Hard times for Norwegian
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To be even remotely able to ever pay off their debt, they need to be bigger than just a domestic airline in Norway. They need to be sizeable, not flying anything that wouldn't be profitable and be more lucky with everything they do (737MAX, RR engines etc)
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The problem is what to do in the mean time, before you get a sizeable market to operate 100 AC with a profit.
What do you suggest? Keep pouring in the money until some point in the future where they "will" make money?
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Some rationale on how the Norwegian Gov thinks:
Today the shares started a steady slide and with the furlough of the Gatwick staff it's looking increasingly like the only option will be to save the Norway operation and cut off the limbs, if this is done through liquidation or a rapid re-structure remains to be seen.
Rather a comprehensive review but of course, just an opinion of a writer
Today the shares started a steady slide and with the furlough of the Gatwick staff it's looking increasingly like the only option will be to save the Norway operation and cut off the limbs, if this is done through liquidation or a rapid re-structure remains to be seen.
Norway’s Industry Minister, :
“It is a tough message to get. But we are answerable for the responsible use of public funds. Norwegian Air has a financial structure that makes it risky for us to go in with support. It was not defensible.”
“It is a tough message to get. But we are answerable for the responsible use of public funds. Norwegian Air has a financial structure that makes it risky for us to go in with support. It was not defensible.”
Last edited by Kirks gusset; 13th Nov 2020 at 16:38.
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https://www.linkedin.com/posts/hans-...468247552-uspZ
It looks like help from the Government of Norway is on its way to ¿save the norwegian/scandinavian part of the company?
Under what conditions (restructuring?) will this help come?
It looks like help from the Government of Norway is on its way to ¿save the norwegian/scandinavian part of the company?
Under what conditions (restructuring?) will this help come?
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With the very complex structure of the company it may be difficult to divide it up, kill off one part and save another. The clue is in the wording
, the politicians have already objected to funding operations outside of Norway and appear to only want to support "internal operations".
The best to hope for now is to keep the "brand" alive by liquidating everything outside of Norway, OK so this shafts the shareholders that showed good will (no choice) in converting debts to shares, on the other hand, continuing to operate whilst insolvent could bring heavy penalties and liabilities that the Norwegian element will certainly want to avoid.( already hinted at by the CEO) , It may be possible to get shareholder agreement for their interests to be retained in a state supported Norway only operation, but this would mean them agreeing to effectively walk away with no functioning elements of the "old structure", of course all the 787 and surplus 737 would be permanently grounded in the "non trading" part of the new structure. The debts are so huge that even state support would not keep the whole operation alive and would require such large sums that other Norway based airlines could question.
This weekend political parties in the Parliament are negotiating on a compensation aid package to the airlines in Norway.
The best to hope for now is to keep the "brand" alive by liquidating everything outside of Norway, OK so this shafts the shareholders that showed good will (no choice) in converting debts to shares, on the other hand, continuing to operate whilst insolvent could bring heavy penalties and liabilities that the Norwegian element will certainly want to avoid.( already hinted at by the CEO) , It may be possible to get shareholder agreement for their interests to be retained in a state supported Norway only operation, but this would mean them agreeing to effectively walk away with no functioning elements of the "old structure", of course all the 787 and surplus 737 would be permanently grounded in the "non trading" part of the new structure. The debts are so huge that even state support would not keep the whole operation alive and would require such large sums that other Norway based airlines could question.
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From the filed courtpapers in the case versus Boeing, Norwegian are claiming compensation due to the grounding of the max and resulting losses of over 1 billion dollars. Now if Norwegian
can get a bit of help from Norway, that will go a long way in getting Boeing to eventually cough up the compensation owed, continue the financial restructuring so brilliantly handled by the CFO until covid destroyed the market, and bring the company back to good health after the crisis.
Will be interesting to see how the leasing companies react, will they pitch in with their own money? Or walk away?
Much of their debt are hooked up to the 787 fleet. Due to the new IFRS rules, FUTURE leasing costs are a big part of this, so is maintenance and other capital costs. If they manage to offload the leased dreamliners (around half of their 787 fleet)back to their owners(the leasing companies) over half of their debt would be gone over night. This would again mean attracting investments and liquidity of which there are plenty available in the current capital markets.
can get a bit of help from Norway, that will go a long way in getting Boeing to eventually cough up the compensation owed, continue the financial restructuring so brilliantly handled by the CFO until covid destroyed the market, and bring the company back to good health after the crisis.
Will be interesting to see how the leasing companies react, will they pitch in with their own money? Or walk away?
Much of their debt are hooked up to the 787 fleet. Due to the new IFRS rules, FUTURE leasing costs are a big part of this, so is maintenance and other capital costs. If they manage to offload the leased dreamliners (around half of their 787 fleet)back to their owners(the leasing companies) over half of their debt would be gone over night. This would again mean attracting investments and liquidity of which there are plenty available in the current capital markets.
Last edited by uncle-traveling-matt; 15th Nov 2020 at 15:06.
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There is already a contract in place for maintenance for 90 738s at least so I would say the spanish bases will survive or worst case scenario everyone transferred up to scandi and flying from there. Still Spanish government is also helping with the ERTEs so I believe Spain will survive along with scandi bases.
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And all this because there is a contract in place for maintenance for 90 738s
Wishful and naive thinking only because you have a Spanish base. Pretty sure Norway is going to give money to save Spanish bases!!! 😂
And spanish based crew transferred to scandi ignoring the MSL right?
As soon as ERTEs FM are over Spanish bases are done
Wishful and naive thinking only because you have a Spanish base. Pretty sure Norway is going to give money to save Spanish bases!!! 😂
And spanish based crew transferred to scandi ignoring the MSL right?
As soon as ERTEs FM are over Spanish bases are done
Last edited by Paul737; 15th Nov 2020 at 16:09.
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The major issue with support Norwegian is transparency. It has from the start had a complex and duplicitous business operating practice, a former CEO that "cannot remember "paying 500K in personal bonus just before the shares collapsed and the whole thing is like an Onion, the more you peel, the more you cry!
Look at their home-grown handling company in UK "RED HANDLING" company records showed they paid £637,546 in staff costs in 2018/19.. for 9 admin staff, no mention of other employees, in October 2020 the Norwegians appointed their own Directors, some of which are also Directors at NAS. They paid no UK tax as a company yet want the UK to support the furlough. One can't blame the Norwegian government for being cautious as this is clearly a management that works overtime to line it's own pockets.
The real shame is the loyal and professional crews seem oblivious and keep following the misguided actions of the company and will be left high and dry.
The Boeing maintenance contracts are handled under the "gold package" for 787s, and as these leases are stalled, so are the contracts, with essential maintenance charges being added as accrued debts ( agreed by Board and Shareholders in bail out)
Lufthansa Technik will only carry out maintenance on the 738s while they get paid.
It would be nice if the Spanish bases survived , cant see these crews being used in scan land though, doesn't make sense with the spare crews and capacity there already
Look at their home-grown handling company in UK "RED HANDLING" company records showed they paid £637,546 in staff costs in 2018/19.. for 9 admin staff, no mention of other employees, in October 2020 the Norwegians appointed their own Directors, some of which are also Directors at NAS. They paid no UK tax as a company yet want the UK to support the furlough. One can't blame the Norwegian government for being cautious as this is clearly a management that works overtime to line it's own pockets.
The real shame is the loyal and professional crews seem oblivious and keep following the misguided actions of the company and will be left high and dry.
The Boeing maintenance contracts are handled under the "gold package" for 787s, and as these leases are stalled, so are the contracts, with essential maintenance charges being added as accrued debts ( agreed by Board and Shareholders in bail out)
Lufthansa Technik will only carry out maintenance on the 738s while they get paid.
It would be nice if the Spanish bases survived , cant see these crews being used in scan land though, doesn't make sense with the spare crews and capacity there already
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My guess is that there will be a massive debt cut that the Norwegian government will ask for as a requirement to take over the majority of the company. I am sure it will be taken from the stock market and major restructuring will happen. When they are lucky they can get rid of at least half of the debts putting them into a good position for the future. While all major airlines are still negotiating with their staff, burning cash everyday and loosing their business clients on long term Norwegian can be the big winner of the crisis. Not to forget the court case against Boeing which will generate cash as well.
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It’s not how the real world works. You cannot just delete the debt and continue like nothing happened.
You decide to delete the debt but elect to pocket the cash from Boeing? Which planet do you come from?
A lot of you are delusional, sorry to say.
You decide to delete the debt but elect to pocket the cash from Boeing? Which planet do you come from?
A lot of you are delusional, sorry to say.
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The kingdom of norway will make an offer to all creditors represented by a share price. Then it is basically on them to accept and secure at least some of their credits. if they deny they loose everything. Cede claims. And i live on planet earth ...
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There are no tricks involved. Its about sound, financial judgement. When the creditors were lined up against the wall in the spring, they lost a lot of money accepting the debt to share conversion. Why? Because they were nice people? No, because the alternative presented an outcome with even greater losses. Given the current circumstances, a pandemic, they are faced with the same dilemma once again. Now, I think Norwegian will walk away from this pandemic, smaller, slimmer yes, but more agile and with a lot less debt..
Last edited by uncle-traveling-matt; 16th Nov 2020 at 07:09.