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Hard times for Norwegian

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Hard times for Norwegian

Old 11th Apr 2020, 07:16
  #241 (permalink)  
 
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A lot will really depend on how much Norwegian's creditors are willing to bet on state aid saving the airline. If the company goes into bankruptcy, the creditors will assuredly lose a lot, and they will have to take their chances with the bankruptcy process to see what, if anything, they can recover. If they are confident that the Norwegian government will come through to save the airline, they may be more willing to gamble with converting their debt into equity in the hopes that in a few years they can sell their shares to recoup their money. Both seem like a big risk either way. It does seem like Norwegian is putting on the full court press within Norway, trying to scare the politicians and public into (probably somewhat realistic scenario) believing that much of Norway will lose flights if Norwegian goes under, and that what is kept will be operated by the likes of Ryanair and WizzAir.
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Old 11th Apr 2020, 08:04
  #242 (permalink)  
 
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If they are confident that the Norwegian government will come through to save the airline
Can you quote a source that the government want to "save the airline"? I have only seen a state guarantee of some $290M~ being offered. Which is against a debt pilot of $5,700,000,000 (Five point seven billion)

Lease payments have not been made on two 787s in March according to this article. Is it really reasonable for the owner of assets worth $300M~ to wait to recoup their money in shares that will become highly diluted?
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Old 11th Apr 2020, 10:24
  #243 (permalink)  
 
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Originally Posted by Porto Pete View Post
Can you quote a source that the government want to "save the airline"? I have only seen a state guarantee of some $290M~ being offered. Which is against a debt pilot of $5,700,000,000 (Five point seven billion)
=13px
No, I can't because that is the big question right now. That is why I used qualifying words in what I said, such as "If they are confident..." and "willing to bet". It is also why I included the last sentence, because Norwegian is trying to sway the politicians and public support in favor of trying to save the airline. We should know soon if their campaign and efforts will work.
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Old 11th Apr 2020, 14:12
  #244 (permalink)  
 
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Originally Posted by Porto Pete View Post
Lease payments have not been made on two 787s in March according to this article. Is it really reasonable for the owner of assets worth $300M~ to wait to recoup their money in shares that will become highly diluted?
$300M might be the book value, but I can't see anyone signing a lease on an aircraft right now. To that end, it might be as well to leave the plane where it is.
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Old 11th Apr 2020, 17:27
  #245 (permalink)  
 
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Originally Posted by ObadiahDogberry View Post
A lot will really depend on how much Norwegian's creditors are willing to bet on state aid saving the airline. If the company goes into bankruptcy, the creditors will assuredly lose a lot, and they will have to take their chances with the bankruptcy process to see what, if anything, they can recover. If they are confident that the Norwegian government will come through to save the airline, they may be more willing to gamble with converting their debt into equity in the hopes that in a few years they can sell their shares to recoup their money. Both seem like a big risk either way. It does seem like Norwegian is putting on the full court press within Norway, trying to scare the politicians and public into (probably somewhat realistic scenario) believing that much of Norway will lose flights if Norwegian goes under, and that what is kept will be operated by the likes of Ryanair and WizzAir.
Yes, they have produced a report that says the government can pay them 12 billion NOK and still come out on top.
To scare the public they claim it will cost the traveling public 7 billion NOK in increased air fares if they go under. Not sure how this mixes with the introduction of another loco in the Norwegian market.
Fact is, when SAS went on strike, the price of a ticket Oslo Stockholm with Norwegian jumped to 8000 NOK. So much for their low cost guarantee.
The Norwegian market is just a small part of Norwegian, and for the Norwegian state to pay to support staff in Ireland, UK, France, Spain, USA, Thailand, etc is just pain stupid. These worker contribute nothing to Norway.
Let these countries carry the cost. If they want to.
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Old 11th Apr 2020, 18:47
  #246 (permalink)  
 
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^^^^
you say that but surely even the Norwegian government will want to keep the bits that have the potential to be profitable , intra Scandinavian or not as the case may be to help repay the debt
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Old 11th Apr 2020, 20:04
  #247 (permalink)  
 
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Originally Posted by ManaAdaSystem View Post
Yes, they have produced a report that says the government can pay them 12 billion NOK and still come out on top.
To scare the public they claim it will cost the traveling public 7 billion NOK in increased air fares if they go under. Not sure how this mixes with the introduction of another loco in the Norwegian market.
Fact is, when SAS went on strike, the price of a ticket Oslo Stockholm with Norwegian jumped to 8000 NOK. So much for their low cost guarantee.
The Norwegian market is just a small part of Norwegian, and for the Norwegian state to pay to support staff in Ireland, UK, France, Spain, USA, Thailand, etc is just pain stupid. These worker contribute nothing to Norway.
Let these countries carry the cost. If they want to.

All staff are employed on local contracts with terms and conditions for the country in which theyíre based. Therefore, respective Government Covid 19 assistance is applicable i.e. here in the U.K. JRS for LGW based employees etc. There is no extra burden for Norway in that respect.
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Old 11th Apr 2020, 23:52
  #248 (permalink)  
 
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Originally Posted by 737 Jockey View Post
All staff are employed on local contracts with terms and conditions for the country in which they’re based. Therefore, respective Government Covid 19 assistance is applicable i.e. here in the U.K. JRS for LGW based employees etc. There is no extra burden for Norway in that respect.
I was not talking about support for individual crew members. I'm talking about the parts of the company that are not near Norway, with production outside Norway and with no Norwegian citizens as staff.

This is a real mess. The Norwegian oil fund is the biggest owner in Norwegian. If the company manages to get their debt exchanged for stocks, the stock price will drop like a rock, and the fund will get a huge loss. That on top of the 3 billion NOK the Norwegian government has promised. If they want to maintain their share of the ownership, they have to feed more money into the company. In return they get a big ?. If this was a company with a solid foundation before corona, that would maybe be a risk worth taking. It was not, and it is now a big gamble if they will get any value for their money. Both in terms of the future of the company and 0 income from those parts (most of the company) based outside of Norway.
I bet a lot of those holding Norwegians loans are thinking like this: Cut our losses and get out, or gamble on CPR working on a half rotten body.
It will take time to get over corona, and chances are it will take even more money to keep them alive.

What they are trying to do is convert debt to shares so they can take up more debt. My bank would kick me out if I suggested anything like that.

Last edited by ManaAdaSystem; 12th Apr 2020 at 02:30.
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Old 12th Apr 2020, 05:41
  #249 (permalink)  
 
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So the company deliberately organized their business model in a way that minimized their contribution to the Norway economy, but now expect the Norwegian peoples tax dollars to bail them out.

The best line ever for how business executives see the world was on another PPRuNe thread

”Capitalization of profits, socialization of loses”

I was going to say “have they no shame ? “ .......but I realize how silly that sounds
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Old 12th Apr 2020, 09:24
  #250 (permalink)  
 
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Originally Posted by ManaAdaSystem View Post
I was not talking about support for individual crew members. I'm talking about the parts of the company that are not near Norway, with production outside Norway and with no Norwegian citizens as staff.

This is a real mess. The Norwegian oil fund is the biggest owner in Norwegian. If the company manages to get their debt exchanged for stocks, the stock price will drop like a rock, and the fund will get a huge loss. That on top of the 3 billion NOK the Norwegian government has promised. If they want to maintain their share of the ownership, they have to feed more money into the company. In return they get a big ?. If this was a company with a solid foundation before corona, that would maybe be a risk worth taking. It was not, and it is now a big gamble if they will get any value for their money. Both in terms of the future of the company and 0 income from those parts (most of the company) based outside of Norway.
I bet a lot of those holding Norwegians loans are thinking like this: Cut our losses and get out, or gamble on CPR working on a half rotten body.
It will take time to get over corona, and chances are it will take even more money to keep them alive.

What they are trying to do is convert debt to shares so they can take up more debt. My bank would kick me out if I suggested anything like that.
This, from a guy working for sas 😂

But tell me. Does converting debt to shares mean taking up more debt? Will the total debt be more or less after this exercise?
New Norwegian will be very much alive after corona, with a strong equity, a lot less debt and one of the newest and most environmentally friendly fleets out there. Restructered, but stronger than ever.

Last edited by uncle-traveling-matt; 12th Apr 2020 at 15:15.
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Old 12th Apr 2020, 12:09
  #251 (permalink)  
 
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Originally Posted by uncle-traveling-matt View Post
This, from a guy working for sas 😂
Anyways, I understand your concern. New Norwegian will be very much alive after corona, with a strong equity, a loss less debt and one of the newest and most environmentally friendly fleets out there. Restructered, but stronger than ever.
Quite incredible optimism, the likes of which Iíve never read before.
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Old 12th Apr 2020, 12:37
  #252 (permalink)  
 
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Originally Posted by uncle-traveling-matt View Post
This, from a guy working for sas 😂
Anyways, I understand your concern. New Norwegian will be very much alive after corona, with a strong equity, a loss less debt and one of the newest and most environmentally friendly fleets out there. Restructered, but stronger than ever.

The ones writing about a Norwegian stronger than ever with a loss less debt have no f... clue about what a debt/equity swap means and it consequences
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Old 12th Apr 2020, 13:05
  #253 (permalink)  
 
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Originally Posted by Paul737 View Post
The ones writing about a Norwegian stronger than ever with a loss less debt have no f... clue about what a debt/equity swap means and it consequences
Enlighten us, educate the masses. Im already
holding my breath..
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Old 12th Apr 2020, 13:42
  #254 (permalink)  
 
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Originally Posted by uncle-traveling-matt View Post
Enlighten us, educate the masses. Im already
holding my breath..

No need. Unfortunately the hard reality will enlighten you in a couple of weeks, but of course, stronger than ever
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Old 12th Apr 2020, 14:18
  #255 (permalink)  
 
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"New Norwegian will be very much alive after corona, with a strong equity, a loss less debt and one of the newest and most environmentally friendly fleets out there. Restructured, but stronger than ever."

After Covid-19 has dissipated, practical reality suggests that prospective air travelers will be in no hurry to fill seats, share armrests and rub elbows with strangers. All passenger carriers will be operating below break-even load factors for many months to come. Because the fear factor of asymptomatic transmissions of the virus will linger.
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Old 12th Apr 2020, 14:27
  #256 (permalink)  
 
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Originally Posted by uncle-traveling-matt View Post
This, from a guy working for sas 😂

But tell me. Does converting debt to shares mean taking up more debt? Will the total debt be more or less after this exercise?
New Norwegian will be very much alive after corona, with a strong equity, a loss less debt and one of the newest and most environmentally friendly fleets out there. Restructered, but stronger than ever.
Can I have some of what you've been taking?
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Old 12th Apr 2020, 15:26
  #257 (permalink)  
 
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The increasingly desperate financial measures could be almost copy and pasted from the story of the final days of Thomas Cook.
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Old 12th Apr 2020, 16:10
  #258 (permalink)  
 
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Wonder what the future looks like if the creditors/lenders accept this deal and become majority owners of the company. My guess is that they will sell it section by section when value increases in coming years.
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Old 12th Apr 2020, 16:14
  #259 (permalink)  
 
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Originally Posted by uncle-traveling-matt View Post
This, from a guy working for sas 😂

But tell me. Does converting debt to shares mean taking up more debt? Will the total debt be more or less after this exercise?
New Norwegian will be very much alive after corona, with a strong equity, a lot less debt and one of the newest and most environmentally friendly fleets out there. Restructered, but stronger than ever.
Converting debt to shares will give Norwegian access to financing from the Norwegian government. That is a loan, not free money.
In the process all shareholders will lose a lot when the share price nose dives. That will affect at lot of regular people out there.
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Old 13th Apr 2020, 09:28
  #260 (permalink)  
 
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Ok, Iím not too familiar with the deal NAS is proposing with its creditors (maybe someone could spell it out) however they need to offer a very rosy future. Creditors/bond holders will have taken out insurance again NAS failing in the form of credit default swaps (CDSs) so if NAS goes bump they still get paid.

The worst thing for most bond holders would be dilution meaning they are stuck with a smaller slice of a problem company. Iíd be surprised if they agree but we are in fairly unprecedented times right now so anythingís possible.

BTW, this is looking almost a carbon copy of TCX and back then Iím fairly sure the bond holders chose their insurance payouts rather than throwing more money after bad.

Sincere good look though I have a family member there so hoping for the best....
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