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Norwegian - Courses Cancelled

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Norwegian - Courses Cancelled

Old 30th Dec 2018, 15:01
  #21 (permalink)  
 
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So why haven’t they (IAG) gone ahead with it? If you have to sell a vast number of aircraft to give you the cash flow to keep your “business model” afloat that’s a pretty sure sign that things aren’t going too well. Norwegian have an eye watering amount of debt. Investors have put some money in to stop them defaulting on banking covenants this time around, that hasn’t solved the issue of the debt, nor does it solve the problem that Norwegian aren’t making enough money in the North Atlantic Summer to offset their huge losses in the winter. Who knew?

They’re selling flights of 10h+ for £150 for god’s sake, do you really believe that that is a profitable business model just because the 787 burns a little less fuel? At this point any further investment/cash is just kicking the can a little further down the road. What you have to remember is that investors like these are basically hedging, it’s a punt and they’ll gain somewhere else in another venture if the Norwegian investment goes down the toilet, which many analysts argue is only a matter of time.

Last edited by RexBanner; 30th Dec 2018 at 15:12.
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Old 30th Dec 2018, 19:28
  #22 (permalink)  
 
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I agree with RB. The only people who throw good money after bad into airlines are Governments and people who need to be saved from themselves.

Most successful investors will run a mile from most airlines.
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Old 30th Dec 2018, 19:35
  #23 (permalink)  
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The ECB are now forecasting a sluggish looking 1.7% GDP growth in the Eurozone next year. ECB QE just stopped. The Fed will raise rates.

https://www.cnbc.com/2018/12/13/euro...or-europe.html


A perfect storm for NAS. To top it off their expensive but fuel efficient fleet ain’t looking so marvelous at just $55 for Brent crude.

Willie Walsh isn’t their to rescue it, he’s there to kill it.


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Old 30th Dec 2018, 20:10
  #24 (permalink)  
 
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Weasl
Do you seriously think Lufthansa will let that happen?
They have shown interest.
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Old 30th Dec 2018, 20:35
  #25 (permalink)  
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Corporate shadow boxing.


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Old 30th Dec 2018, 21:00
  #26 (permalink)  
 
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directmisbi and RexBanner

You’re both quite active on this thread and I find both your post quite informative and credible - so I am, like other aviation colleaques left not knowing what to think about Norwegian....

My honest opinion is that Norwegian offers a superior product when asking value for money - that surely is part of the problem.....

Having gone through the available material on Norwegian homepage for investor relations a whole lot of questions come to mind, hopefully some are able to answer objectively.
  • 2016 profit of 1,6 Bn was that a profit of flying passengers from A to B or was it a sale and leaseback of assets to strenghten the balance sheet?
  • Also, owning aircraft Vs. leasing, the lease according to their figures is a higher cost for Norwegian, than owning the aircraft. So what good does 70% ownership of the fleet if potential Sale and Leaseback to free cash puts further financial strain on the financials long term?
  • Am I correct, if i’d were to say that, if Norwegian investors ( Kjos and Kise included ) have indeed thrown money into the company again - this would be the third time within 30 months?
  • Adding to the above - the CFO is on their Q3 reporting the highest, ever equity of 5.34 Bn in company history....! If that is true, and their official debt is nearing 30 Bn i’d say they’re financials is more than a bit stressed - considering the need for fresh cash to not endanger breaching covenants, second time in one year.
  • What good does refinancing of a 787 worth 275 mill. cash when they, by their own figures loose close to 1 Bn pr. month during the winter? - that gives liquidity for 10 days operation at current state.
  • Is it, by the opinion of all the PPRuNe experts, at all realistic for Norwegian to slow down or even stop the expansion and consolidate the organization without substantiel further losses?
A bit pessemistic questions I know, but hoping for the best for our colleaques up north. The joint venture thing sounds like a liferaft though. Any further indications on the prospect of chinese businessmen involved with a euro lowco?

With significant amount of respect for Mr. Kjos I would hope that the Director of the Board, in due time appoints a new CEO with no feelings involved. Mr. Kjos has done what many pilots dream of - started and run his own airline - and what an establishment he has created. He has and probably still is running it with norwegian style dignity.

Happy new year to all









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Old 30th Dec 2018, 21:00
  #27 (permalink)  
 
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Nah. Big egos playing to see who has the biggest aviation group in Europe. If you buy NAS and close it down you don't achieve anything wizzair or transavia or whoever would just grow to fill the gap. IAG wants to be the biggest and to grow it needs to buy up smaller players. NAS + VLG are bigger than Easyjet and makes IAG the 2nd biggest player in European Low cost shorthaul. Keeping the separate brands gives the appearance of choice to consumers while taking advantage of economies of scale. It also fills a gap that cannot then be filled by other competitors. In the other hand a large airline is quite a good hedge to a large oil company hence the Norwegian sovereign fund is not letting go that easily, unlike other investors they are in a position to take the long view.

Low cost long haul is just a marketing concept, quite a nice one if it helps you to promote brand awareness and drives consumers to your website. Norwegian does not really need to be low cost to benefit from the low cost label, specially since there isn't really any benchmark as to what constitutes low cost in long haul. Not may tickets sold at low cost prices I suspect. Proof of that is they have increased the size of the premium cabin which tends to be quite full.
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Old 30th Dec 2018, 21:15
  #28 (permalink)  
 
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Originally Posted by calypso View Post
NAS + VLG are bigger than Easyjet and makes IAG the 2nd biggest player in European Low cost shorthaul.
A quick search on Google suggests you got the numbers wrong.
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Old 30th Dec 2018, 21:55
  #29 (permalink)  
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Winter is coming.


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Old 30th Dec 2018, 22:04
  #30 (permalink)  
 
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Fascinating, I'm sure.
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Old 30th Dec 2018, 22:29
  #31 (permalink)  
 
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Originally Posted by Wee Weasley Welshman View Post
Winter is coming.


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i feel you are correct...i am no expert in finance, but we are in a service based country, retail is dead, new car manufacturering down 20%, average savings of less than £100 per head, stock markets seemed to have peaked this year, china v trump, brexit, some huge elections in big countries this year...the lemons have been squeezed dry and just the pips remain. The biggest hint that the storm is coming, is it has never been easier to get a pilot job, just like the previous recessions!!

The question is, where does the central banks go. This “recovery” has been built on zero rates and printed money.

Apologies for thread drift.
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Old 30th Dec 2018, 22:42
  #32 (permalink)  
 
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Long winter
Easter in April , second quarter.
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