Hard times for Norwegian
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Uncle, you said it yourself - the shares are almost worthless, so why would they convert secured debt into more worthless shares. The level of security on debt varies, but the (Norwegian) governments tend to put themselves at the front of the queue for break up assets - it wouldn't be much, but at a guess, I'd say it's more than the equity would be worth. Anyway, first the administration has to be approved by the judge, and that's far from certain.
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In reality the "old structure" dies and the value of the shares dies with it, so selling any old shares is not possible, who's going to buy shares in a structure that no longer exists? The shares are already under observation for OSLO trading and forecast is worth zero, so forget raising money by selling old shares.
The existing "creditors" may also be share holders, however their historical debt was converted to shares in May and it could be seen the slate was wiped clean with that transaction, the "new debt" has accrued since May and is on-going with contractual obligations, wages, overheads etc, and it is this "new debt" that balanced with the available income and cash reserves puts the existing company in insolvency.
The examinership process is solely designed to protect the company from its creditors for the period 100 days, during which a feasible and sustainable business plan must be made, or the company is declared bankrupt.
Of course the shareholders will vote for restructuring, they have little choice, but the hat they wear as "creditors", means that for the process to be approved by the court with a successful exit they will get more in real terms than if the company is dissolved and the assets sold.
One must remember that the primary role of the Examinership is to protect employees.
For this process to be approved REAL INVESTMENT must be forthcoming, not vacuous promises and more importantly, the "investment must be received" , this is where they will struggle unless the shareholders are prepared to actually put in cash. Trading revenues from sales is not investment.
Cityjet creditors agreed to write off 75% of their debts and the company received sufficient external investment cash to continue.
A slimmed down Norwegian with the new management may well be an attractive investment, lets see who comes out of the woodwork on this. Pity Braathen has hovered up some potential sources
The existing "creditors" may also be share holders, however their historical debt was converted to shares in May and it could be seen the slate was wiped clean with that transaction, the "new debt" has accrued since May and is on-going with contractual obligations, wages, overheads etc, and it is this "new debt" that balanced with the available income and cash reserves puts the existing company in insolvency.
The examinership process is solely designed to protect the company from its creditors for the period 100 days, during which a feasible and sustainable business plan must be made, or the company is declared bankrupt.
Of course the shareholders will vote for restructuring, they have little choice, but the hat they wear as "creditors", means that for the process to be approved by the court with a successful exit they will get more in real terms than if the company is dissolved and the assets sold.
One must remember that the primary role of the Examinership is to protect employees.
Examinership, it’s Ireland’s rescue framework for, you know, otherwise viable companies that find themselves in difficulty, but they have good, good prospects for survival if they can be restructured.
In fact, the test actually is only a reasonable prospect of survival and subject to certain conditions that if they can restructure themselves, they can still be there for the for the benefit, particularly of the employees, which is why the legislation was introduced in 1990. And secondly, then for the benefit of the community as a whole, that, you know, that the enlightened approach is that businesses should have a second chance, should be given a second chance if they are if they can be viable, if they’re restructured. So that’s what that’s what Examinership is.
In fact, the test actually is only a reasonable prospect of survival and subject to certain conditions that if they can restructure themselves, they can still be there for the for the benefit, particularly of the employees, which is why the legislation was introduced in 1990. And secondly, then for the benefit of the community as a whole, that, you know, that the enlightened approach is that businesses should have a second chance, should be given a second chance if they are if they can be viable, if they’re restructured. So that’s what that’s what Examinership is.
Cityjet creditors agreed to write off 75% of their debts and the company received sufficient external investment cash to continue.
A slimmed down Norwegian with the new management may well be an attractive investment, lets see who comes out of the woodwork on this. Pity Braathen has hovered up some potential sources
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From The Irish Times:
https://www.irishtimes.com/business/...icit-1.4415098
The outlook is not encouraging.
https://www.irishtimes.com/business/...icit-1.4415098
The outlook is not encouraging.
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“the report says the companies have a reasonable prospect of survival if they take certain steps proposed by management, including renegotiating lease payments on their aircraft, deferring some loan repayments, cutting their fleet and cancelling future aircraft orders.”
Seems there is hope
Seems there is hope
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liquidating Norwegian would see the creditors loose everything :
”An independent accountant’s report submitted to the court shows that winding up Norwegian AirShuttle would wipe out most of its assets, leaving a $7.1 billion (€5.98 billion) shortfall, eliminating any chance of creditors collecting on the debts due to them”
”An independent accountant’s report submitted to the court shows that winding up Norwegian AirShuttle would wipe out most of its assets, leaving a $7.1 billion (€5.98 billion) shortfall, eliminating any chance of creditors collecting on the debts due to them”
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They were losing money before the pandemic. Their major competitors are now leaner and ready to make serious money.
Seriously, if a family wanted to spend money next year on a trip to the USA do we think it’s wise to spend money on them or one or their competitors?
It’s a no brainier.
And I feel for the staff who have been badly treated but many people have been laid off in other companies too.
They bring nothing to the pilot profession apart from a step downwards and because of that, in my opinion, they do not deserve to succeed.
Seriously, if a family wanted to spend money next year on a trip to the USA do we think it’s wise to spend money on them or one or their competitors?
It’s a no brainier.
And I feel for the staff who have been badly treated but many people have been laid off in other companies too.
They bring nothing to the pilot profession apart from a step downwards and because of that, in my opinion, they do not deserve to succeed.
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The lease payments were changed to PBH in the May bail out, not sure what's left to be negotiated, other than fly for fee.
Deferring loan payments, guess that's up to the Banks and the government of Norway, but the loan payments have already been deferred once from Dec to March.
Cancelling future orders, already done, but at legal stages with Boeing regarding payback of prepayments and compensation, that case likely to last a year.
The good thing is that the Court have identified the liquidation would just leave huge debt, nothing for creditors so anything better than that is a bonus and helps the process.
Key to this is external investment, no investment, no happy ending
Deferring loan payments, guess that's up to the Banks and the government of Norway, but the loan payments have already been deferred once from Dec to March.
Cancelling future orders, already done, but at legal stages with Boeing regarding payback of prepayments and compensation, that case likely to last a year.
The good thing is that the Court have identified the liquidation would just leave huge debt, nothing for creditors so anything better than that is a bonus and helps the process.
Key to this is external investment, no investment, no happy ending
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"They bring nothing to the pilot profession apart from a step downwards and because of that, in my opinion, they do not deserve to succeed."
I'm not sure I follow your sentiment... I used to fly for Norwegian and I only left to go home (I was made redundant 2 months after I left in my new airline). I saw nothing but professional and dedicated people at Norwegian, and the pay was absolutely acceptable. Not perfect, but at the upper scale for low cost at the very least. Only long days and too many nightstops out of LGW was really a "minus" as I recall.
If Norwegian folds I suspect we will see an even faster decline in T&C's across the board. The next major low-cost company might not be as union friendly as Norwegian.
Not sure how this will play out, but I hope we will see a better, leaner Norweigan at the other end of Covid-19.
I'm not sure I follow your sentiment... I used to fly for Norwegian and I only left to go home (I was made redundant 2 months after I left in my new airline). I saw nothing but professional and dedicated people at Norwegian, and the pay was absolutely acceptable. Not perfect, but at the upper scale for low cost at the very least. Only long days and too many nightstops out of LGW was really a "minus" as I recall.
If Norwegian folds I suspect we will see an even faster decline in T&C's across the board. The next major low-cost company might not be as union friendly as Norwegian.
Not sure how this will play out, but I hope we will see a better, leaner Norweigan at the other end of Covid-19.
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Any idea what this may mean for the LGW SH skippers that were made redundant and looking at CRZ CPT on 787? Is this a ploy to suggest they are protecting jobs?
Last edited by Avenger; 22nd Nov 2020 at 11:40.
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It was assumed that all the creditors would agree to the process, but getting a High Court Judgment against the company in which you have an interest is a pretty strong statement that the Courts will not ignore
"The judge awarded Norwegian temporary protection until December 7, by which time creditors of Norwegian’s Irish subsidiaries can lodge their opposition."
The problem now is that having the default judgements made by the UK Court, unless the examinership protection continues the winding up is almost certain unless the previous debts are paid off in full..
"The judge awarded Norwegian temporary protection until December 7, by which time creditors of Norwegian’s Irish subsidiaries can lodge their opposition."
The problem now is that having the default judgements made by the UK Court, unless the examinership protection continues the winding up is almost certain unless the previous debts are paid off in full..
Last edited by Kirks gusset; 23rd Nov 2020 at 16:44.
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Boeing seeks dismissal of Norwegian Air’s €1bn lawsuit over Max aircraft
https://www.irishtimes.com/business/...raft-1.4417147
”Boeing is bidding to stall troubled airline Norwegian Air’s $1 billion lawsuit against the US aircraft manufacturer while the Scandinavian carrier lines up a rescue attempt in the Irish courts”
”Boeing is bidding to stall troubled airline Norwegian Air’s $1 billion lawsuit against the US aircraft manufacturer while the Scandinavian carrier lines up a rescue attempt in the Irish courts”
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BOC have been gradually selling shares but still hold over 182 Million shares in NAS and the group companies, although the values have plummeted since the bail out in May.
Selling these 39 Million shares would have generated $18M in May, now just $2M.
On a positive side, it does free up more shares for investment, although it looks like a fire sale by the leasing companies is taking place before the next stage of the examinership, which if rejected renders the shares worthless.
Selling these 39 Million shares would have generated $18M in May, now just $2M.
On a positive side, it does free up more shares for investment, although it looks like a fire sale by the leasing companies is taking place before the next stage of the examinership, which if rejected renders the shares worthless.
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Even with the debt for shares program earlier this year, NAS still has a debt of around 4 billion Euros. No new investor will bei terested in throwing more money into this bottomless pitt.
The only sensible thing to do is liquidate this mismanaged company, eventhough it will hurt the creditors.
Norwegian will never be a serious contender in the aviation market again. Post Corona they will not have the muscle to compete with Ryanair, Wizz air and Easy Jet. Unless ” somebody” is stupid enough to inject at least 1 billion EUR into this doomed company.
The only sensible thing to do is liquidate this mismanaged company, eventhough it will hurt the creditors.
Norwegian will never be a serious contender in the aviation market again. Post Corona they will not have the muscle to compete with Ryanair, Wizz air and Easy Jet. Unless ” somebody” is stupid enough to inject at least 1 billion EUR into this doomed company.
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For the financial gurus:
It is quite clear that only 20% of the income came from the home market, therefore, by definition, if the new structure allows just for Norway based operations, 80% of the revenue would be lost.. having said that, the biggest growth in revenue 29% came from "other" which translates to selling aircraft, fuel hedging, selling fixed assets, exchange transactions etc.. if you like "wooden dollars" as these transactions are really "one off".
Interestingly, USA and Spain were the second biggest source of pax revenues, again, with the demise of LH ops, thats another 19% lost.
A sensible model would appear to be a much reduced fleet, just SH and Norway and Spain operations.
In terms of who's buying shares, there are no apparent large single investors, and with the price so low perhaps many are taking a punt with over 66% of the shares up for grabs.
Sales per Business
2018 2019 Delta NOK (in Million) % NOK (in Million) % Passenger Transport 32,560 82.3% 35,216 82.6% +8.16% Ancillary 6,267 15.8% 6,652 15.6% +6.14% Other 695.60 1.8% 899.00 2.1% +29.24% Freight 743.30 1.9% 755.10 1.8% +1.59%
Sales per region
2019 NOK (in Million) % Norway 8,644 20.3% United States 8,313 19.5% Spain 6,005 14.1% Other 4,585 10.8% United Kingdom 4,458 10.5% Sweden 3,430 8% Denmark 2,977 7% France 1,949 4.6% Italy 1,214 2.8% Finland 1,206 2.8
It is quite clear that only 20% of the income came from the home market, therefore, by definition, if the new structure allows just for Norway based operations, 80% of the revenue would be lost.. having said that, the biggest growth in revenue 29% came from "other" which translates to selling aircraft, fuel hedging, selling fixed assets, exchange transactions etc.. if you like "wooden dollars" as these transactions are really "one off".
Interestingly, USA and Spain were the second biggest source of pax revenues, again, with the demise of LH ops, thats another 19% lost.
A sensible model would appear to be a much reduced fleet, just SH and Norway and Spain operations.
In terms of who's buying shares, there are no apparent large single investors, and with the price so low perhaps many are taking a punt with over 66% of the shares up for grabs.
Sales per Business
2018 2019 Delta NOK (in Million) % NOK (in Million) % Passenger Transport 32,560 82.3% 35,216 82.6% +8.16% Ancillary 6,267 15.8% 6,652 15.6% +6.14% Other 695.60 1.8% 899.00 2.1% +29.24% Freight 743.30 1.9% 755.10 1.8% +1.59%
Sales per region
2019 NOK (in Million) % Norway 8,644 20.3% United States 8,313 19.5% Spain 6,005 14.1% Other 4,585 10.8% United Kingdom 4,458 10.5% Sweden 3,430 8% Denmark 2,977 7% France 1,949 4.6% Italy 1,214 2.8% Finland 1,206 2.8
In terms of who's buying shares, there are no apparent large single investors, and with the price so low perhaps many are taking a punt with over 66% of the shares up for grabs.