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Hard times for Norwegian

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Hard times for Norwegian

Old 18th Apr 2020, 09:41
  #321 (permalink)  
 
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Calypso, you are entirely right. That's why I believe the Norwegian government would only bail out the 'Norwegian' part if anything. I don't expect any help from the French or UK government as for them the operation is relatively insignificant and does not add many benefits that they don't have already with the existing UK / French carriers. Except for the employees nobody gives a f**k about Norwegian in said countries.

Ford was considered 'too big to fail' and helping Honda UK was making economic and even more political sense at that time. Saving Norwegian does not fit either I am afraid.
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Old 18th Apr 2020, 09:58
  #322 (permalink)  
 
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Originally Posted by fab777 View Post
In france, this temporary furlough protection is not on the social security budget, but general state budget. Therefore, an airline which has been successfully at not paying taxes in this country is getting state help without contributing. This applies for other airlines, too.

Good for the crews, though.
Norwegian crew work for a French subsidiary hence they fall under the furlough protection.
The furlough protection comes with some restrictions though: the employer can’t make anyone redundant and has to pay 70% of the salary. The French state will refund the 70%, but the refund is capped at 5500€. The question remains if the subsidiary has enough cash to pay the salaries...

Should the French subsidiary go tits up, employees will be entitled to unemployment benefits in their country of residence which is not necessarily France even if they paid social security in France.
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Old 18th Apr 2020, 10:01
  #323 (permalink)  
 
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Originally Posted by Tontito View Post
Norwegian crew work for a French subsidiary hence they fall under the furlough protection.
The furlough protection comes with some restrictions though: the employer canít make anyone redundant and has to pay 70% of the salary. The French state will refund the 70%, but the refund is capped at 5500Ä.

Should the French subsidiary go tits up, employees will be entitled to unemployment benefits in their country of residence which is not necessarily France even if they paid social security in France.
Let me doubt it. If you pay Social Security in one country, you are entitled to protections in that country. That country might choose to transfer your money to another one, but third countries will not take responsibility when no money has been put in in the system, except for a few exceptions.
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Old 18th Apr 2020, 10:13
  #324 (permalink)  
 
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Originally Posted by Luke258 View Post
How do you even know they weren't paying taxes there? The Crews are paying taxes there as well as Social contributions. Why they shouldnt get anything in return now??
Crews are paying social security in France for sure. However income taxes are subject to the Double Taxation convention between the country of residence and France.
As 777 stated the furlough agreement was, originally, for French companies only. In the mean it has been changed to include airlines with bases in France to include easyJet crews who are still employed by EasyJet U.K, a British company.
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Old 18th Apr 2020, 10:19
  #325 (permalink)  
 
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Originally Posted by Tommy Gavin View Post
Calypso, you are entirely right. That's why I believe the Norwegian government would only bail out the 'Norwegian' part if anything. I don't expect any help from the French or UK government as for them the operation is relatively insignificant and does not add many benefits that they don't have already with the existing UK / French carriers. Except for the employees nobody gives a f**k about Norwegian in said countries.

Ford was considered 'too big to fail' and helping Honda UK was making economic and even more political sense at that time. Saving Norwegian does not fit either I am afraid.
Tommy you havenít understood a word Calpyso has said...

There is no ďNorwegian PartĒ to separate. Do you understand why the AOCís are in place ?

No benefits for other countries you say...as an example Norwegian carried 6 million brits last year, 4.5 million from Gatwick alone. Have you asked those passengers why they chose not to fly with BA ?

If they are able to survive they will restructure without question.

One fact remains, consumers are stuffed without choice.
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Old 18th Apr 2020, 10:25
  #326 (permalink)  
 
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Originally Posted by vikdream View Post
Let me doubt it. If you pay Social Security in one country, you are entitled to protections in that country. That country might choose to transfer your money to another one, but third countries will not take responsibility when no money has been put in in the system, except for a few exceptions.
No, the country of residence pays and can claim the money back from the country of last employment.
Here are quotes from the relevant EU law:

A wholly unemployed person who, during his/her last activity as an employed or self-employed person, resided in a Member State other than the competent Member State and who continues to reside in that Member State or returns to that Member State shall make himself/ herself available to the employment services in the Member State of residence.

and:
The benefits provided by the institution of the place of residence under paragraph 5 shall continue to be at its own expense. However, subject to paragraph 7, the competent institution of the Member State to whose legislation he/she was last subject shall reimburse to the insti* tution of the place of residence the full amount of the benefits provided by the latter institution
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Old 18th Apr 2020, 10:38
  #327 (permalink)  
 
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Originally Posted by 8che View Post
Have you asked those passengers why they chose not to fly with BA ?.
Probably because they liked being sold a product below cost. I donít think itís anything more complicated than that. Donít get me wrong I actually hope Norwegian pull through eventually because it would be indicative of a wider upswing for the industry plus no one really wants or likes to see colleagues on the other side of the fence being put out of work into a desolate wasteland (which is what itíll be post Covid). Realistically though the government package isnít massive, how long is 3B Krona really going to last them even if they pull this last throw of the dice off? Genuine question here.
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Old 18th Apr 2020, 11:13
  #328 (permalink)  
 
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Originally Posted by RexBanner View Post
Probably because they liked being sold a product below cost. I don’t think it’s anything more complicated than that. Don’t get me wrong I actually hope Norwegian pull through eventually because it would be indicative of a wider upswing for the industry plus no one really wants or likes to see colleagues on the other side of the fence being put out of work into a desolate wasteland (which is what it’ll be post Covid). Realistically though the government package isn’t massive, how long is 3B Krona really going to last them even if they pull this last throw of the dice off? Genuine question here.
Not long. They have produced a report that claims it will be of benefit to Norway if they pay 12 billion. Not sure if they mean a direct payment to Norwegian or a loan guarantee. I’m pretty sure what they hope for.
The parts of the company that suffers the most are the longhaul parts. That was true even before Corona. Selling tickets below cost will always be popular with the public, but this is putting pressure on everybody else. That was probably what they meant to do.
This company is already split into pieces. Just kill the relevant AOCs and keep the core.

Debt to shares in order to take on more debt, and no guarantee of a profitable future even if they can pull this off. The investors must be thrilled.
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Old 18th Apr 2020, 11:35
  #329 (permalink)  
 
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How long?

Originally Posted by RexBanner View Post
Probably because they liked being sold a product below cost. I donít think itís anything more complicated than that. Donít get me wrong I actually hope Norwegian pull through eventually because it would be indicative of a wider upswing for the industry plus no one really wants or likes to see colleagues on the other side of the fence being put out of work into a desolate wasteland (which is what itíll be post Covid). Realistically though the government package isnít massive, how long is 3B Krona really going to last them even if they pull this last throw of the dice off? Genuine question here.

Quick answer is probably not very long, the word is that long haul out of LGW was profitable, the bigger problem when will any airline be able to start flying again let alone long haul , who wants to travel to Spain let alone the US and South America.

If they can pull off some form of deal with the Norwegian Government it will very much be about Norway not the UK, I think there will be a Norwegian going forward, but not as we know it now.
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Old 18th Apr 2020, 11:50
  #330 (permalink)  
 
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Originally Posted by EIFFS View Post
Quick answer is probably not very long, the word is that long haul out of LGW was profitable, the bigger problem when will any airline be able to start flying again let alone long haul , who wants to travel to Spain let alone the US.
With the USA opening itís beaches in Florida I would be more than happy to get on a Norwegian 787 heading west tomorrow.
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Old 18th Apr 2020, 12:32
  #331 (permalink)  
 
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Originally Posted by 8che View Post

No benefits for other countries you say...as an example Norwegian carried 6 million brits last year, 4.5 million from Gatwick alone. Have you asked those passengers why they chose not to fly with BA ?

If they are able to survive they will restructure without question.
6 million pax on a total of roughly 180 million is not really significant. Not enough to expect a lifeline from UK government. TCX and FlyBe didn't get one so I strongly doubt the UK government will help out Norwegian. UK aviation market is one of the most competive markets around, with or without Norwegian.



Don't get me wrong, I hope Norwegian survives with all its subsidiaries but one has to be realistic.
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Old 18th Apr 2020, 13:26
  #332 (permalink)  
 
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Originally Posted by Tommy Gavin View Post
6 million pax on a total of roughly 180 million is not really significant. Not enough to expect a lifeline from UK government. TCX and FlyBe didn't get one so I strongly doubt the UK government will help out Norwegian. UK aviation market is one of the most competive markets around, with or without Norwegian.



Don't get me wrong, I hope Norwegian survives with all its subsidiaries but one has to be realistic.
Their not in talks with the UK government......Their talking to the Norwegian government !

p.s the UK government are already assisting them by paying part of their UK employees salary from next month.

The point is that the Norwegian government will want to see future healthy corporate tax revenue and options for Norwegian passengers. If one or more of the AOC's is deemed to assist in Norwegian Airlines profitability why on earth would you shut it down ? Unless you have no idea what the AOC gives you.



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Old 18th Apr 2020, 13:34
  #333 (permalink)  
 
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Report from McKinsey this week had Aerospace and Air Travel as hardest hit sectors and that it would be six Quarters before LH returned to previous levels.
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Old 18th Apr 2020, 13:35
  #334 (permalink)  
 
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Originally Posted by ManaAdaSystem View Post
Not long. They have produced a report that claims it will be of benefit to Norway if they pay 12 billion. Not sure if they mean a direct payment to Norwegian or a loan guarantee. Iím pretty sure what they hope for.
The parts of the company that suffers the most are the longhaul parts. That was true even before Corona. Selling tickets below cost will always be popular with the public, but this is putting pressure on everybody else. That was probably what they meant to do.
This company is already split into pieces. Just kill the relevant AOCs and keep the core.

Debt to shares in order to take on more debt, and no guarantee of a profitable future even if they can pull this off. The investors must be thrilled.
Incorrect. The debt will be massively decreased.The equity will be a lot healthier. Which is the purpose of the whole exercise, and this is why the Norwegian government put the demands fourth in the first place,in order for Norwegian to secure the loan guarantees. Simply put as a means to put pressure on it's creditors but also for Norwegian to emerge as a healthier entity.
A very interesting scenario will happen if Norwegian survives because it's competitor in Scandinavia,SAS, is heading in much the same direction as Norwegian before the crisis hit. Extremely low equity, high debts(more than 52 billion Swedish kr!!)and more loans will not solve the situation (Loans dont up the equity, ask Kjos) so the worst thing that could happen for SAS right now, is facing a restructed and almost debt free Norwegian. That scenario is becoming very real, IMHO. I think the SAS management are acutely aware of the danger, because the last couple of years have seen a dramatic decrease in the T and C in SAS, forced part time for upgrades, shocking low wages and fully variable rosters. A real shame...see the SAIL thread for more

Last edited by uncle-traveling-matt; 18th Apr 2020 at 13:46.
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Old 18th Apr 2020, 13:50
  #335 (permalink)  
 
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Matt, of course the UK government is assisting in paying the salaries right now. Totally different thing.
​​​​​The UK AOC wasn't profitable before Covid-19 hence why I think that IF the Norwegian government will bail out Norwegian it will focus on a trimmed down mostly Scandinavian operation that is to the benefit of infrastructure and accessibility of Norway. It is IMHO not realistic to expect Norwegian coming out of this crisis in its current form, shape or size.
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Old 18th Apr 2020, 13:55
  #336 (permalink)  
 
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Originally Posted by Tommy Gavin View Post
Matt, of course the UK government is assisting in paying the salaries right now. Totally different thing.
​​​​​The UK AOC wasn't profitable before Covid-19 hence why I think that IF the Norwegian government will bail out Norwegian it will focus on a trimmed down mostly Scandinavian operation that is to the benefit of infrastructure and accessibility of Norway. It is IMHO not realistic to expect Norwegian coming out of this crisis in its current form, shape or size.
I agree..however some parts of LH could be kept.
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Old 18th Apr 2020, 14:49
  #337 (permalink)  
 
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Well, the way Trump is throwing money at the US airlines, if companies like norwegian don’t survive, your options for transatlantic will be an old 777, 77 year old cabin crew....and an ice cream...

good luck
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Old 18th Apr 2020, 15:59
  #338 (permalink)  
 
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Originally Posted by Tontito View Post
Crews are paying social security in France for sure. However income taxes are subject to the Double Taxation convention between the country of residence and France.
As 777 stated the furlough agreement was, originally, for French companies only. In the mean it has been changed to include airlines with bases in France to include easyJet crews who are still employed by EasyJet U.K, a British company.
With the difference that Norwegian Crew are employed by a french employer. I am Well aware of the DTAs. But donít assume that all CDG crew lives outside France, and those who do can also be asked to pay taxes in France according to the relevant DTA.
CDG and LGW were the cash cows on longhaul for Norwegian. They flew significant number of flights from CDG and LGW. It will be in everybodys interest to keep that as it is.
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Old 18th Apr 2020, 17:51
  #339 (permalink)  
 
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Originally Posted by Luke258 View Post
With the difference that Norwegian Crew are employed by a french employer. I am Well aware of the DTAs. But donít assume that all CDG crew lives outside France, and those who do can also be asked to pay taxes in France according to the relevant DTA.
CDG and LGW were the cash cows on longhaul for Norwegian. They flew significant number of flights from CDG and LGW. It will be in everybodys interest to keep that as it is.
Cabin Crew have been told LGW is the least loss making long haul base, with LGW-MIA the only Norwegian long haul route that is consistently profitable, all other LGW long haul routes are not even breaking even. I remember about 2 years ago being shown financials that they lost around £6 per passenger on average on long haul.

I believe Norwegian will still be here after Covid 19 but on a much smaller scale, mainly Scandinavia with little to no long haul.
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Old 18th Apr 2020, 21:44
  #340 (permalink)  
 
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Originally Posted by Tommy Gavin View Post
Matt, of course the UK government is assisting in paying the salaries right now. Totally different thing.
​​​​​The UK AOC wasn't profitable before Covid-19 hence why I think that IF the Norwegian government will bail out Norwegian it will focus on a trimmed down mostly Scandinavian operation that is to the benefit of infrastructure and accessibility of Norway. It is IMHO not realistic to expect Norwegian coming out of this crisis in its current form, shape or size.
Do you have any information to back up the statement that NUK was not profitable ?
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