europe-only model. “We have discussed it on the board and ... will continue to do so going forward. but there is definitely no decision,” said Mr Schram.

Norwegian Chief Financial Officer Geir Karlsen told Reuters on Thursday that it plans to give assurances in the courts that it can get access to sufficient capital by the end of February but that the process could be drawn out further.

Justice Michael Quinn, presiding over Friday’s update, said that while it was a complex case that may not reach an outcome in time, the parties should not unduly assume it will be extended beyond the 100 days.

He also encouraged the examiner to share the company’s plans with lessors whose aircraft may be returned as a result as early as possible.

A lawyer representing some creditor lessors including Aercap and BOC Aviation complained that the information put before the court so far was “somewhat sparse”

[Maxfli]

I would disagree with a few points here:
BA didn't just look at the books and walked away..........

A Spanish company called IAG did.

[Luke258]

Maybe read the sentence that followed?

[davidjohnson6]

Bankruptcy protection has been sought in Spain

[Kirks gusset]

Norwegian already knew the Irish Judgement would be recognised in Norway, it is possible the same case exists for Spain,
If they hold "assets" in Spain in the form of shares in the subsidiary company, it could possibly be looked at, although the process there tends to heavily favour the creditors and the success rate of "restructuring" is typically less than 10%
They already converted "crew service debts" to equity, quite what happens after the ERTE scheme ends 31st Jan is anyones guess, perhaps employees can move to Fogasa.
Spain is an important market for them, if they can keep this operation and the Norway home base, dump LH they may well survive.

[aless85]

You know so much.. I do not know why you are not the CEO of Norwegian...

[Kirks gusset]

On the contrary "we" are as much in dark as anyone else! but as they say "time spent on diagnosis is rarely wasted" . The facts of this restructure and the legal background can easily be found for those seeking them;
https://www.irishlegal.com/article/high-court-examiner-appointed-over-low-cost-airline-norwegian-air-with-only-six-planes-in-use
Been 11 months of false hope for many crews and suppliers, even the Irish Examiner is requesting the airline comes clean with the lease companies..
https://www.lifeinnorway.net/norwegian-long-haul-flights-unlikely-to-return-if-airline-survives/
Like it, lump it,

https://www.ch-aviation.com/portal/news/98357-norwegian-converts-more-crew-service-debt-to-equity

[NEDude]

Vokes55

I know for a fact that Denver and Chicago to name two were massive loss makers, Singapore (not US obv but proves the point) was so successful it lasted a matter of months. The rest were marginally profitable in summer and a big drain in winter, similar to low fare long haul full stop. IAG took one look at the books and walked away saying “nah thanks”. That’s the reality.

Singapore lasted more that "just a matter of months", it lasted from September 2017 to January 2019. Much of the issues with Singapore was mismanagement of the cargo contract. Flight deck crews were not properly informed of how the contract worked and would dump cargo to carry passengers and/or bags when it was cargo that was paying the bills. When the cargo agent canceled the contract because of reliability issues, the Singapore route was axed. It was only after the route getting axed that flight crews were given proper guidance on prioritizing cargo over passengers. This was a prime example of the type of mismanagement that occurred at Norwegian, one hand often did not have any idea what the other hand was doing. Some other examples were recruiting and training crews like crazy, only to have them get stuck at the line training bottleneck. Many crew members would sit for six months or longer, with full pay, without any line training. Many pilots had to be sent back to the sim during that time. Virtually the entire FLL based pilot group sat around for over a year, on full salary, while trying to get the EASA license conversion figured out. During the NUK start-up in LGW, there were some cancellations because they could not find enough NUK crews, while there were several NAS crews sitting around on standby in LGW, unable to cross AOCs. As NUK got larger in LGW, and the NAS operation wound down, the opposite occurred, with some NAS flights being cancelled for lack of crew, while several NUK crews were sitting around on standby. So for almost a year, Norwegian was operating two different airlines in LGW, with two separate management staff (two base captains, two chief cabin crew, etc.), but with zero ability for the two airlines to interact with each other. These are just a few examples of the massive mismanagement that was occurring at Norwegian.

IAG did not walk away from Norwegian. IAG made two offers, and Kjos rejected them, foolishly believing them to be too low. It turns out the offers were significantly more than fair, and the rejection of them is what ultimately forced Kjos out of Norwegian (no...he did not retire of his own accord, he was asked to retire by the board and many of the other large shareholders). IAG's plan for Norwegian was not to operate it as a LCC, but more to position it as a mid-level type of carrier, similar to how it was operating Aer Lingus. The plan was for three levels of airlines, BA and Iberia being the full service, top end carriers, Aer Lingus and Norwegian to be mid level airlines with some long haul, with Level and/or Vueling to be the LCC carriers.

"IAG had bought almost 4% of shares in Norwegian and had been in takeover talks, with two tentative offers rebuffed." (https://www.theguardian.com/business/2019/jan/29/norwegian-airline-rights-issue-shareholders-iag)

[A320 Glider]

NEDude is correct.

The LGW SIN route was supposed to be a proper money maker for their LH fleet. But it looks like the comms between company and flight deck was the reason for the failure. Also the flight SIN LGW was regularly delayed which I am sure added to the list of reasons why the cargo company tore up the contract.

Everybody knows Norwegian can fill up a 787 but that does not mean they are making profit.

[krismiler]

Singapore is a transit hub and Norwegian had no feeder traffic from there. SIA had numerous connections available and QF went onto Australia or had Jetstar for the SE Asia market. Norwegian competed against SQ, BA and QF for pax wanting direct flights and were slightly cheaper even after adding baggage a a couple of snacks, the problem was that you could fly full service for a similar fare if you took a connecting flight with the usual suspects and unless your origin/ destination was SIN/LHR you'd need a connection anyway.

[NEDude]

That may very well be true if you are relying on passenger traffic to support the operation. For Norwegian, the route was more dependent upon the cargo, which would have made the route successful, but failed to communicate that fact to the front line employees who operated under the impression that passengers should have come first on that route. It was only after the route was cancelled that management decided to communicate to the employees that cargo should have been prioritized. Also they failed to invest in a decent load planning operation, instead outsourcing to the lowest bidder, with the unsurprising results. Just one of the many things Norwegian management screwed up.

[maxpeck]

Best description of Norwegian I have seen. The left hand didn't know the right hand even existed.

[Vokes55]

krismiler

As has been mentioned in the two posts directly above yours, passenger numbers weren’t the issue for Singapore. When it was culled it had one of the highest load factors on the network. It was the fact that loads were good that cargo ended up being offloaded when performance was restricted.

[krismiler]

The route had one of the highest load factors on the network and cargo in such amounts that it had to be offloaded and they still couldn't make money ????

[Vokes55]

You’re obviously not a pilot, so will almost certainly fail to understand the basics of aircraft performance and it’s limitations so I’m not going to bother going into the detail on that. All I was pointing out is that your post about being unable to compete for passenger numbers due to this or that was simply not the case.

[Rwy in Sight]

If an aircraft achieves such occupancy maybe the airline should raise the fares (both for pax and cargo).

[Skipness One Foxtrot]

The route had one of the highest load factors on the network and cargo in such amounts that it had to be offloaded and they still couldn't make money ????
The fares were brilliant, pitched at way below BA or Singapore and consequently I was very tempted to book it myself, but yields would have been through the floor as those fares were consistently low across the extended period, certainly unsustainable in market.

[FullWings]

London-Singapore in normal times is a highly competitive route, so nobody was creaming it with huge margins. If you’re substantially undercutting the prices of everyone else, while operating an expensive aeroplane, don’t expect much in the way of returns...

[andrasz]

Been beaten to death a few times on several threads. The low-cost/low-fare model is simply not sustainable for longhaul. On shorthaul, if done with discipline like RyanAir or Wizz, it is possible to achieve a good 50% cost advantage over the full service network model. High aircraft utilisation, secondary airports, local crew bases (no overnighting), simple product and strictly no connecting traffic (except on two tickets at passengers risk) can achieve this. On longhaul much of the cost advantage disappears (network carriers also squeeze out 16-18 hours from the longhaul fleet), due to stage lengths cannot do away with hotel layovers, fuel is a much larger % of total cost, etc. On the revenue side, the low-fare model is able to induce a substantial amount of discretionary spending on shorthaul (who cares for the 20 euro airfare if one can save twice that amount on five beers on a friday night...), whereas on longhaul even the lower fares are above the discretionary spending threshold for the majority of customers, so traffic will have to be captured from others rather than inducing additional travel. By forfeiting premium service, the most stable part of longhaul revenues are missing. Network airlines play with offering low fares for a one-stop product while charging premium for the point-to point, meaning that there will always be a full service network airline matching the lower point to point fares through their hub, eliminating much of the fare advantage, and on longhaul a transfer does not add substantially to total journey time. It simply does not add up, period.

[srjumbo747]

andrasz. At last someone who knows what they are talking about!

[Vokes55]

Except he neglected to mention that the lack of short turnarounds on long haul networks enables cargo to be carried, which covers a significant amount of the cost of the operation, as it did for Norwegian. Virgin, BA and TUI have proven that a 787 can cross the Atlantic with ZERO passengers and still make money.

As has also been said to death, a certain proportion of the Norwegian long haul network, specifically out of LGW and Oslo, was profitable.

He also used ‘Wizz’ and ‘discipline’ in the same sentence, which is where he lost me. Wizz have been anything but disciplined in the last year or so.

[AQUAPLANE1]

Airlines can currently fly across the atlantic with no pax because freight charges have increased massively.. Under normal times that certainly isn't the case...!

[NEDude]

Vokes55

Yeah, the idea of "low cost long haul doesn't work" is just lazy. There are some segments of it that worked, and actually worked well. Norwegian was just unorganized and undisciplined in the way it implemented its operation, and went overboard on its expansion. If Norwegian had operated strictly to LGW and OSL to a handful of destinations to the States, with a fleet of 10-12 787s, and invested a bit into a more robust operations center, it could have worked. But instead they ordered close to 100 787s, tried flying anywhere and everywhere, and tried to do it out of an operations center more suited to a small regional airline instead of an airline with 140 airplanes and a global presence.

[Vokes55]

AQUAPLANE1

In normal times there are plenty of routes across all airlines that are only viable due to their carriage of freight, which covers the bulk of the cost of the operation. And whilst the freight charges have gone up, the levels of freight actually decreased during the height of the pandemic. Key industries like car manufacturing, which is the bulk of a lot of transatlantic cargo routes had a massive decrease in demand throughout the spring and summer.

Don’t underestimate the importance of cargo to all long haul operations. Saying low cost long haul doesn’t work is short sighted when there could be £100k+ worth of goods in the hold.

In the case of Singapore, the route was profitable largely due to the cargo carried. Unfortunately due to take off performance issues, the cargo was often offloaded instead of passengers and baggage, which led to the company losing the contract. Poor management yes, proof that the concept doesn’t work, absolutely not. I believe they learned their lesson from this and capped passenger numbers on the Buenos Aires to Gatwick route which was also often performance limited with a sizeable cargo load.

[FlightDetent]

Wizz have been anything but disciplined in the last year or so. He meant that WZ discipline their resources, and that is not far from a valid description of their core-employee relationship 2020 edition.

[andrasz]

I don't know where did this myth of cargo being a prime revenue source on longhaul flights originate, but it is just that, a myth. In the best of times (and let's ignore the current unprecedented and certainly transient situation) generic cargo rates from Singapore to Europe were around $2 per kilo, roughly half of the yield of an average economy passenger counted at 100kg with bags. Passenger aircraft are optimised for a maximum passenger load (plus baggage), so there is not much cargo space left with a full pax load at the edge of the range envelope, 3-5 tonnes at most. Add to this the variable headwinds, on a 14 hour sector to Europe the winter winds will reduce cargo capacity to nil (and sometimes even reduce pax load). With all this variability and uncertainty, critical cargo shippers will not chose passenger airlines, they will use dedicated freighter services of which there is plenty. Pax airlines are left with non-time critical generic cargo, which is good to fill underload if there is not a full pax load, but it is not a stable revenue to base a route on. Also this cargo is one-way only, on Asian routes the east-to-west cargo flow is about 10x the volume of west-to-east (where the winds would permit a higher load), thus usually pax flights carry very little cargo eastbound (cargo airlines manage this by operating continuously westbound round the world services).

PS. I'm no fan of Wizz, but I have to grudgingly admit that they are very disciplined when it comes to sticking to their cost model. Their adventure this past year with routes is a different story, we'll see what comes out of that.

[M.Mouse]

Passenger aircraft are optimised for a maximum passenger load (plus baggage), so there is not much cargo space left with a full pax load, 3-5 tonnes at most.

As with all sweeping generalisations you are not entirely correct.

I listened to a presentation by Rod Eddington where he talked about why he loved the B777. He directly contradicted some of your assertions.

But then he was only the CEO of a large and successful airline so what did he know?

[zomerkoning]

I found the following analysis quite interesting, and although it leaves out some key components (such as freight, which is a very fickle business at the best times), it does have some good research behind it.

https://www.youtube.com/watch?v=fTyUE162lrw&t=790s

[andrasz]

But then he was only the CEO of a large and successful airline...

Large, yes. Successful ... ? In all fairness I think his obsession with costs did more damage than good on the long run. I have not met him, but have dealt personally with both his predecessor and his successor, it was two different worlds (as was the experience on-board).

I agree generalisations don't always apply (they do in the case of Norwegian), with the relatively short transatlantic stage lengths out of LHR the T7 did have a substantial cargo capacity, as it was built for 10+ hour routes. However the cargo market was very different in those days, 20 year have passed and specialty operators have in the meantime captured most of the premium market. BA was/is in a special position with slot constrained LHR (which is the reason it survived to this day, not because of any stellar corporate performance) which does change bits of the equation. It all boils down to network which drives everything else, and I agree no two airlines are the same.

[fulminn]

Norwegian is going bust because is managed by amateurs. Dot. Talking more than this is a waste of our time. Been both and in nas and fr, Is like night and day the way operations are organized.
fr is at top level of industry efficiency, while Nas is runner by Norwegian guys that believes to know it better than a 500+ 737 operator

[Joe le Taxi]

In a nutshell! (and a cautionary tale of where an (ex)pilot thinks they know how to run an airline .. and not the only one, at that)!

[Avenger]

Not really optimistic regarding LGW recovery in any shape or form, the current fares advertised on the US routes from April for NAS are about 35-50% more than the offering BA have as a full service airline. Hubris and arrogance have put us in an "unrecoverable jet upset!"

[andrasz]

...and a cautionary tale of where an (ex)pilot thinks they know how to run an airline .. !

Couldn't agree more.

Many moons ago I was called to a high office at an airline that is now history. On most flights I was invited up front, and after doing away with niceties and distractions like takeoff and landing, the conversations usually revolved around how the airline should be run, with me mostly doing the listening. After a while I took on the habit of offering helpful advice to the flight crew, like a little bit to the right, now a little to the left... The smarter ones took the hint :)

[Elephant and Castle]

As a pilot I often get called by the cabin crew telling me there is a funny noise, a funny smell, a peculiar vibration, etc. I always listen carefully. Most of the time is nothing but I always listen and try my best to avoid the "buff, what now? what do they know..." You never know when you might learn something quite important. I was also at high office at a couple of airlines once, I applied the same logic then and listened to the crews carefully. Among the very abundant chaff there was plenty of wheat, I found. Maybe that is smarter than sitting there basking in your own smugness.

[NEDude]

andrasz

You prioritized passengers over cargo ("so there is not much cargo space left with a full pax load, 3-5 tonnes at most."). If the order of priority is pax+bags and then fill the remaining available lift capability with cargo, it will loose money as you claim. If the order of priority is cargo, then fill the remaining lift capability with passengers and bags, routes more often become profitable, or at least break even. This is why Norwegian's lack of communication to its front line workers was so fatal. Crews and operations folks would refuse cargo to accommodate passengers and bags, when the route was opened on the basis of the cargo contract. This is why the route was closed when the shipping agent cancelled the contract.

It has been said more than enough times, and validated in financial reports, that there were aspects of Norwegian's long haul operation that worked, and worked well. LGW to the US, and OSL to the US was making money overall (and I believe, but am not positive, that OSL/CPH/ARN to BKK was strong as well). LGW to South America, and CPH/ARN/CDG/AMS/BCN/MAD/FCO to the US were money losers. Norwegian expanded too much and too quickly, and the debt incurred could not be sustained with trying to carry all the unprofitable routes. I strongly believe if Norwegian has expanded a bit more slowly, and only operated 10-14 787s with limited routes, it would have worked.

[MissChief]

Ignore the "smugness" jibes, Andrasz. Unnecessary.

You clearly understand more about running an airline than us pilots....(WW was an exception, but he was never a career pilot).

Top management in the multi-dimensional and fast-changing arena that is the airline world requires a totally different skillset from that used by the experienced captain/trainer/Chief Pilot. As a short/long haul pilot myself, I have been bored silly listening to the 'wise' pontifications of colleagues about what must be done to run the airline properly. The only carrier I worked for that survived in part was bmi. (Swallowed up by BA/IAG) The rest fell flat on their faces, for a multitude of reasons.

(Never worked for FR....they are the likely European survivors of the present crisis, along with some legacy carriers.) As for the rest, EJ included, disappearance and subsequent reappearance in a different size and form is likely. Sad times indeed.

[andrasz]

You prioritized passengers over cargo...

No, you misunderstood. I was saying cargo pays about 50% per kg. than even low fare passengers. Yes, there is premium cargo, but only westbound, none eastbound. On the other hand passenger flow is pretty much balanced (most of those who go tend to also return, one-way is a minuscule component on longhaul). Simply put, there is no way a passenger airline can priorize cargo on a long Asian route without pissing off a lot of customers, and one mistreated passenger will put off another 100 from choosing that airline. Bad internal communication may have made matters worse for what was a bad choice in the first place.

Another thing is that it is a very tricky exercise to say whether this or that route made money or not. A large component of costs (around 30-35% on longhaul, higher on shorthaul) are allocated fixed costs that are spread based on some arbitrary measure (flight hours, seats, pax numbers, length of the chief purser's hair, whatever). Depending on the method used for the allocation of fixed costs and overheads, route profitablity changes dramatically, and it is the most common fallacy of inexperienced airline management to cut 'unprofitable' routes. That usually only results in the fixed costs being spread over a smaller base, making formerly 'profitable' routes unprofitable. Inversely, chasing growth it is easy to make more established routes profitable by adding loss making ones to spread the cost base. Overall, airline profitability can only be measured on a full network basis (that of course does not preclude measuring and ranking routes on a contribution basis, but even there connecting traffic, if it exists, muddies the picture), and I have yet to see numbers that support a low-fare model for longhaul operations.

[Kirks gusset]

Some observations are valid, some not so applicable. If the fixed cost relates to a set number of rotations of profitable routes it makes sense to amortise that cost base, on the other hand, if additional non-profitable rotations are added it may result in additional staffing and overheads and thus the previously stated "fixed costs" are now increased dragging down the overall group profitability. More frequent schedules on popular routes does not automatically lead to more profit as this model demands high pax numbers/ freight or combination of both. Having said that, even with full pax and headwinds a 787 can easily cope with the routes Norwegian were operating and still allow a modest amount of cargo, In normal weather conditions I've never seen a 777 or 787 with no underload. The issue appears to have been the lack of a proper load optimising system, communications and bad cargo contracts. If cargo timing is not critical then eventually it all gets shipped.
Getting back to the LC LH model, while some routes may have been revenue positive, taking the whole operation it was a financial disaster, bit like running a supermarket with one profit making product, eventually the overheads will kill the company. Some posts elude to the ticket pricing, frankly, compared to the majors it's not cheap and the most successful routes are those on which they created demand rather than try and poach customers from others.
You cannot borrow your way out of debt, this is what is being attempted now.

[ATC Watcher]

An extremely interesting and educative conversation from the beans arithmetic's world that many of us are not familiar with. Thanks you for that.
A question on belly cargo on board pax a/c if I may, :, Andrasz, you mentioned 2 $ / Kg on some LH routes, but at this rate what kind of profit margin the airline gets considering the fuel cost penalties to to carry that extra load on a 10+ hours leg ?

Back to Norwegian LH future. A friend of mine is Capt 787 with them was just sent back last week for retraining on the Sim with a lot of other colleagues after months of inactivity together. So looks like money is still there to do this and the plans seems to be to restart soon.

[andrasz]

you mentioned 2 $ / Kg on some LH routes, but at this rate what kind of profit margin the airline gets considering the fuel cost penalties...
The ~$2/kg is specificly Singapore (or Bangkok) to Europe for generic cargo (or rather it was some years ago, I'm not privy to current rates, but as passenger fares stayed relatively stable on that route for the past 10 years or so, I assume so did freight). The fuel penalty would be minuscule, in the few cents range per kg, not material. This translates into a revenue of $200 for 100kg of freight, which is roughly the weight of a passenger with baggage. Passenger yields on that route would be in excess of $400 for economy passengers. It is a pretty good rule of thumb that on high density longhaul routes with over 20 daily frequencies generic cargo yields are roughly half of passenger yields per unit weight. Once passengers have paid for the flight, any cargo to fill available underload goes directly to the bottom line, which of course drives the yield down, especially at times when there is less cargo than available belly space. There is of course better yielding cargo, though seldom paying more than passengers. However that comes with the caveat of guaranteed space, which is very difficult to manage on primarily passenger services with the unpredictable passenger and baggage loads that change up to the very last minute. KLM solved this problem by operating combi aircraft with a dedicated cargo capacity, supported by long-term contracts primarily with the dutch flower industry and a number of large manufacturers. However they too found that having dedicated freighters for the cargo business works far better than mixing passengers and cargo.

[Birgitte Andersen]

Hi ATC Watcher.

Are you 100% sure this friend of yours is a pilot with Norwegian LH?

No crew has been asked to return to work, no crew is yet being retrained and no internal information regarding any such events has been issued.

So maybe this friend of yours works with a different company?


Out of curiosity where is your friend based?

[ATC Watcher]

He is based in Paris CDG

[Locker10a]

Lots of LGW crew are under the impression they’re going back to work this side of summer, couple 787s positioned to LGW today apparently

[SWBKCB]

If they did, none of the spotters noticed...

[Heads Out]

Meanwhile up the road at Heathrow a barely whispered New Year’s Eve announcement as BA gets a UK taxpayer backed £2 Billion loan. Guess Willie Walsh must be fuming that the government has dared to step in and support a UK airline. Yeah right!

[Vokes55]

andrasz

Your theory would hold some merit if the figures weren't so out. Looking at BA's fares (to avoid any ignorant comments from others like "well Norwegian should just charge more then") from LON-NYC, the bread and butter of Norwegian's long haul operation, the revenue per passenger once government taxes and airport fees have been taken out is more like $68 per passenger per sector. A far cry from $400, and using your own cargo price estimation, about a third of the $200 per 100kg, assuming the costs associated with handling cargo and passengers are similar. Of course the average revenue per passenger would increase once you include higher fare brackets and cabin classes, but these aren't the passengers that are going to be sacrificed for the carriage of cargo.

The myth of cargo being a prime revenue source may be a myth on some routes, with some airlines. But for airlines like Qatar, for example, cargo is the reason they're able to operate such a high number of frequencies to offer optimal connecting opportunities for passengers. Qatar don't (pre-Covid) fill six widebodies per day into and out of Heathrow for around 45 of 52 weeks of the year, but they do regularly shift over 100 tonnes of cargo per day in each direction. It's not a case of waiting for the last bag to be checked in and then working out how many kg of cargo they can load, the airlines will be able to model an estimated passenger load a couple of weeks in advance and artificially adjust capacity above and below the floor as required. A vast amount of long haul routes all over the world rely on cargo to be viable, it's not just a few extra dollars to the bottom line.

Going back to Norwegian and Singapore, offloading bags and/or passengers would've been far more beneficial than offloading cargo, and this has been covered a number of times. As you well know, being offloaded as a passenger is rarely a traumatic experience that results in "100 lost customers per mistreated passenger". There's usually plenty of volunteers to be offloaded with the incentive of 600 Euros in DBC, a free hotel room and a seat on the next flight. Nor is a missing bag going to cause the airline to lose 100s of passengers. All airlines have bags that don't end up on their intended flight, intentionally or otherwise. I've had Iberia misplace my bag three times on the exact same widebody flight from Madrid to LHR, including once when no bags at all made the flight - bumped off in favour of the vast quantities of fresh fruit from South/Central America.

With that being said, if your argument was that low cost Ultra long haul doesn't work, I'd tend to agree. Singapore, which is essentially ultra long haul, was always going to be a marginal route with performance issues. Another factor at play in Norwegian's case was that most of the flights departed from Singapore in the late morning, when temperatures are typically 3-4 degrees warmer than the "traditional" European departure bank around Midnight. Not only did the few extra degrees add to performance issues, but the daytime airway closures in India add significant track mileage to flights operating Westbound at this time of day. They simply didn't have the aircraft availability to operate evening departures in both directions, not helped by the well publicised RR issues. And that's before you consider the volatile airspace the route uses, whether it's Pakistani airspace closing, Iran's airspace restrictions, Russian overflight or, if all that fails, the near impossible task of getting a Saudi overflight permit at short notice. Low cost to Singapore was probably always doomed. Low cost to New York, Los Angeles and Orlando on the other hand...

[Birgitte Andersen]

He is based in Paris CDG

Oh, okay. So you persist.

This leaves basically three different scenarios.

1. You are making stuff up.
2. Your friend is making stuff up.
3. Your friend paid for his own LPC and you thought that meant he had been recalled.

I suppose you have no interest in number 1., I suppose your friend has no interest in number 2., so lets conclude your above post was all a big misunderstanding. But just to make it crystal clear - NO LONG HAUL CREW HAS YET BEEN RECALLED.

[3Greens]

well, they”re flogging tickets CDG-JFK in March so I guess it’s not out of the question to start the long process of getting crew retrained! After so long it will entail a lot more than just a two day LPC so this kind of lead in is probably about right..

[ATC Watcher]

Dear Brigitte. I do not know who you are , it is one of your first posts so I'll be gentle.
Replying to your questions:
I do not makes things up to post here . A lot of people here by now know who I am and what I do.
My friend is not making this up either we fly together in the same flying club since decades .
All I said was that he and other B787 crews went to the sim to revalidate . That is a fact . When and how and where to they will fly again I do not know and this is what I wrote :So looks like money is still there to do this and the plans seems to be to restart soon. but as 3 greens mentioned they are currently selling tickets on the web for March to JFK. ( from 28 March for 470 Euro return, I just checked ) . You can draw your own conclusions. .

Last point, I have no horse in this race as the British say. I do not own shares or whatever and even never flew with them , I so just have a friend flying for them . I am here because I find this thread very interesting as I learn a bit how an airline internally functions, and post from people like Andrasz regarding finance are very educative for me. Nothing more .. I can see that the subject is more sensitive and personal for you and I sympathize. Lots of people are going to be severely affected this year by the crisis . I am one of the lucky ones, having retired before the crisis.
so I wish you good luck and really hope to see Norwegian pulling out of this mess. .

[Birgitte Andersen]

Dear ATC Watcher.

If what you meant was simply that your friend went back and did re-training (Number 3 above), I apologize. Your quote "So looks like money is still there to do this and the plans seems to be to restart soon.", made me (and others) believe you implied the company (Norwegian) paid for your friends training. However, if we can agree to the fact that your friend paid for his own training, and that Norwegian has not recalled CDG pilots and paid for their training - let's call it a misunderstanding - and I apologize for my part.

Respectfully.

[Diavel]

It is well known that Norwegian earned their money on Norwegian domestic flights and on flights from Scandinavia to southern Europe.
Overall the longhaul branch was operating with massive losses, for the following reasons The management had no idea how intercontinental flights operate, it is a completely different ballgame than short- medium haul operations.
The mistakes they made regarding longhaul ops, were to utilize a new completely unproven and very expensive. aircraft
with no business class.
Their cargo. operation was a complete disaster.
As all the money they were earning on the good short- medium haul routes were used cover the losses from longhaul , forcing the company to continue a completely unsustainable expansion, just to generate some cashflow, among other things leading to the catastrophic Argentinian adventure.
Some will say that a few of the longhaul routes from LGW were making money, and that may be true, but not nearly enough to cover the massive losses from the rest of the longhaul ops.

The only one who has ever had any success with low cost longhaul was Sir Freddy Laker with his Skytrain, until the operation was killed by BA and other airlines.

There are a few other lowcost longhaul airlines that were operating pre corona, They were also not doing that great, but most of them has business class, and they are either owned by legacy carriers, or other large companies that have other revenue streams.

Norwegians way of low cost longhaul was always doomed.

[andrasz]

Vokes55 I don't know about BA average yields on the NYC route, but $68 Euros sounds a tad low even with fees and taxes deducted. Then again, the last time I have seen real numbers from them was 10+ years ago, and the world did change, but fundamental airline economics haven't. One can argue that LHR-JFK is really on the borderline of being a longhaul route (the fastest eastbound I ever did with a good kick in the rear by the jetstream was something like just over 4 hours), and with some cunning and finesse the low-fare model may actually work. The figures I used were all for the Singapore to Europe routes (not really material which, though the UK is on the long end). Having a lengthy exposure to both the ful service and the low cost side of the industry, I do stand by my original statement that by and large the low fare model is not viable on routes over six hours. However I'm always open to being proven wrong, would love to see those figures and calculations.

[Downwind_Left]

Vokes55

Sorry but that argument still doesn’t stack up.

Air Cargo News (https://www.aircargonews.net/data/air-cargo-demand-dips-in-november-but-rates-rise/) puts the current average air cargo rates at $3.30/kg (in a world where cargo yields are higher than normal) While a quick online search has Singapore-UK being offered at between $2-$4/kg. So let’s take the top end at $4/kg for cargo.

You need to offload a passenger to uplift an extra 100kg of “very profitable” freight.

Cost of passenger offload = EU261 compensation (€600)+ Hotel+Subsistence+Potential loss of not being able to sell the seat the next day
At current rate €600 is a little over $700, plus let’s say $150 for hotel and subsistence claims. Can’t quantify the loss of revenue for a possible last minute seat sale on the next flight. But absolute minimum cost of passenger offload $850.

Revenue from freight = $400

Doesn’t make much sense from a revenue perspective to cost yourself $850 to “earn” $400

And in my experience airlines don’t offload passenger baggage for cargo either, as that quickly gets expensive. Luggage has to be forwarded on to final destination, possibly involving connecting flights and then couriered to home address or hotel. Plus passengers are normally offered expenses to buy some replacement items.

When my job has involved dealing with cargo in an operational capacity, on high demand cargo routes, there was an agreed minimum cargo uplift offered by the airline in the freight contract. When there was additional demand we would get a phone call/email/SITA on the day of departure from cargo, once the passenger figures were known and we could calculate a real world flight plan, to ask for how much additional cargo we could accept. And the answer was almost always yes with an increased figure for them to work to.

I don’t recall us often not being able to accept the agreed minimum cargo uplift, except in extreme weather contains. Was rare.

This again looks like another case of Norwegian getting it wrong. They offered more cargo capacity than the aircraft would routinely carry based on performance and en-route restrictions, and lost the contract as a result of regularly not being able to accept the agreed freight uplifts. The idea of offloading passengers and baggage to try and save a flawed freight contract would have been a commercial non-starter.

[FlightDetent]

Downwind_Left Finally some sense. The original outlined idea above, off-loading bags or pax to keep the lucrative cargo customer served, did not make any sense cashflow-wise. Not to mention additional overheads, PR and loss of customer confidence.

I'm not really disputing anything voiced previously, just wanted to thank you for re-aligning the puzzle pieces. Restrict pax load before selling the tickets, in order to preserve freight capability? Well, perhaps. IDK, not a yield manager. But to offload at the last minute sounds like a trick from the techcrew such as myself.

[Stick Flying]

But wouldn't this all depend on the contracted cargo allowances, or more importantly, any penalties payable for being unable to carry the contracted load? From past experience, the penalties for default are significantly more than the original contract sum.

[Avenger]

Racking my brains here, normally the dispatcher advises the crew about the cargo before the final fuel figure is calculated for the estimated ZFW in order to avoid any last minute issues. I can't think of any occasions of denying pax, left baggage behind in the past, but not PAX, except when overbooked or families can't be seated according to the requirements e.g UMs or special assistance.
By the way, most LGW LH destinations are being advertised from 2nd Qtr, doesn't mean we will fly again.

[Locker10a]

If they did, none of the spotters noticed...


Literally going off posts I’ve seen on Facebook from some of the staff, I’ve not actually seen them myself

[Vokes55]

Downwind_Left,

I never said that it’s a common practice for on the day offloads of passengers and/or bags, for the reasons you described. The majority of routes (worldwide, not Norwegian specific here) that have a large regular cargo uplift will have onboard capacity restricted in advance, either for every flight with a contracted minimum cargo capacity, or based on estimated loads a couple of weeks or so in advance.

One thing that nobody is disputing is that Norwegian handled the Singapore route badly. If the cargo was keeping the route profitable, passenger capacity should’ve been restricted in advance - I believe they did learn their lesson on this one and started restricting passenger capacity on the EZE route, I’m sure one of the NUK drivers on here can confirm or deny that - however, much like how airlines overbook flights on the premise that 19 times out 20 there are sufficient no shows, sometimes it doesn’t work out on the day and something has to be left behind, particularly on a performance limited route like SIN-LON, where something as small as 10-15 knot wind speed increase in the strong jet stream over the Sub-continent could require an extra 2 tonnes of fuel.

Norwegian should’ve taken the hit that you outlined with a few passengers, which would’ve cost them a few quid on the day but might’ve ultimately saved the cargo contract. Also worth remembering that if the performance is tight, offloading bags and/or passengers is a far more refined way of getting the numbers below the limiting factor than offloading an entire pallet of cargo. There’s plenty of fat in the performance figures, there’s nothing wrong with departing on MTOW to the kg.

Also worth noting that airlines expect a certain number of EU261 claims per year and will adjust ticket prices to cover this inevitability. It’s only when the number of claims becomes excessive that it becomes a problem for the airline, and offloading a few passengers voluntarily with this incentive would barely scratch the surface of this contingency “fund”.

[MichaelOLearyGenius]

Airlines have contracts with hotel chains to handle their offloaded/delayed pax. Eg BA will pay Hilton £Xm per year to handle their pax world wide so it is a fixed cost for the airline. An offloaded pax literally costs the airline anything as the room has already been pre-paid.

[FlyingStone]

Who pays the EU261 compensation?

[Vokes55]

As long as the number of claims isn’t more than mitigated against, every single passenger as part of the ticket price.

[andrasz]

Airlines have contracts with hotel chains to handle their offloaded/delayed pax.

Sorry, but this is just plain wrong. They have contracted rates with individual hotels, fixing the rates IF a room is needed (that usually includes crew accommodation as well, to provide sad hotels with predictable revenue), there is no downpayment. The big hotel chains are just marketing and sales fronts, but except for a few flagship properties the hotels themselves are individual franchise businesses setting prices and conditions themselves.

[ATC Watcher]

Dear ATC Watcher....... if we can agree to the fact that your friend paid for his own training, and that Norwegian has not recalled CDG pilots and paid for their training - let's call it a misunderstanding and I apologize for my part
.
Yes it was, I just checked, and he did pay himself for his revalidation, it was me who assumed it was paid by Norwegian. He expects to fly again in April but he did not get any firm confirmation himself yet. My own apologies for the misunderstanding.

[BSD]

Having watched the YouTube presentation recommended by Zomerkoning (post 1053) about Long Haul and low cost, I'd say Norwegian's future survival will not be well served by long haul 787 operations.

Interesting viewpoint, seemingly well researched, well explained, served to demolish many of my per-conceived notions about airline profitability. A sobering watch.

Good luck to all in Norwegian.

[Kirks gusset]

Even if furloughed the company should still do the validations as part of the employment contract. I can understand paying for a revalidation if made redundant just to preserve the privileges of the licence, but if the company is planning on using the pilots they need to do an OPC in any event and would probably combine this with the LPC.

[zerograv]

Certainly it can be combined, or include, an LPC, IF the rating is still current.
If the rating has lapsed then the company can no longer fix the issue, unless they are also an ATO. Not many airlines are also ATOs. Once the rating has lapsed one as to go to an ATO. Courtesy from EASA.

[Kirks gusset]

As far as I am aware Norwegian has an ATO (in some part of the complex model) . Airlines would normally not allow rating to lapse in order to avoid the "training as required" rules by EASA. If the Pilots are type rating lapsed either the Airline has given them the bums rush or they have been told it will all be fixed when/if they come back online, in any event there is no need for an "employed pilot" to have to arrange their own revalidation unless they feel the end is nigh and they want to keep current for job seeking purposes, which given the situation at NLH is highly likely. An OPC may be incorporated in an LPC, as you state if the rating is expired then the ATO must determine the training requirements.

[FlightDetent]

For the unaware, a rating lapsed for no more than 3 months needs, apart from the checkride itself,
- minimum of 0 (zero) re-training (or more as determined by the ATO Head of Training).
That is explicitly spelled out in the relevant paragraph of the regulation. With the normally allowed buffer of 3 months prior to annual expiry, one could go 15 months in between the licence check simulators.
Thus if the yearly validity is expired less than 3 months, there no immediate need to disjoint everything.

Basically, the regulator says: Until the official expiry it's the airline's playground,but in case its lapsed then out of the sandbox and let an independent supervisor decide and handle what needs to be done. The ATO plays an important role, through its internal quality assurance system. No longer TRE friends with pens and friendly inbreeding on the fleet.

​​​
Sorry for the technicalities.
​​​

[PitotTube]

Got an email from Norwegian saying they are operating loads of routes out of Scandinavia this summer, and also from Helsinki.

What crew will operate these flights? I hope they bring back the crew they laid off.

OSL (81 routes) - https://www.norwegian.no/tilbud/nyttar/
ARN (51 routes) - https://www.norwegian.com/se/erbjudande/nyar/
CPH (41 routes) - https://www.norwegian.com/dk/tilbud/nytar/
HEL (96 routes) - https://www.norwegian.com/fi/tarjouksiin/uuden-vuoden/

[Kirks gusset]

Reports of some of the LH fleet already being moved back to Shannon. Approx 72 aircraft potentially to be repatriated to the lease companies, although exact figures still to be confirmed.
https://www.irishtimes.com/business/retail-and-services/norwegian-air-begins-cutting-its-fleet-ahead-of-restructuring-1.4450975

https://www.aerotime.aero/26878-Norwegian-Air-flies-leased-planes-to-Shannon-airport (https://www.irishtimes.com/business/retail-and-services/norwegian-air-begins-cutting-its-fleet-ahead-of-restructuring-1.4450975)

AerCap has announced that they are working to sublet the aircraft Norwegian has leased. Now the leasing giant announces that they have also reduced their shareholding in the airline significantly in recent months.

All quiet on the Spain court protection, the process was never going to be a quick rubber stamp.

[SerriaFireFly]

I will say it's a real shame about NOR, from a flight crew/work side perspective they were excellent for improving working conditions. I'm aware of a lot of guys who moved there for the better the conditions, pay and the like. They forced other companies to improve their environment in order to retain crew.
The loss of NOR could help other airlines with new aircraft and crews being available when all this is sorted.
However NOR got themselves into a mess. Buying 737s, and later 787s, with a large number of the optional extras, no real plan of how to use all the ones they bought, and then there's the "better conditions".
The conditions seemed (at least from the outside), to be better pay, better hours, things being given to you rather than the "go get it yourself" that other European LCCs may have. I have heard some NOR guys struggling to get their base training and being paid to wait around for it.
All this added cost, this growth meant the likes of EZY, WZZ, & RYR had a much lower cost base on crew and aircraft.
The money didn't go as far when they earned it, there was no "LCC mentality" to it.
Their long haul dream will need a solid short-haul performance. Even with the MAX returning, this could be difficult.
Truly I wish all the best those at NOR, and I hope management are able to fix all that has happened.

[Locker10a]

While I can’t comment on the remuneration of the various bases, I know/knew a good amount of people in Norwegian and they all seemed to really enjoy working there, especially the many who came from Ryanair, the work environment was like chalk and cheese, so that is a pity to see go.

[midnight cruiser]

I'll give you that, my former colleagues who went there were top guys, so I don't doubt it was a very nice place to work. But that don't pay the bills, so let's not mourn it as a lost stalwart against aviation's declining T&C's, because it wasn't.

[Clop_Clop]

I will say it's a real shame about NOR, from a flight crew/work side perspective they were excellent for improving working conditions.

Can you give an example of that ? I don't believe they are in the same league as some of the ultras out there. But the same time some stories from the US earlier or Thailand would suggest they were far from being excellent in improving things also... thats why it would be interesting to hear more ...

[SSDK]

I used to work there before I decided to move to a major (to get home).

When I joined just before they began the big expansion, the conditions were not great to be honest. Weird contracts, the whole Thai crew situation and many more things like that really was a departure from what Norwegian had going for it shortly before. The old scandi-contrats from the "K-area" were fantastic.

It was quite a mess for a few years, and unfortunately the stories of a "race to the bottom" type company stuck for quite a while... Some still do as one can tell from the latest few posts. We all know how it goes with the cockpit gossip...

But - Then something happened. Unions were welcomed for all bases (after some tension from the media etc.) and things began to go in the right direction. And pretty fast actually. The salary went up, conditions improved and there was room to grow in the company with openings for training positions and so on. If you liked working extra you could get some pretty good deals in the busy summertime. 2-3K extra per day for a skipper was not unusial at all! Also, most bases had a nice stable 5/4 roster.

Was/is it as good as a US major? No- not even close. But Europe is a different ballgame on all fronts to begin with... That conversation is DOA.

Was/is is as good as a major in Europe? Depends. Better than some, but worse than others. Somewhere in the middle I would say. The upside was fast upgrade and career progression. In any case it has been on par or better than most low cost in Europe.

If you have any financial trouble working for Norwegian in any base - It's definately on you! (pre-covid)

So, renumeration etc. has been somewhere in the middle with regards to the European market for the past 3 years or so... However....

The ethos on the people side has for the most part been great. It has a very scandinavian feel and you are treated like an adult. It's reflected in procedures, the management and the overall atmosphere in the company. It has been a very nice place to work for me at least. Norwegian is by no means perfect, but it has only moved in the right direction!

I honestly think Norwegian is good for European aviation. They now have a new management team with a real sense of responsibility and above all sustainability. No more throwing things at the wall to see if it sticks. The new CEO seems to be highly praised in scandinavia and there seems to be a clear vision of what is possible within the market. If Norwegian goes, we will se the likes of wizzair, RYR and other new players go on the offensive taking up the marketshare with covid as a excuse for poor T&C's. We all know how that story ends...

[Clop_Clop]

Interesting to hear. Let's hope they manage to keep going after the restructuring but as you say there will be others more than willing to take over some of the network. More jobs like that are needed in Europe.

[jst17]

Interesting to hear. Let's hope they manage to keep going after the restructuring but as you say there will be others more than willing to take over some of the network. More jobs like that are needed in Europe.
Norwegian Crew Emailed and told LH is finished - heart goes out to all those crews

[ManaAdaSystem]

New business plan today. NO longhaul in Norwegian in the future. 2000 jobs to go.
Short haul down to 50 aircraft this year, increasing to 70 in 2022.
Focus on Scandinavia/Nordic and European routes.

[Paul737]

New business plan today. NO longhaul in Norwegian in the future.

Plus huge reduction in the 737 fleet as well. From current 92 to 50 this year and approx 70 in 2022

[SWBKCB]

Norwegian press release as reported in the "Norrwegian" thread in "Airline and Airports" Forum by Link Kilo

https://media.uk.norwegian.com/pressreleases/norwegian-to-focus-on-a-strong-european-network-3064682

[Diavel]

Norwegians longhaul operation will be closed, according to a press release from the CEO.
Ifeel very sorry for the dedicated longhaul crew, but the longhaul operation with Norwegian has always been operating with huge losses. So if the company is to have any chance of survival it is the only thing to do.
Granted that a few routes out of LGW were marginally profitable. This goes to show that the LCC concept is not a success when it comes to longhaul.

[Kirks gusset]

As predicted..and not unexpected here. Sad news for the crews ( and staff) whom have been dangled on strings, and the real shame is this was perhaps avoidable if the "old regime" had acted as the "new regime" in terms of cost control, seeing the writing on the wall with realistic growth in capacity, no business model works with a 100% capacity growth and 20% income growth.
There is no automatic approval of this plan by the Irish Courts, again worth remembering that "Examinership" is designed to protect jobs not secure assets and with the vast majority of the jobs outside Norway going this is a real lead balloon. The "Concrete interest in investment" needs to be actually secured in cash terms before exit from the examinership process and if the existing creditors are not satisfied the courts can unleash the dogs.
The good news is that the brand may survive to live another day, no pilots want to see others without jobs wherever they may be.

[FullWings]

As above, no pilot wants to hear of other pilots losing their jobs. Whenever I talked with Norwegian LH crews down route, they struck me as dedicated and pretty happy with their lot.

One of the few positives is that with the removal of loss-making capacity from the market, it might make make survival for the remaining carriers a little easier, and during the recovery it may mean more job opportunities for those on the sidelines now. All those 787s will need crews at some point...

[goeasy]

how many 787s they have? market going to be pretty swamped....

[Avenger]

About 35 unit. Same as the wine we will drink having been thrown under the bus! Amazon may want 767 skippers in USA. Was fairly obvious that the home market Scandinavia bases would be protected and the Norwegian court will approve this provided the Irish Courts don't pull the plug

[andrasz]

The only thing surprising about the announcement is that it took so long. Sorry for all those involved, but it never made business sense.

[ManaAdaSystem]

goeasy

35. They own 11 of them, the rest are leased. Used to be 37, but 2 are already gone.

[134brat]

Six engineless 787s at Prestwick currently looked after by Chevron. The implications of today's announcement go beyond Norwegian.

[golfyankeesierra]

And the RR ones will not be high on the wishlist.

[stormin norman]

Not surprised ,a flimsy bussiness model at the best of times.

[Doppio]

So in summary; Norwegian appears on the market, destroys everybody elses T&C's with their unsustainable business model, and then kills itself... Thanks for that. Good riddance to the flying tampons.

[H44]

That’s a bit harsh! I would much rather a sustainable Norwegian survived than the likes of Wizzair with their proper race to the bottom terms and conditions.

[FlightDetent]

The point in his post probably is that Norwegian grew unsustainable. And if it wasn't for them, SAIL would not need or exist, or similar.

[Luke258]

Doppio

It appears you have no clue about the T&C at Norwegian.

[hans brinker]

The T&C offered in FLL were not great. If I remember correctly $10K/month for PIC. That’s about half of what a NB PIC makes at pretty much any US carrier.

[OhNoCB]

Thoughts to the affected crews.

As a side note, can we leave comparing EU to US salaries to another thread? At this moment in time they are just not directly relatable, reasons for that can be debated elsewhere. It contributes almost nothing to this topic.

[hans brinker]

If you’re referring to my post, it was comparing the Norwegian T&C offered to pilots based in the US, to the rates of US carriers, so I thought it was relevant.

[midnight cruiser]

Kind of academic, seeing as the long haul is no more.

The short haul T&Cs are more competitive. I was tempted, and it was only the lack of job security that put me off. I hope that side of things survives and grows.

[Kirks gusset]

With this action anyone owed money by the leasing arm has less than no chance of recovering it unless any assets can be sold, but major creditors are in the poo...and so the dominos fall:

https://www.irishtimes.com/business/transport-and-tourism/high-court-winds-up-norwegian-air-leasing-company-1.4459344

As for investment in "Hybrid Instruments" once bitten, twice shy comes to mind. Cash for equity/shares only works were a stable base share price can be established, and the shares have fallen heavily in the last 24hrs. In the mean time the Gatwick crews face loosing the Furlough payments after the liquidation.

[ManaAdaSystem]

So they want to print a hexx of a lot more shares, and want their leased 737s to operate on a pay per hour contract. This in order to have flexibility in the ramp up. Who is going to pay for this? The leasing companies.
They want everybody else to pay for their own mistakes. Shareholders, banks, leasing companies, employees, states, taxpayers. They don’t want to pay for anything, just expect the debt to go away. And free money from the Norwegian Government.
Money or repo man, that would have been my answer if these aircraft were mine.

[LGW Vulture]

And where exactly would these repo'd aircraft be placed afterwards? You see, this is the issue right now. The cost involved to repossess and leave in storage is way more costly than a pay as they fly concept.

That is the dilemma for leasing companies the world has changed and one simply cannot place hundreds of machines with capacity hungry carriers any longer.

[FlightDetent]

Who is going to pay for this? The leasing companies. They want everybody else to pay for their own mistakes. Shareholders, banks, leasing companies, employees, states, taxpayers. They [Norwegian] don’t want to pay for anything, just expect the debt to go away. Isn't it a bitter reality that the company indeed will not pay as there is no money (sufficient amounts). The listed stakeholders getting looted, as unjust as it is, are the only ones you technically can take away from.

Refusing to fold a failed business, about to start over with 2.0 financed by government money ... uh oh, I could imagine the big finance behind the leasing companies pushing for that. Would not happen in Poland (even if 8x as populous to Norway), but then again only full coffers attract the thieves

[midnight cruiser]

I was wondering what leverage leasing companies would have on the process.... Then remembered the court is in Ireland - home of Aercap, amongst others!

[Jonty]

The issue leasing companies have is if they reposes the aircraft they will have to pay for storage and maintenance while they find another airline to take the aircraft on, which is unlikely at the moment. If they leave them with Norwegian, even on a pay to fly contract, Norwegian will be paying for storage and maintenance while the aircraft aren't flying.

[cats_five]

It is? Maybe it was once (it didn't seem generous when I was out of work 45 years ago) but not now.

[Altostratus]

https://www.thetimes.co.uk/article/norwegian-prospectus-shows-rescue-may-never-take-off-78twvw3zl

[Clop_Clop]

So the plan is to put 50, later on 70 planes in the Nordics and fly to continental Europe. So flights in and out of Norway, Sweden, Denmark, Finland etc and considering they are leaving long haul altogether they will most likely use the 737's for it... So in places like Norway Sweden and Denmark maybe there are some opportunities ahead. If the rest of the plan falls into place first finding buyers of the shares, and the courts trimming debt to a min level etc...

[Kirks gusset]

The previous shafting of suppliers and shareholders now means that it is not only a campaign to raise funds:
"The Perpetual Bonds are expected to commence trading on Oslo Børs on Monday 18 January 2021" at this time shares are still falling.
But also a hunt for companies willing to do work for them, 171M in unsecured debts already hanging in the wings plus 45 m to the Irish commissioners, the Examiner will have tough job doing a deal with these guys. In political circles terms like "working hard to find a solution" means stuffed for a solution, "working with creditors" means desperately trying to keep them off your back. Let's face it, all the good will has been evaporated. If NAS can get all the maintenance, catering etc carried out in Norway they may have a chance, however, given the history it's unlikely any suppliers will afford credit outside of Norway.
Effectively using the furlough scheme to fund the payroll was a smart move, as was the use of ERTE in Spain but now the light in the tunnel has been turned off there is a real human suffering element to this skulduggery, small suppliers, MROs, etc may collapse. The "support" form the Norwegian government, if any, is more likely to be concessions and incentives as they must be seen to be fair to all airlines. On the surface, 90% of the money came from outside Norway and yet 90% of the job losses are also outside Norway yet 90% of the "dividends" were paid to people inside Norway..

[turbidus]

Sending back 72 aircraft, including 37 787's

ouch!

[Kirks gusset]

Interestingly, the Gatwick slot pairs were either returned or traded back in November, one may get the impression they already knew the plan.
https://www.acl-uk.org/completed-slot-trades/?fromAirline=Norwegian
Are there any jewels left in the crown to sell?

[ManaAdaSystem]

Meanwhile, in Norway, the new airline Flyr are trying to get airborne in the second half of 2021. They have chosen the 737-800 as their aircraft and will in due time operate 30 of them.
Lots of those sitting on the ground in Oslo and Stavanger. Just need a lick of paint and off they go.
If Flyr (means flying) manage to get financing, that is.

[Kirks gusset]

However, filings with the Oslo Stock Exchange posted on Norwegian’s investor relations website on January 14, related to a prospectus for a rescue fundraising for the company as part of the recapitalisation, came with strong warnings attached.

“The company is of the opinion that the working capital available to the company is not sufficient for its present requirements, for [at least the next] 12 months. [...] The company estimates that it will no longer have sufficient working capital during the first or second quarter of 2021,” the company said in a securities note.

In a registration document related to the imminent listing on the stock exchange of new shares and perpetual subordinated convertible bonds, it warned: “It is a material risk that the group’s business and operations - both with respect to size and nature - will be adversely changed even if the group is able to conclude the ongoing restructuring.”

If it is unable to conclude the restructuring, “it is a material risk that the group may enter into bankruptcy. Such bankruptcy risk also applies even if the group should be able to conclude the current restructuring.”

It added: “There can be no assurance that the group will be able to generate sufficient cash from its operations and/or obtain new capital to pay its debts or other payment obligations in the future or to refinance its indebtedness in order to be able to service its debt in its ordinary course of business.”

This means that there is “a significant risk that the group will continue to breach its debt obligations and other obligations, and that creditors, as a result, will be entitled to accelerate their claims against the group.” In that case, Norwegian “will in such circumstances be dependent upon its creditors agreeing to waive covenant breaches and other events of default.”


This warning from the Oslo Stock Exchange is hardly encouraging new investment and to exit the Examinership the airline must prove it can survive without breaching the debt agreements or coming to the begging bowl again

[Big Tudor]

Such bankruptcy risk also applies even if the group should be able to conclude the current restructuring.

Surely that should be the crux of the Examiners review? If there is such a risk I cannot see how the courts can support any continuation of the business. It is basically saying to creditors that they will have to stump up cash (or write off debt) to keep the company going, but there is every likelihood that they will never see that cash again.

[andrasz]

The phrases in the OSE filings are pretty much standard CYA clauses that need to be included for any company under bankruptcy protection, and present a possible worst case scenario rather than the most likely outcomes. I am not familiar with pertaining Norwegian law, but Big Tudor is correct, the company needs to demonstrate a viable business plan to be able to continue operations under protection, and stock exchange rules are even stricter when it comes to issuing new shares under such circumstances. Anyone familiar with financial statements phraseology will hardly blink, nothing in there which we did not know already. (In a non-airline business I personally signed financial statements that included some similar wording in the audit opinion on an ongoing basis for nearly 10 years...).

[flyboyike]

It seems to me that if the only way an operation is sustainable is through some sort of a 4-way (or more) flag of convenience scheme, it's probably not really sustainable.

[ManaAdaSystem]

The Norwegian government is now positive to issue a hybrid loan to Norwegian. Terms and conditions apply.

[Kirks gusset]

That's at least some positive news.

The government has set several conditions for participating in the reconstruction, which includes:
The company must be provided with the necessary new capital of at least NOK 4.5 billion, mainly from institutional and strategic investors.
Participation in a hybrid loan will take place on market terms.
It is a prerequisite that the company finally receives approval of an overall restructuring plan within the framework presented by the company.
State participation in Norwegian's restructuring is subject to the Storting's approval.
Ministry of Trade and Industry
Ministry of Transport
THEME
The corona situation

[ManaAdaSystem]

Positive for some, not so much for a lot of others. They need to wave the magic wand and make some 30-40 billion NOK worth of debt disappear.

[uncle-traveling-matt]

Norwegian financial media reporting this morning that Nordea bank and DNB bank willing to invest and become owners of Norwegian. DNB bank is Norway (https://en.m.wikipedia.org/wiki/Norway)'s largest financial services (https://en.m.wikipedia.org/wiki/Financial_services) group with total combined assets of more than NOK (https://en.m.wikipedia.org/wiki/Norwegian_krone) 1.9 trillion and a market capitalisation NOK (https://en.m.wikipedia.org/wiki/Norwegian_krone) 164 billion as of 20 May 2016. More notably the largest owner of DNB is the Norwegian Ministry of Trade and Industry.
A real shame LH had to close down, but without government support, flawed RR engines, covid and a total let down from Boeing, it wasnt meant to be this time around.
The 70 aircraft in 2022 will hopefully be enough to fend of Ryanair from the Nordics.

[Kirks gusset]

The court has given them an extension to allow the plans to be finalised, apparently, 2 Billion in debt wiped away mainly by the lease companies taking one for the team, but still over 220 Million in debt to be "resolved" plus 543 Million needed to satisfy the Norwegian Government and allow access to the funds, so about 770 Million gap needs plugging. Highly likely the creditors that already have judgements for 171 Million will stick out to get the money as they know its the last real chance, so the question remains if the banks will stump up to settle old debts, which is dead cash or insist this is done before they "invest". Even selling and leasing back the owned A/C would not raise the money required, only hope is existing shareholders "supporting" the plan by discharging the old debts, but that is a bitter pill if "new investors" get all the cream, or an "offer" of X cents on the dollar to creditors in the hope they take it..in marketing "spin" terms " a better deal for the creditors"

https://www.irishtimes.com/business/transport-and-tourism/court-gives-norwegian-air-shuttle-examiner-rescue-plan-extension-1.4465268

[Kirks gusset]

A hearing to consider the repudiation of some of Norwegian's liabilities will be heard by the High Court on January 28.

https://www.irishtimes.com/business/transport-and-tourism/norwegian-examiner-has-month-to-finalise-rescue-plan-1.4465268

Interesting approach to debt management, claim the leases are invalid, but that appears to be a small fly in the ointment as they don't have enough cash to refund the passengers for cancelled flights and the terms of the new investment require there are no skeletons likely to jump from closets

https://www.travelweekly.co.uk/articles/399302/norwegian-air-warns-rescue-highly-uncertain

[Kirks gusset]

More here today:

https://www.norwegian.no/globalassets/ip/documents/about-us/company/investor-relations/20210127-norwegian-presentation-for-creditors.pdf

The headline "Ramp up" basically translates as: not going to pay for anything unless needed, crews need to be paid on furlough by their own countries.

Interestingly they want to raise the capital to EXIT the examinership AFTER they exit..seems "promises" will come in Feb, not quite sure the courts here will warm to that, funds should be in place before EXIT according to the law

In a nutshell, the presentation to shareholders is nothing new and the promised "investment" seems as far away as ever. Norway is a very rich country, the banks are loaded, this 4.5 Billion is small beer to them.. why no appetite for the project? the management are being transparent for once and not making any promises.

[vikingivesterled]

The government still holds strong ownership in the largest norwegian banks (DNB for one) after the last financial crash. These banks are willing to stump up money but in reality its state aid by another name. Governments have usually no problem doling out easy gotten taxpayers money because its relatively easy to collect some more. Problem is finding somebody else that is willing to stump up a substantial amount of their own hard earned cash for another flying folly. To show that there are also norwegian private investors with enough wherewithals to amass their own fortune, that believes money can be made by investing in the airline Norwegian.

[iome]

Yes yes, a really nice company... Time to close the doors
https://www.balpa.org/Media-Centre/Press-Releases/Questions-need-answering-on-the-collapse-of-Norweg

[Kirks gusset]

Unfortunately KPMG are also dealing with the Irish Examinership NAS and four Irish subsidiaries have Irish High Court (https://www.irishtimes.com/topics/topics-7.1213540?article=true&tag_organisation=High+Court) protection from creditors while examiner Kieran Wallace (https://www.irishtimes.com/topics/topics-7.1213540?article=true&tag_person=Kieran+Wallace)of KPMG (https://www.irishtimes.com/topics/topics-7.1213540?article=true&tag_company=KPMG) puts together a rescue plan for the Scandinavian carrier.
The UK guys got £96K for writing a few letters and the Irish ones will be getting £Ms. The Irish Courts had the the wool pulled over their eyes and now have the embarrassing scenario of the Irish Companies they were meant to protect also being hit on the 4th if the leases are repudiated by the court, although there is no justification for this action according the lessors.
The simple answer is for the creditors not to agree the court proposals, it may be a home goal for some but will protect others in the future.
As for the £10.5million that was due to the NAR UK and spirited away to "NAS Invest" ,NAS Invest was owned by a "Norwegian" but dissolved in 2016 probably just a coincidence, but in 2018 another NAS Eire Invest sprung up. No doubt KPMG will get all the info...unless someone "forgot" they were owed 10.5 M :)

[krismiler]

The frequent flyer program has been put on hold.

https://www.forbes.com/sites/davidnikel/2021/02/02/norwegian-puts-frequent-flyer-program-on-hold/

[tprop]

Yes, after they convinced a bunch of gullible customers to take points (hey, we´ll even give you a 20% bonus!) instead of cash when "refunding" tickets for corona cancelled flights.
Shell game, bait and switch, just call it what it is: grift.

[Kirks gusset]

Looks like a storm is brewing in the process on at least two accounts :

https://www.irishtimes.com/business/transport-and-tourism/norwegian-creditors-challenge-airline-s-bid-to-return-aircraft-to-lessors-1.4476352

The leasing companies claim they were "bombarded" with multiple applications on 3rd Feb to return the aircraft with no reference to the terms and conditions, maintenance schedules or re-delivery costs. Norwegian stated they will continue to "store and maintain" the aircraft until return, but the lessors think the 163M cash the company will have left will be insufficient to cover the costs of the "return" obligations under the leases. The court may repudiate the leases but that does not cancel the existing obligations under the lease, simply cancels any obligations going forward

Repudiation involves the company ending lease agreements or contracts, but paying the creditors involved one settlement based on the amount owed on the date the company went into examinership, and a second settlement covering liabilities from the period of the examinership itself.The lessors then gets the same dividend as all others on the difference between the total the company paid in the settlements and the full amount due.

Mr Justice Michael Quinn (https://www.irishtimes.com/topics/topics-7.1213540?article=true&tag_person=Justice+Michael+Quinn) proposed allowing until Friday, February 12th for creditors to reply to the companies’ applications. The issue is due back before the court on Monday, February 15th.

Also on Thursday, NAS and its subsidiaries asked the court to repudiate contracts with various suppliers, including Irish company, In Flight Audio, fuel and catering businesses and US airports such as Boston Logan.

Secondly BALPA want KPMG to clarify why NAR have gone back on the promises to crews, opening the can of worms regarding the 10.5 which should technically be collected by the liquidator as part of the winding up of the UK operation..Keeping your old uniform as "keep sake" for heavens sake!

[Kirks gusset]

Latest news is Examiner has requested a further 50 day extension to the process, apparently lessors and creditors cannot agree the proposals and the investment has not been forthcoming as yet.

https://www.irishtimes.com/business/transport-and-tourism/norwegian-air-court-protection-likely-to-be-extended-1.4485227

Interestingly an Air Moldova Airbus has been prevented from leaving Dublin after ex-parte order granted by Judge for unpaid bills.

https://www.irishtimes.com/business/transport-and-tourism/air-moldova-plane-ordered-to-stay-in-dublin-amid-dispute-over-4-2m-award-1.4481524

[calypso]

Not quite. The creditors have requested an extension. The judge will decide if it is granted

[Kirks gusset]

Not quite!

Norwegian needs more time for restructuring. The deadline for Norwegian Air and its four Irish subsidiaries’ protection from creditors by the Irish courts is currently set to February 25th. However, the Irish Times (https://www.irishtimes.com/business/transport-and-tourism/norwegian-air-court-protection-likely-to-be-extended-1.4485227) reports that examiner Keiran Wallace of Anglo-Dutch KPMG is set to ask the High Court to provide an extension.

The senior counsel to the examiner informed the court of the likelihood of the forthcoming request on Monday. Initially intended to last 100 days, this would increase the length of the examinership to 150.


The creditors are saying that Norwegian is trying to now trying to force a take it or leave it deal, and the council for the Examiner will request a further extension. The judge will decide if the extension can be granted, but almost certainly will. The creditors must respond by this Friday to the proposals of Norwegian, the leases are a sticking point and now Norwegian has decided to get back in bed with Boeing for the continued maintenance.

[Kirks gusset]

A key issue for NAS itself is terminating leases on aircraft held by the Irish companies and returning them. Its lawyers recently signalled that it wanted to do this with 36 jets, but on Monday, the High Court heard that the airline had reached settlements with lessors, including Avolon (https://www.irishtimes.com/topics/topics-7.1213540?article=true&tag_company=Avolon), SMBC Aviation Capital (https://www.irishtimes.com/topics/topics-7.1213540?article=true&tag_company=Aviation+Capital), Orix (https://www.irishtimes.com/topics/topics-7.1213540?article=true&tag_company=Orix), Aviation Capital Group and others, relating to 21 aircraft.

The court will hear applications to repudiate leases covering the remaining planes, along with service contracts with various other suppliers on February 23rd. It is possible that more creditors will have agreed deals by then, but a few leases are likely to remain, so that hearing itself could take days.

Asking the court to repudiate the leases will be complex, as they involve the agreements themselves, guarantees and other contracts. They also involve several parties, namely the airline subsidiaries, lessors, banks and other entities. This is a long-haul journey, the like of which the Norwegian airline has never before experienced.


The raising of 500 Million is still to be confirmed in order to trigger the release of the Norway state funds, potential investors do not want to simply settle old debts and existing creditors want some hard cash as opposed to hybrid instruments that proved worthless in the past. Chicken and egg.

[Clop_Clop]

Yes, even in best of times investing in airlines is not for everyone. Now there is more competition also with the new startup, more Wizz and as always Scandi changing the market a bit when things will pick up again. Add a covid situation where no-one really knows when things will pick up again, at what pace and to what levels. So it's not a easy case for sure. But same time if things turn out well or better then the base-case the instruments should reward those who went for it. Perpetual bond at around 10% later on, unless i misread, sounds nice for example if the rednoses keep going and stays in the air...

[Kirks gusset]

Yet another extension, seems reasonable given the logistics of arranging creditor meetings. Planned exit will be around May, IF the funds are forthcoming.

https://www.irishtimes.com/business/transport-and-tourism/norwegian-air-secures-extension-to-court-protection-1.4489905

Another complicating factor, the court heard is the companies’ ongoing efforts for repudiation of aircraft leases and service contracts it had entered into. The company says, if it is to survive, it needs to have those agreements set aside.

Several contested applications regarding leases, arising mainly out of Norwegian’s decision to reduce its fleet when it opted to cease its long-haul services, are due before the High Court next week.

The lessors sticking out for a proper settlement ironically may be the one that get the "best deal" as they are now the fly in the ointment

Mr Justice Quinn, who made orders in other motions from the examiner over the approval of pre-petition payments for critical services, fixed April 16th to the examiner’s application to formally approve any scheme of arrangement approved by creditors.

And, to continue to operate the examiner must now start paying for "critical services"

[Kirks gusset]

Tomorrow is a pivotal day in the Irish Courts regarding the repudiation of the leases, on the one hand good news today that Airbus threw the airline a lifeline and has nearly reached agreement in principle to cancel the book orders, albeit they get to keep the deposits and claim another 846K dollars, whereas Boeing are not playing ball in any shape or form.
One wonders if this is anything to do with NAS suing Boeing and cancelling the 97 Max jets! Boeing Website still shows the NAS orders as live. Lawyers for Boeing basically stating DUBLIN, Feb 24 (Reuters) - Boeing is not engaging with Norwegian Air’s restructuring proceedings in Ireland or Norway, a lawyer for Norwegian said on Wednesday, a decision that may complicate the airline’s efforts to recover from the brink of collapse.

Kennedy said Boeing wrote to the Norwegian official overseeing Norwegian’s restructuring in that country on Dec. 28 saying that neither Boeing nor its affiliates submit to the jurisdiction of the Norwegian courts.

It is Norwegian Air’s understanding that it is taking a similar position in relation to the Irish process, Kennedy said.

[logopop]

I am up in the mountains skiing, and just now looked up some contrails on FR24 - turned out to be NAX9E - LN-LNJ on its way from OSL to Victorville. Made me a bit sad...

[ManaAdaSystem]

They are getting rid of all their 737 MAX airframes. The company will be based of 50 737 NG aircraft.

[Nil by mouth]

An end of season bargain basement for MoL?

[Avenger]

Just planning to run Nordic routes from June/July after examinership, if they survive, perhaps expanding to Spain 3rd qtr 2021 if demand and finances allow. Even ramping up from 10 airframes to 50 is a 500% increase.
The real discussion is not how many but IF..

[davidjohnson6]

10 738s being foreclosed as collateral for previous security, auction at the end of March
Article (in German) - https://www.aerotelegraph.com/boeing-737-von-norwegian-werden-zwangsversteigert

[Sick]

So that's the end?

[Kirks gusset]

These airframes were the assets of Torskefjorden Leasing Ltd which was wound up by the courts on Jan 15th as the judge decided the company would no longer be viable as the only client NAS would not be able to pay for the leases.

Friday the court will decide if the guarantees can be repudiated. At the moment creditors are offered 4% of their debt in settlement and perhaps some cash, but being warned the cash is less the longer the process goes on. Its a cat and mouse game at the moment but Norwegian have advised they may not successfully exit the process if deals can't be struck.

As part of the Irish process, which is due to conclude by April 16, the Irish High Court will rule on Friday on whether to allow the airline to repudiate liabilities, including three aircraft subleases and 25 guarantees tied to aircraft leases.

A lawyer for Norwegian on Tuesday confirmed to the court that agreement had been secured on the last of 36 aircraft leases it had been seeking to repudiate.

[Kirks gusset]

Let's see how things pan out, if the full rescue plan is approved and the creditors don't appeal the required fund raising efforts should start. There are still some flies in the ointment, Boeing USA is an unknown sword, although the guarantees are removed the orders are "active" and the required settlements agreed to Airbus and other creditors have added another 1 billon to the funds needed, now standing at just under 2 billion to get off the starting blocks.

[Flying Clog]

I wouldn't get your hopes up.

[Kirks gusset]

Not much point in having a creditors vote other than to satisfy Norwegian Law

[Kirks gusset]

In a liquidation scenario we expect the claims to exceed NOK 80 billion due to breach of contract obligations and other accrued liabilities, ref. Annex 5.

In addition, NAS also owe accrued holiday pay for 2020 (with approx. NOK 35 million - in total for all NAS employees in Norway, Denmark and Sweden). Employee claims are, subject to the limitations in section 9-3 of the Creditor Recovery Act, considered to be first priority claims. The total amount of first priority claims from employees in a liquidation scenario is assumed to amount to a total of approx. NOK 115 million for the 472 NAS employees. The amount includes both the accrued holiday pay, and salary and holiday pay throughout the notice period as defined in the Norwegian Working Environment Act (Nw.: “Arbeidsmiljøloven”) section 15-3.


And all other non Scandi employees get nothing..Nice

Realistically, if they can survive it will be 2022 before any operations outside of Norway start

[vikingivesterled]

6 private investors and 6 fonds lined up so the planned 3 billion nkr capital injection is oversubscribed, acording to this article: https://finansavisen.no/nyheter/luftfart/2021/03/11/7640570/investoreliten-forbereder-seg-for-norwegian-emisjonen
Founder and former CEO Kjos is one of them and on on his way back according to this article: https://finansavisen.no/nyheter/luftfart/2021/03/11/7640819/kjos-onskes-inn-i-norwegian-igjen-bekrefter-deltagelse-i-emisjonen

(Both articles in Norwegian and paywalled but what is visible of them for free says a lot)

[directmisbi]

I would say that the 53 aircrafts in 2021 are set artifically low to get through the process. Clever move to ditch the old and expensive aircraft leasing contracts during the reconstruction as these are normally non-terminable. That will give them a competetive edge as they ramp up again. Goal is around 70 aircrafts for 2022, enough to fortify the Nordics?

[Kirks gusset]

If Kjos gets involved again it will be groundhog day at Norwegian. Not only did he bury the company in debt, even after the difficulties he tried manipulate the share values.

However, on March 25, the carrier’s shares shot up by 35% when HBK asked short-sellers of the stock to return shares it had lent out, Reuters reported at the time.

“HBK Holding AS has decided to request redelivery to HBK of the shares in Norwegian Air Shuttle ASA currently having been lent in the market by HBK,” Kjos said.

“HBK needs some better liquidity. In a world where we do not know what will happen next week and hardly enough today, we called back the shares to have complete freedom and access to all our assets,” Kise wrote in a comment, also at the time, to the online business newspaper E24 Næringsliv.


The "new management" have done a good job in cleaning up the cat's litter tray, it would be a great shame if things returned to the "bad old days"

[vikingivesterled]

Question is did the new management, and the current chairman, have the right financial contacts to pull together investors for the necessary fresh capital injection or is Kjos the one to make that happen. After all the current management have burned the so far investors more than twice in less than 1 year. Not only has Kjos a winning personality, he has money of his own to invest and that creates trust among others with money. Norwegian rolled him out last spring also when they needed money. Its not all about saving a few jobs.

[Kirks gusset]

Kjos certainly has the right connections and his family have just dumped shares one Bank Norwegian after they climbed on rumours Nordax would buy the bank, so they are cash rich at this time. It depends if Kjos just sees Norwegian as an investment opportunity or a long term relationship. Either way, burnt suppliers, including CAE, Euro Control and even Facebook will be reluctant to do business without prepayment and injected cash must be sufficient to settle old debts and pave the way forward.

The other issue is the "new proposal" is almost identical to the "old proposal" with unsecured creditors taking a 95% hit on their debts and waiting up to 3 years to get settled. It may well be some object on the basis there may be nothing left in 3 years anyway and with inflation the 95% hit is already over 100% in real terms. It is by no means certain, although probable that the court will approve the planned restructure of debts.
In any event, crews in UK and Spain will be left out in the cold for the remainder of 2021.

[Paul737]

How many UK and Spanish crew will be able to come back? Specifically the Spain crew, they were on ERTE before Covid (already excess of crew) and with the fleet reduction (affecting also Spain) I wouldn’t be very optimistic

[dirk85]

Same goes for the italian crews, also abandoned with not even a thank you.

[FRogge]

Same goes for all the Swedish, Danish and Finnish crews as well.
​​​

[Paul737]

I would say Swedish, Danish and Finnish crew will be back before the Spanish crew. Not all of them but some.

[737Driv3r]

Paul737

Considering Spanish crews are still employed and the company is still paying a part of their taxes I don't see how the crews that no longer are contracted will be called first. Also the company considers this ERTE time as employed thus counts for the seniority and that is not the case for fired employees.

[Paul737]

Because CPH, ARN and maybe HEL bases (definitely the first two) will open before any spanish base, if they ever open again. Spanish crews are not in the same situation only because you are now on ERTE FM, which is a different case than a simple ERTE, but when the force majeure ends...

[Kirks gusset]

737Driv3r

Not quite, If you look at the list of creditors it is obvious NAS are not actually paying anything, merely accruing debts, only essential day to day costs are approved by the examiners as any use of funds potentially reduces money available in the case of liquidation.
If they survive they will initially keep to the Nordics as they owe so much money outside of Norway that forward payments would be needed and they cant afford that, perhaps after some time cash flow may allow further expansion but if you look at the current cash burn versus the investment proposal , they would still need significant revenues from pax to keep going more than 6 months.
If they sack the Spain crews they will automatically have another bundle to pay out and its easier to leave them as "employees" at effectively nil cost. The proposals make it crystal clear that only Scandi crews would get payments in the event of liquidation, LGW LH crews are an example of the shafting.
One has to take the Kjos hype with a large pinch of salt, if the "offering" is so attractive and "oversubscribed" why are shares falling like love sick angels.
BALPA and GAL don't expect a presence at Gatwick in the near future and remember NAS have no slots anymore.

[directmisbi]

Dilution occurs when a company issues new shares that result in a decrease in existing stockholders' ownership percentage of that company. When the number of shares outstanding increases, each existing stockholder owns a smaller, or diluted, percentage of the company, making each share less valuable = Current shares falling in value
New shares for new investors will be valued around 6 kr pr share. Offering 3 times oversubscribed meaning strong demand over supply(new shares valued at a total value of 1 billion kr offered to the market, but investor demand was actually for 3 billion nok)

[vikingivesterled]

One has to take the Kjos hype with a large pinch of salt, if the "offering" is so attractive and "oversubscribed" why are shares falling like love sick angels.

The current shares needs to fall a lot more. They are priced at 52 nkr and the new ones will be issued at about 6 nkr. After that existing shareholders will be left with only 5% of the total. So the new shares will cost the investors 6 each and there is a lot of headroom from there to 52. A leveling out at even just 8 would give a quick tidy profit. No wonder they are popular among Kjos monied friends. Then the entusiasts and amateurs buy in and will be the ones taking the pain when Norwegian again needs money. Some predicts this last event within 6 months if there isn't a decent summer recovery.
Some big name initial shareholders in Flyr did just that, a quick exit for profit, just a few days ago. Launced at 5, quick rice to 7, inital names sold and now down to 5.50.

[ManaAdaSystem]

23000 passengers will not get refunded, so not only crew suffering from this new and improved Norwegian. Kjos has a winning personality? Last I saw of him, it was an old, slightly incoherent man with anything but a winning personality. His concept failed pre covid. What would he bring except more of the same? And more whining about everybody else?

[Kirks gusset]

Shareholders

3.1 The interests of the single class of Shareholders are impaired by the Proposals. This is because the Shareholders' shareholding will be diluted as a result of the issue of capital raise associated with the Proposals (detailed below) and the proposed conversion of liabilities of the Company into Shares. The Company estimates that the Shareholders' Existing Shares will be diluted to 4.6% of the total issued share capital in the Company on a Fully Diluted Basis. Shareholders can potentially mitigate the impact of the dilution by subscribing for new Shares pursuant to the proposed Rights Offering.




That's OK then you can buy more shares and loose even more!, unsecured creditors are taking a 95% hit and now even the people that supported the company by buying shares.Existing shareholders in Norwegian Air must agree to their holdings being reduced to a combined total of 4.6%.

And 17 classes of creditors, including 1,600 unsecured creditors and 34,000 customers seeking refunds, must agree at 17 separate meetings to receive just 5% of what they are owed plus a ‘pro rata’ share-out of a NOK 500 million (€50 million) ‘cash pot’.nly available

The "cash pot" is only available from new capital raising and creditors will still have to wait up to 3 years to get their pro-rata amount. The 34000 passenger refunds are an issue

[Paul737]

Talking with some crews from OSL, CPH and ARN today, it seems the plan for 2022 (70 aircrafts) could be like this:

- Norway: 40 aircrafts
- CPH: 8 aircrafts
​​​​​​- ARN: 8 aircrafts
- HEL: 6 aircrafts
- Spain: 6-8 aircrafts

[Kirks gusset]

Looks about right, the "plan" suggests a maximum of 50 Aircraft concentrating out of core Nordic operations, 70 is very optimistic as is Spain until mid 2022.


3.32.1 focus on its core Nordics business, operating a European short-haul network with narrow body aircraft (the Group expects to initially hold up to 50 Boeing 737 aircraft (owned and leased));



As always the devil is in the detail: If you want to process a ticket refund claim:


The General Expert has estimated that it would take at least one hour of his chargeable time to determine the Unagreed Debt of a Customer Creditor with a single Ticket Refund Claim. Accordingly, for illustrative purposes only, such a Creditor may expect to be liable for a minimum of EUR 125 plus VAT per Ticket Refund Claim should it refer a Ticket Refund Claim to the General Expert under Clause 11.1.5.

125 Euros "Expert" time to say your ticket claim is valid!

[jst17]

Back for another go!! Former founder of Norwegian, Bjørn Kjos, is eyeing taking another run at the low-cost long-haul market. In partnership with other investors and aviation industry personnel, he is seeking to launch Norse Atlantic Airways to fly from Europe to the Americas as soon as later this year.

[Skipness One Foxtrot]

https://newsroom.aviator.aero/norse-atlantic-airways-norways-newest-long-haul-airline/

April Fool has come early once again. Is this real?

[directmisbi]

No, Forbes is running a piece as well. New Norwegian will feed Norse Atlantic with pax? Kjos is investing in both projects, and the new airline are taking over the old 787 from Norwegian at half the price.



from dn.no(interview with Kjos)

Norse Atlantic will be an independent company. It is the right time to restart longhaul now, Kjos says to DN, and points to a new start after the corona when the vaccines become widespread.

Kjos joins the board, and wants a collaboration between Norwegian and the new company.

- We will definitely try to achieve that. The two companies have not had time to settle down with this, as Norwegian has been very busy with the reconstruction in Ireland, and Norse Atlantic with setting up long-distance. I believe that both companies can have great synergies. Several million passengers flew both long and short haul in Norwegian, and I hope that can continue, says Kjos.

flynorse.com

[sangiovese.]

I find it quite sickening that they can do this with how they treated their staff. Actually turns my stomach to see Kjos grinning face

[Kirks gusset]

According to the "press release" they raised 24m USD in investment.. just about enough to put lease deposits on 3 aircraft ! 12 half price! my Arse! but amusing way to start the week...

[Plastic787]

What’s the definition of insanity again?

[Chris2303]

Having anything to do with aviation?

[Una Due Tfc]

Primera, Wow, Laker, Tower Air, Norwegian......but this time low cost long haul will work.....

[Una Due Tfc]

And whats to stop IAG and Lufty from killing them (again) with Level, Eurowings etc this time? Madness.

[Kirks gusset]

Meanwhile back in LA La Land, NAS stock placed on the penalty bench as the rules regarding the securities issued where broken. Now the Board is urging the existing Bond Trustees to accept the forced changes, which they are not willing to do (at this time). Quite correct, you invest in a "Bond" as its meant to be a protected secure place come what may, not some instrument that can be constantly changed. Trust is what is lacking these days, no trust, no investment..

[directmisbi]

Remove LH from Norwegian in order to secure government funding

Erase debt and expensive pre-covid leasing agreements.

Secure Norwegian’s 787 complete with the old configuration but at a much better price

OSM survives(takeover the old employees from before)

Reinvest in Norse and New Norwegian.

Restart LH when convenient

Merge Norse and New Norwegian?

[Say Mach Number]

Any new start up in this day and age is a vanity project.

Look at me I own an airline.

These people need protecting from themselves.

[Less Hair]

Same guys, same routes, same aircraft, same concept.
What will work better financially next time?

[november.sierra]

Yes, many things are the same, BUT: looking at the proposed route network, it was only those LH routes that made money for Norwegian and the gang behind this project would know that. There is now a lower cost base through lower lease costs and no doubt lower staffing costs (OSM will take the opportunity to set lower T&C's of course...) The slots left behind by Virgin at LGW can be snapped up on the cheap, so why not. On top of that, I'm sure they've learned their lesson and won't cover aircraft maintenance downtime with Wamos etc as before, no doubt this downtime will be factored into any lease agreements including enough spare airframes on a 'power by the hour' agreement. Capitalism at its best quite simply

[Kirks gusset]

The Virgin slots at Gatwick are no longer available. Some pairs leased from Norwegian were returned, Norwegian then sold these. The remainder have gone to other carriers.
Having said that LGW is as quiet as a church mouse and I doubt getting slots would be an issue, but anything to do with "nordics" has a bad smell and they won't be caught out again

[MCDU2]

Who in their right mind would do business with this crowd without cash up front? They would need one hell of a war chest to be able to prepay their expenses eg: leases, fuel, airport fees. And that is without the CAA imposing any rules on the UK operations to ring fence ticket sales should it all go boom again.

[BWSBoy6]

What a slap in the face to all those NAS employees that were either made redundant or still stuck in limbo whether their jobs even continue to exist. Meanwhile, the big boys have walked away and are trumpeting about their sparkly, new airline.

[srjumbo747]

With a queue of gullible, eager pilots eager to join these charlatans!

[oceancrosser]

Correct me if I am wrong, but post Brexit, the UK is out of the European Aviation Area. How can an AOC holder from Norway thus plan to operate from the UK to faraway places (US and ASIA). UK bilaterals or EU bilaterals?

[SaulGoodman]

how does that work with BA? Aren’t they majority owned outside the UK?

[Kirks gusset]

Notwithstanding the grace given by a "transition period"

In order to gain the traffic rights between theUK (https://centreforaviation.com/data/profiles/countries/united-kingdom)and the EU (https://centreforaviation.com/data/profiles/government-bodies/european-union), airlines from each side must be owned and effectively controlled by nationals of their own side, must have their principal place of business in their own territory, and must hold an AOC from the competent authority in their own jurisdiction.

In other words a new UK AOC would require UK Control by UK Nationals.

Flexibility on UK (https://centreforaviation.com/data/profiles/countries/united-kingdom) airline ownership is aimed mainly at British Airways (https://centreforaviation.com/data/profiles/airlines/british-airways-ba)
This flexibility on the ownership of UK (https://centreforaviation.com/data/profiles/countries/united-kingdom) airlines appears to be aimed mainly at British Airways (https://centreforaviation.com/data/profiles/airlines/british-airways-ba), which is owned by IAG (https://centreforaviation.com/data/profiles/airline-groups/international-airlines-group-iag).

The multinational airline group needs to be majority EU (https://centreforaviation.com/data/profiles/government-bodies/european-union)-owned so that its subsidiaries Iberia (https://centreforaviation.com/data/profiles/airlines/iberia-ib), Vueling (https://centreforaviation.com/data/profiles/airlines/vueling-vy) and Aer Lingus (https://centreforaviation.com/data/profiles/airlines/aer-lingus-ei) could remain EU (https://centreforaviation.com/data/profiles/government-bodies/european-union)airlines. This would have caused a problem if it meant that BA (https://centreforaviation.com/data/profiles/airlines/british-airways-ba) no longer qualified as British.

It also allows the UK (https://centreforaviation.com/data/profiles/countries/united-kingdom) subsidiaries of other groups that are majority EU (https://centreforaviation.com/data/profiles/government-bodies/european-union)-owned to continue to operate as UK (https://centreforaviation.com/data/profiles/countries/united-kingdom) airlines. Examples include Ryanair UK (https://centreforaviation.com/data/profiles/airlines/ryanair-uk-rk), Wizz Air (https://centreforaviation.com/data/profiles/airlines/wizz-air-w6) UK (https://centreforaviation.com/data/profiles/countries/united-kingdom) and easyJet (https://centreforaviation.com/data/profiles/airlines/easyjet-u2)'s UK (https://centreforaviation.com/data/profiles/countries/united-kingdom) subsidiary (the parent group easyJet (https://centreforaviation.com/data/profiles/airlines/easyjet-u2) plc has chosen to become an EU (https://centreforaviation.com/data/profiles/government-bodies/european-union) airline – more on that below).

[directmisbi]

Norse Atlantic Airways plans to be listed on Euronext Growth (Oslo Stock Exchange) as of 12. April. Norse managed to raise over NOK1,28 billion in less than an hour from institutional investors today. Norse Atlantic Airways plans to start lowcost longhaul operations between Europe and the U.S. by year end (2021), using Boeing 787-8/9s, ex Norwegian. Start-up with a limited number of B787s, but plans for a demand driven growth with up to 12 B787s. The core business plan is to offer super low fares through industry low costbase and catch-up on Norwegian good market position in the U.S. and Europe for lowcost longhaul flights across the Atlantic. Plan calls for bases in London and US.Kjos eyes cooperation between Norwegian and Norse. HBK (Kjos and Kise) will also invest in Norwegian. The biggest investors in New Norwegian want him on the new board according media

[oceancrosser]

directmisbi

No AOC. No Operating Licence. No route authority. No airport slots. And yet, people throw money at them and a brand new upstart company gets a listing. What could possibly go wrong?

[Kirks gusset]

Norwegian’s main reason for its failure in terms of its long-haul low-cost operations is that the low-cost model is not suited to long-haul – these routes cannot turn enough profit to support low, attractive fares. Full-service carriers are now entering into this market by offering low-cost options. This will attract a type of traveller that may not have considered flying this way before and could have the potential to become loyal customers due to an increased standard of service and enticing loyalty programs. This increased competition will also make things harder for the new entrant.

Norris adds: “Norse Atlantic Airways must change its business model if it is to survive. The only way full-service carriers can succeed in this low-cost market is due to the provision of high yielding business and first-class cabins, making flights more profitable. To give itself the best possible chance of success, Norse Atlantic needs to take this into consideration and learn from the mistake that Norwegian made – namely not having such cabins.”


There is no "external investment" the 24 Million was the initial share capital, and with kjos's hubris the potential investment could be small. As for priority for ex NAS pilots? why? it's a different company, only selection criteria will be type rated, pay your own interview and training costs and be prepared to sign a zero hour contract with a dodgy third party crew supplier.
They may have agreement in principle for 9 B 787 leases but they will need a load more cash before the wheels turn.

Norse Atlantic says the net proceeds will be used for lease deposits of $4 million on up to 12 aircraft, funding of start-up costs including pre-delivery operational expenditure of $24 million, gross working capital of $80 million, transaction costs of $9 million, and general corporate purposes including licenses and marketing costs of $33 million. Sound familiar !

[directmisbi]

DNB asset management, Nordea investment management and Handelsbanken all participated in the share placement, with around 64 million dollars of the total 150 million dollars raised from investors today.
Norse confirmed in an interview with finansavisen.no that they actually aim for a fleet of around 30 dreamliners as soon as covid ends.
Norse looks increasingly like an exact blueprint of Norwegian LH.

[sangiovese.]

Apparently trying to be EI registered to circumnavigate restrictions on employment law in Norway. No doubt this will allow them UK access.

[Smooth Airperator]

It's going to happen and it will be (at least initially) a success. It's going to be the same operation except in name but minus the debt. NLH v1 wasn't as low cost as it was made out to be. For the public it was but internally there were a lot of inefficiencies. The operation wasn't lean enough due to multiple AOCs and vanity projects led by people with a legacy carrier mentality. Lessons will have been learnt from NLH v1. Furthermore, governments and XAAs will be keen to cut red tape and offer incentives for airlines to restart. I can even see the AOCs being rubber stamped on the basis that the post holders, company manuals, standards and SOPs will largely be identical to the NLH model. On the topic of employment, a UK AOC will only be allowed to employ Brits. And I would put the number of current redundant B787 rated Brits at somewhere around 150 +/- 25.

[Kirks gusset]

" To continue operating EU-registered aircraft, you may seek a licence validation from any of the EASA Competent Authorities, which would be valid for aircraft registered in any EASA Member State."
With only 9 Aircraft a Gatwick base is unlikely in the near future and there is no long term prospect with the LC LH model. Best option would be for pilots to get validations and work abroad..
The concept of AOC outside of Norway to circumvent strict labour laws should ring alarm bells, sadly folks never learn.

[FlyingStone]

Furthermore, governments and XAAs will be keen to cut red tape and offer incentives for airlines to restart.

I wouldn't hold my breath of red tape being cut, when it comes to UK if anything since 1st January is to go by.

On the topic of employment, a UK AOC will only be allowed to employ Brits.

You mean anyone with the right to live and work in the UK, right, not exclusively British passport holders?

[Gordomac]

Apologies for coming in late but is it not the case that Directors of a failed company are barred from employment in the same positions in the same industry for at least 5 years ? It was, something like that, in my hazy memory of GCE A level economics in 1965. Must all be a gut-wrench for previous Norwegian employees.

[Smooth Airperator]

That is true FlyingStone

[Avenger]

Hasta La Vista

Spain (if it ramps up) one aircraft in AGP and one in BCN, 2021/22 then if the tooth fairy comes, up to 6 aircraft in summer 2022, 3 each base. Total Pilots needed 72 at 100%
Unions will negotiate the terms

[Paul737]

Avenger

ALC not BCN. Sorry for the guys affected, but it was pretty obvious what was about to happen.

[SWBKCB]

Apparently trying to be EI registered to circumnavigate restrictions on employment law in Norway. No doubt this will allow them UK access.

Not for long haul to the US - hence EI getting a UK AOC for Manchester ops

[Avenger]

Paul, Apologies, yes ALC, and AGP.

[zomerkoning]

Wouldn't hold my breath, but interesting how this one is going to play out.

https://simpleflying.com/norse-atlantic-block/

New administration, new ideas and some of the people there have been known not to be to fond of dodging labor laws...

[Smooth Airperator]

Errrr, the US aren't exactly ones to talk about labor rights are they? Situation is complex right now. If Norse wants any favors from the Norwegian govt they might think twice about choosing Ireland as a flag of convenience again but I agree it's a possibility. But they'd simply be taking advantage of the same exploitation that big Europe offers and Ireland offers Amazon, Apple et all.

[vikingivesterled]

Norwegian hired Adrian Dunne from Ryanair as EVP Operations.
Ex-Ryanair director lands new role at Norwegian Air | Travel Weekly (https://travelweekly.co.uk/news/air/ex-ryanair-director-lands-new-role-at-norwegian-air)

[directmisbi]

Irish court clears Norwegian restructuring for take-off.
Ireland’s High Court cleared the way on Friday for Norwegian Air to raise new capital and emerge from bankruptcy protection in Ireland and Norway in May by approving the airline’s restructuring scheme.

[Kirks gusset]

26th March to 9th April Voting period for the creditors in Norwegian Restructure

26h March to 26th April Appeal window for Irish process

9th April to 9th May Appeal period for Norwegian process

Mid May Start to raise capital, minimum required to exit is 4.5 Billion NOK

End May planned Exit and continued capital raising for continued operations.

Its doubtful there will be any "appeals" as no creditors objected, the biggest hurdle will be the capital raise, the 4.5 Billion is just "start up", continued operations need far more for remainder of 2021, and they have agreed to pay Airbus and some creditors to stave off objections during the examinership, these will become legally binding contracts.
If they "down size" in Spain there will be contract severance payments to be made so at the moment it's a very thin line but when the government support for workers ceases the unions will want to know where their members stand.
Given they only operate 7 airframes at the moment, and those not full, the revenue forecast on 50 airframes which forms the basis of the cash flow seems a bit "pie in the sky" compounded by new competition on their existing Nordic routes

Shareholders have to agree to their holdings being reduced to a combined total of just 4.6%, and 1,600 unsecured creditors plus customers seeking refunds must accept just 5% of what they are owed plus a ‘pro rata’ share-out of a NOK 500 million (€50 million) ‘cash pot’.

Norwegian Air will then seek to raise NOK 4.5 billion (€446 million) in new capital in order to release a Norwegian government loan guarantee of NOK1.5 billion (€149 million).

The new capital is needed in part to provide the ‘cash pot’ to share among creditors.


Basically, a lot of the initial funding will be spent, no new funding, no survival

[Kirks gusset]

As predicted they now realise the initial money raised will not be enough:

https://www.irishtimes.com/business/transport-and-tourism/norwegian-air-to-raise-more-money-than-planned-1.4536968

The industry uncertainty is cited as the "reason" but the initial fundraising plan did not allow enough to meet the legal obligations they agreed with the creditors and the court. Wise move as this is the last chance they have before the plug is pulled.

[MCDU2]

Its like a copy and paste from the previous incarnation of Norwegian. Lure in the investors. Then a few months later ask for more cash. Good money follows bad in order to try and protect their initial investments. Rinse and repeat.

I still don't know how its going to get off the ground as surely credit card companies, fuel suppliers, airports etc will all be requiring cash up front/held in escrow?

[Avenger]

Not good news for the Spain crews:

https://www.euroweeklynews.com/2021/04/13/norwegian-air-retains-its-base-at-malaga-airport-after-securing-restructuring-deal/

Just one airframe in Malaga and Alicante being operated by Scandinavian crews.

[iome]

What a waste of space of a company.
Given the level of care towards their ex employees they will not be missed when they finally disappear

[Diavel]

Airlines, or whatever it is called will at best be a short lived chance of employment for some of the ex. Norwegian LH aircrews.
The fact that Mr. Kjos is involved again should be a massive warning sign.
This character has only ever been good at one thing in the airline industry, burning other peoples money at an astonishing rate.
There was nothing innovative about Norwegian or Norwegian longhaul.
One can only hope that Mr. Kjos will not interfere with the running of the company.
Furthermore Nobody, with the exception of Sir Freddie Laker has ever made money from low cost longhaul. The few companies that today calls them selves lowcost longhaul, are dependent on either being a subsidiary of a full service airline, or beeing a member of a group of companies that have revenue streams from other activities. Doing as Norse wants to do is a recipe for failure, even if they optimize the operation compared to the old Norwegian LH.
People like Bjorn Kjos should be banned from the industry altogether.

[BWSBoy6]

Any truth in the rumour that SH crew are being asked to reapply for their old jobs, with Scandi bases possibly being on offer?

[november.sierra]

Yes, bases in CPH and HEL are to reopen with vacancies to be allocated as per the Master Seniority List. 'Reapply' would imply there is a selection involved which there is not! A quick chat and a walkthrough the T&C's on offer that's all.

[SaulGoodman]

out of curiosity: the MSL does that only include the previously direct employed workforce or also the contracted?

[november.sierra]

Time to do some myth busting: there is no 'contractors' vs 'permanently employed'! ALL Norwegian pilots regardless of base are/were employed by fully owned Norwegian subsidiaries, either PS (Scandinavia) or NAR (everywhere else) and the MSL covers ALL pilots flying Norwegian aircraft.

[calypso]

Is that really true though. I know some that where employed by OSM and some by Rishworth

[aviationvictim]

november.sierra

the question is if they would’ve been better off employed by one of the traditional contract providers. It seems more or less everyone was dumped with no salary or compensation as the subsidiary contract companies were put into bankruptcy. Or did I understand that wrong? I only see what was written here and in div media.

[Avenger]

Employment and "direct employment" are completely different as we came to find out. Only the Scandi crews would have benefitted from redundancy payments if the whole thing folded ( and it may well still do). The UK and Spain crews employed through what the Courts described as a "very complex business model" were basically left high and dry.
It is not rocket science to see your ID number and thus where your butt sits on the MSL and if you have any chance of getting a look in, having said that, there is a presumption that all pilots will re-apply, which of course is not the case. Looking at he proposed fleet in Spain, even if they crew up fro ramp-up if your seniority is outside the 30's forget it.
Don't know of any UK crew that would be interested, but what you hear and what goes on in the background is another matter. Perhaps more importantly, many will not have the right to live and work in Scandi land, or indeed be able to afford to on any "new contracts"

[BWSBoy6]

That’s my point.

Asking for a friend, based in Spain, contract through OSM, receiving sporadic ERTE, friend assuming that s/he is still on ‘the books’

[directmisbi]

Due to Spanish legislation, only the pilots based in Spain will get a chance to bid for the ES positions. That fact, however, will not prohibit them(like everyone else employed 1st of march 2020) to bid for all new positions in Norwegian the next five years. Bids to be awarded according MSL.
If one takes a look at the investor relations and company information pages, plan calls for 50 aircraft in 2021, 70 in 2022 and 90 for 2023.

“Near/mid-term transition to MAXs or Neos through fleet replacement and expansion in 2022-2024 is considered feasible within the current fleet strategy”

[SaulGoodman]

november.sierra

Ok thanks. For clarification this only applies then to the 737 operation?

[november.sierra]

The invitation to apply for CPH/HEL clearly states that all pilots are welcome to apply but must have a B737 rating even if expired.

Going back to the issue of direct employment, there is nobody employed directly by the mother ship but by fully owned subsidiaries. This enabled the company to bankrupt these subsidiaries in the countries where the cuts were made, and there was no preferential treatment for Scan based crews, neither the ARN nor the CPH based pilots received a single penny from the company, and had it been decided to bankrupt PSN, not even the Norway based pilots would have seen any money. As it stands at the moment, the only pilots employed are in Norway and Spain, and the dynamics of this situation have been covered here in detail.

[grottyyottie]

I am afraid it never was a good place to work as a start up and this has continued throughout its limited history. Cash rich at one phase agreed, but... 'everything is worth nothing'
as they say in the boardrooms.

[RTO]

Any truth in the rumour that SH crew are being asked to reapply for their old jobs, with Scandi bases possibly being on offer?
The old jobs have vanished into thin covid-infested air. HEL and CPH are regarded as new bases that everyone on the MSL can bid for, according to seniority. Seems reasonable.

[Nil by mouth]

Latest news from Spain https://www.euroweeklynews.com/2021/05/03/norwegian-air-announces-layoffs-at-bases-in-spain/

[FredFlintstone]

Such a shame, lots of good friends there, I hear something is rising out of the ashes in the U.K. though, wonder if it will pay the same lol?

[BWSBoy6]

Is there? And is this Phoenix rising from LGW?

[Avenger]

You guys have been watching too much Harry Potter and smoking weed! What viewers have to realise is the whole Norwegian thing is a cleverly planned hype. Today the new share allotment was "heavily oversubscribed" pushing shares up 15% .. Look at Oslo Bors to see who bought them.. its no different to rock bands buying their own concert tickets to get the payback on the sales over 50% then dumping the tickets with a broker.. Sadly the Spain crews, and I know a few, are being played again with promises of jobs later, job shares, etc etc. When ERTE finishes the true colours will start to show.. Red Nose Warriors my word, whatever next!

[directmisbi]

Capital raise scheduled to last two weeks, oversubscribed in 30 minutes. New cornerstone investors and owners :
Norwegian pension fund
John Fredriksen
DNB
Nordea
Sundt family

[Avenger]

737Driv3r

The point being that NAS didn't have to pay any wages during the ERTE period and when the negotiations are over and ERE kicks in NAS won't have the money to meet the obligations, and once again the Spanish government systems will have to kick in to pay the settlements. According to Spanish laws, once collective dismissal starts within 6 months of commencing operations again, NAS may also have to refund the social security contributions they were exempt from plus a 20% charge, There is no provision in their examinership plan for any of this.
It just seems awfully wrong that the bases are being kept open without the commitment to keep employees on until/ if things pick up.
The very minimum they could do is retain enough staff to crew the projected 6 airframes for 2022, especially as they are boasting about cash reserves and proactively recruiting abroad.
European travel is opening up and it appears the lessons of the past went out of the window.