Is the Norwegian state backing up the company? I haven't seen information about this, so I'm curious.

I don’t think Norwegian is going anywhere any time soon but the fact that the Norwegian state fund is massive is completely irrelevant.

CP

Right, so, the fact their wealth fund is looking to invest heavily in businesses with growth potential for the long term benefit of their country, and that the airline carrying the country's name is undergoing a globalised expansion, for benefits to national visibility as well as long term profit if they crack this new market, and that the wealth fund is worth over a trillion dollars, you don't potentially see that as a source of funding (either directly or indirectly via the Banking industry) going forwards?

Or I suppose the Norwegian government could just let a major carrier fold due to cash flow issues in the future whilst they get set up? I personally can't see that happening. Too much loss of face.

The Norwegian government is already involved in SAS, its flag carrier, along with 2 neighboring governments. Moreover its souvereign fund is public money invested for a positive return for the benefit of the country and its taxpayers.

On that basis I fail to see why Norwegian Air, as a private business and competitor, would benefit from the blind & unconditionnal support of its government.

As for the too big to fail argument, this one ignores what happened to Pan Am, TWA, Swissair, Sabena, Olympic or some others more recent or still to come.

Norwegian government investment, if they were to invest in Norwegian, would it not be the Norwegian AOC and the Norwegian element of the business.
Surley Norwegian government funding for an Irish/English AOC and associated companies would not be seen as Norwegian investment in an Norwegian company.

Unless of course the funds going into the Norwegian business and they filter down to the European companies, but surley that is unfair competition, having a European carrier NAI/NUK funded by the Norwegian government.

Food for thought perhaps.

It makes no difference if the AOC is UK (at least before Brexit), Irish or Norwegian. Norway is part of the EEC and implement all EU legislation in order to take part of the EU internal market. Norwegian Air Shuttle will have to follow the same competition rules as the rest of the airlines in Europe and state support is not allowed. Folketrygdfondet (the state fund) is the second largest shareholder in Norwegian and was holding 6,1% of the shares before the issue of new shares two weeks ago.

if private investors are not investing, Folketrygdfondet cannot solely take part in strengthening the finances of the company. The captial raised for SAS in 2009 and 2010 where the SE/NO/DK states funding half the money was not considered to be unlawful state support as the other half was funded by private investors. The capital SAS gained from the states were rather considered a healthy investment than state support.

If Folketrygdfondet is to invest further in Norwegian, the company needs confidence from private investors to raise capital as well. If that confidence is lost, money from the Norwegian state is likely considered illegal state support (if even offered). However it takes time before a decision like that would be final so if NAS is able to turn things around and become profitable again the company might be able to pay back any "illegal" state support received.

All well and good.Then again we have Alitalia

You could argue the EEC could also take a view if an airline was to saturate an airfield and loss lead seats in order to force another airline into leaving, or going bust, then upping the price once they have moved out of that operation.

And as commented above its not as though it's being done via the back door elsewhere and ignored.

Thier debt is high their trading losses are not that much, the early hiccups with the MAX US operation seem to be over with good solid load factors going forward, the start double daily from Dublin to Stewart in a few weeks time, there was a massive training program for this to be crewed and a lot of expense, crew visas, second passports and the time off paid to get them, then lots of Captains training other Captains, with the recruited and on full pay American pilots sat at home awaiting the IAA to allow them the dispensation to fly EASA aircraft on a FAA, still not fully resolved but getting their resulting wholesale purchase of pilots days off and the double day off payments that went with it.

Meanwhile long haul proper has been receiving a new Dreamliner every two weeks, so just think of the advance up front costs of crewing and training that lot for routes that only started this week Austin & daily Chicago and it’s easy to see why the are burning cash, but they are burning it through investment not through flying empty aircraft, the 1st half will likely show a significant loss and I would expect a small full year loss, thereafter the critical mass should start to overwhelm the costs, cargo is doing very well out of LGW and people are paying for the premium seats, because although round trip fairs can be bought for similar money elsewhere, what you can’t do for sensible money with BA is one way legs, they are often 2 or 3 times the cost of a return flight on the same route.

So yes there’s a risk and it would please many if it went under, especially the ‘special one’ who was sacked by Norwegian and still hasn’t got over it.

Rex. BA and AA ran at a loss with the sole purpose to put Laker out of business. Laker’s model did work and it scared the hell out of all trans-Atlantic carriers. Sadly the public were denied the chance of cheaper travel thanks to BA/AA.

These two also tried to screw Virgin but RB was a different cookie to Freddie.

Not to mention a digital strategy that means you are connected transatlantic. For free. Something some of the more established legacy carriers don't even yet offer. A lot of E-commerce, with many millennial employees, is dependent on connectivity due to the speed of business. I know many in the sector who would pick premium economy connected over unconnected in business. No good turning up for a meeting in NY with 80% of the content changed and you are the last to know.

The legacy carriers have some learning and catching up to do imho. Both iridium and Inmarsat are going to rake it in over the next 20-30 years imho as data costs plummet for global high speed business connections for airlines.

Not very good publicity over the last few days, Gatwick flight delayed nearly 24 hours after Hi-fly A340 subbed in went tech and then 787 waiting for a spare part. A lot of disgruntled passengers and NOT put up at hotels. Any profits for the day gone down the drain. This airline does very much remind me of Peoplexpress!

Incredible really. These ops disruptions have been going on for years flushing money away. Even in a learning by doing case that shouldn’t occur this often - i.e. repeating mistakes over and over again. Who manages this? Can anyone working there shed some light on their ops. Are they managed as bad as it looks from the outside?

Norwegian Preminum Economy
 

I flew Laker and loved it. I needed to get back to North America one way at short notice. Their fare was a fraction of what else was on offer.
I have flow Norwegian and their premium economy was great. All I wanted, room, a power port, wifi and enough food and drink. Nothing lavish but it worked. Air Canada did not have any wifi on their flight from Toronto to Rome.

This summer a fully refundable, changeable, PE ticket is about 1700 RT from NYC to AMS
As their routes grow I think they will do very well with the PE.
20driver

Tell me where customer sentiment fits in to the cold hard economics? Passengers love flying on the A380, however the airlines have voted with their feet as far as purchases of that model go. Same with Concorde vs the Boeing 747. In the end the economics always wins. And that does not favour Norwegian because their model is fundamentally flawed and they are a complete basket case in terms of finances.

Free wifi on the 787?

Yes, JFK- Oslo, 3 summers ago - maybe 4. Worked fine both ways.

I'm sorry, but 3 maybe 4 summers ago non of the Norwegian 787 fleet had WiFi.

Infact my last time on a Norwegian aircraft was end of 2017 and only then where aircraft starting to have WiFi installed.

With Norwegian the USP with WiFi was the fact it's free, I think for the long haul side of the business WiFi would have to be paid for, therefore initially it was not introduced on the widebody fleet.

Wifi on their a/c for several yrs
 

They had free wifi on a flight to Stockholm about 5/6 years ago. Got my travel insurance booked using it by the time we landed ha!

On the website it says no wifi on 787.

Yep economics normally wins and the 787 is mile ahead of the nearest competitor, no WiFi on long haul until late 18

Out of cash??
 

Probably. Norwegian is a company that if they moderate the LH expansion and keep the SH expanding they can get back on profitable numbers very fast. They should sale more of those 787 and wait for the A321LR to expand LH.

Its beginning to sound like AirEurope, that went bust in 1991. I remember this event well. From wikipedia "Air Europe's success came to an end – the cost of borrowing rose (to the detriment of highly debt-leveraged companies) and financial problems beset its parent company"

OMG, this is so similar to Norwegian's predicament. The cost of borrowing is rising, and political tensions are too.

I would hate to see Norwegian beaten down by BA and IAG. Its such a thorn in BA's side, but as usual, the incumbents still win. BA AF KLM will still be around , still charging the earth, long after NLH has been gobbled up.

Anyone putting up €40000 for their B787 training bond at the moment needs to be prepared for the worst.

no down payment necessary. just a guarantee you can pay.

....which may be called on in a liquidation/bankruptcy scenario? Are you not a debtor to the company which administrators would chase?

A4

....er no. An administrator is required to recover as much money as possible on behalf of creditors (banks). I have no idea if it is an enforceable contract between DLH, the type rating company or agency and the pilot.

I have no desire to see DLH fail - I’ve been on the receiving end of an airline failure and it’s a horrible place to be. I’m just asking the question - that’s all.

A4

I’d also be very surprised if it was enforceable in the event of a failure.....but with way employment practices/contracts have gone in the last few years in our industry and the bonus driven culture of management remuneration it’s not beyond belief.

A4

You are all getting a bit ahead of yourselves. Norwegian has a big pile of debt, true and it is making a small loss while going through some explosive growth, true but....

It owns a whole pile of aircraft
It owns a whole load of very valuable slots at main airports
It has firm delivery slots for A320 neos, 737 MAX and 787 worth a whole pile of money (that is just the delivery slots)
It has the backing of the Norwegian sovereign wealth fund (who has a long term investment horizon unlike other funds)
It has just now gone through the first equity raise in 9 years which has been fully subscribed by existing shareholders. It hasn't even tapped the open market.
The existing debt, they say, is financed at low long term fixed rates
It has on the table a buyout offer from IAG

Expansion costs money. New routes take time to mature, newly hired staff take time and money to be trained and to be productive, AC cost money, etc, etc, etc The amazing thing is that they are able to carry out such explosive growth without raising more (much more ) capital. Some companies use their profits to make a dividend pay out, Norwegian is using them to grow and attain a critical size to allow the necessary economies of scale to compete. I am sure the Norwegian sovereign wealth fund is happy with that.

Which on the other hand is quoted in the contract, that if this is the case, the bank guarantee will become invalid. Rishworth, is btw the actual employer. The company which rents out its services to Norwegian. So if big daddy goes bust, no liquidator will ever be able to take in those guarantees. This is also the case for any other contract (e.g. the SEPLA Collective agreement in Spain). Here, the guarantee runs (again!) over OSM Aviation and not Norwegian itself.
It is clearly stated that the bonding can ONLY be claimed if the employee choses to leave within a certain amount of time. Which in this case is three years. No money will be claimable for any other reason (except of course misconduct) than the one stated above.

Stop spreading horsesh*t.

Where do you find that the Norwegian sovereign wealth fund holds any ownership in Norwegian Air Shuttle? I've just checked on their webpage and I cannot find any information that they hold a single share in NAS.

Well they don't pay out any dividends because there is hardly any money to pay out even if they wanted to. Their EBITDA margins looks like a roller coaster last 10 years and the OP cash flow hardly increase at all. Looks like they expand with negative profitability. The question seems to be for how long the lenders/shareholders accept no return on their money. It will always be a point where they have had enough. Unfortunately the only financial curves that are beautiful to look at when you screen NAS is their debts and revenue.

Training bonds
 

For some reason the repayment of training bonds to bankrupt companies is etched into the psyche of some pilots back in 1999 when Debonair went bust the staff / administrators meeting was dominated by questions about training bond repayment. The administrators became increasingly baffled by the same questioned asked repeatedly when they had said they could not ask for the pilots under bond to repay anything.

The fact of the matter is the courts would take a very dim view of company bankruptcy administrators taking action to recover training bond money from a person who had just had the means to repay the debt removed by the very bankruptcy they are administering.

This is a historical comment on the industry and not a comment on any other issue.

lansen - if you note my post had a question mark at the end of it......so no spreading of horse$hit on my part. But thanks for the answer.

A4

Folketrygdfondet owns 3.57 million shares. The second largest owner behind the CEO and founder.

Another 2.13 million shares are owned by DNB Asset Management AS, which is in turn owned by the ministry of trade and industry.

All freely available info, for example at:

NAS Stock Price & News - Norwegian Air Shuttle ASA - Barron's

If they had chosen to not spend the money on growing the company there would be plenty of profits and money to pay out.

Yes it is. It wouldn't pass the daily mail test for a start. You could destroy the liquidators with one interview on Radio 5/LBC/Redundant of Crawley on the third page of the daily mail.

I don’t work for Norwegian. And I fully agree with what you say. Most people have who ‘talk down’ Norwegian have next to no idea of business or economics and simply fail to understand the first thing about growing a business or the concept of debt.

I think it's fair to say that nobody knows anything about the financing of the aviation business until the day before the receivers walk in. Airlines do have a bit of a habit of spectacularly imploding. Not saying Norwegian is likely to go under, but if it did, or if IAG take it over, who'd be massively surprised?

I'm familiar with a bankruptcy where the bonds were claimed. It went like this.

-Company in receivership but did not fire anyone.
-Other job was available immediately forcing the bonded people to resign in order to get this job within a limited time frame.
-As soon as they submitted their resignation the bond was claimed.
-A few days after the last bonded person resigned the company declared bankruptcy.

Don't think something similar can't happen.

Scare Mongering doesn't help
 

No covenants have been breeched yet.
Not withstanding their equipment issues, look at the presence they have in the market.
Should they require addition external funding there will be no shortage of suitors, it's just a matter of how much of the pie the principles are will to sell and to whom and at what price.

The crew will be ok and on that note Merry Christmas to all.