smallvoyageur
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Concerns that DY is running out of cash reserves

Fri Dec 08, 2017 11:49 am

Spotted this in the FT. According to Andrew Lobbenberg an aviation expert of HSBC, Norwegian is fast running out of cash due to expanding too fast, and could follow the history of Laker Airways.

https://www.ft.com/content/a013d226-daa8-11e7-a039-c64b1c09b482 ($)
 
by738
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Re: Concerns that DY is running out of cash reserves

Fri Dec 08, 2017 12:30 pm

Subscription only article. Think we've seen the likes before in similar articles last year... "the end is nigh..."
 
Curiousflyer
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Re: Concerns that DY is running out of cash reserves

Fri Dec 08, 2017 9:22 pm

There was an article on Bloomberg’s website this week too, saying they might be running out of cash eventually, although for now they seemed to be fine. How bad is this situation? Aren’t they flying full aircrafts and selling numerous add-ons like other low-costs? I understand they are a long-haul low-cost but Jetstar, Scoot, etc. are doing OK, although they are backed by large regular airlines.
 
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OzarkD9S
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Re: Concerns that DY is running out of cash reserves

Fri Dec 08, 2017 10:25 pm

Curiousflyer wrote:

There was an article on Bloomberg’s website this week too, saying they might be running out of cash eventually, although for now they seemed to be fine. How bad is this situation? Aren’t they flying full aircrafts and selling numerous add-ons like other low-costs? I understand they are a long-haul low-cost but Jetstar, Scoot, etc. are doing OK, although they are backed by large regular airlines.


DY has the "advantage" of scads of shorter haul Euro routes which may be propping up long haul, for now. How long that lasts, who knows? I remember reading in "Splash Of Colors" about Braniff's demise that Lawrence Harding justified the ALB-JFK route which was running about 50% load factor that the ALB-JFK portion was a dog but the ALB folks buying tickets to DFW through JFK and beyond made the flight profitable. Of course we now know how that kind of thinking worked out for BN.
Next Up: STL-DTW-PWM-LGA-STL in September. Gotta have a decent bowl or five of lobster bisque! :tongue2:
 
ORD2BNA
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Re: Concerns that DY is running out of cash reserves

Sat Dec 09, 2017 12:20 am

In my opinion, they need to spend a year cleaning up their balance sheet before expanding further. They have an interesting business and it would be a shame if it went by the wayside due to overspending.
 
VS11
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Re: Concerns that DY is running out of cash reserves

Sat Dec 09, 2017 12:26 am

The article is actually very informative. It does argue the two sides - one being the airline is expanding too quickly and that the many new planes ordered are eating its cash and forcing it to find places where to fly them i.e. Argentina. The other side is that the strategy is fine (overpriced and underserved TATL markets) but the execution is somewhat floppy, and while the cash burn is worrisome it is not life-threatening and the airline has equity in planes (sell and lease-back options) and equity in a bank which they can sell for cash as they have done in the past.
 
Nami
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Re: Concerns that DY is running out of cash reserves

Thu Dec 21, 2017 2:12 pm

The airline has again sold shares in Bank Norwegian, collecting NOK 185 million.

* HAS SOLD 2,000,000 SHARES IN NORWEGIAN FINANS HOLDING ASA under a Cash Settled Total Return Swap agreement with Danske Bank as counterparty at NOK 92.50 pr share.

Reuters 19.12.2017


Today a Norwegian investment bank Sparebank 1 Markets cut the stock price target from NOK 240 to 100 and recommends investors to sell. The analyst says that they have to cut back on their growth or sell the whole company.

Google translated excerpts from dn.no (in Norwegian):

"We see a high risk that the cash flow from operations will not be sufficient to finance Norwegian's growth," Westby writes in his report, which doubts that the sale of shares in Bank Norwegian or the use of sales / lease contracts for the aircraft can secure it necessary funding.

The brokerage bases the analysis on the historical development in Norwegian's earnings per available seat kilometer, based on expected growth and expected costs in 2018.

"Our analysis shows that revenues per seat kilometer will fall 11 percent in 2018 and five percent in 2019, Westby writes.

Analyst Westby believes that Norwegian therefore has two options for maintaining operations. The first is that the airline returns to the business model from 2014, when it had not launched long-haul flights.


- According to our estimates, Norwegian had a return on invested capital after tax of around ten percent in the period 2009-2013. After the launch of long distance this has dropped to two percent, the analyst points out in the report.

The second option is to get rid of long-distance flights, according to the brokerage house.

"But it will probably have few buyers because it's a loss project," writes analyst Westby.

According to him, it is more realistic to sell the entire company.

- It should be attractive for buyers from the industry as they will be exposed to a consolidated Scandinavian market, writes Westby in Sparebank 1 Markets.

He also claims that buying Norwegian will be to remove a competitor and give access to new aircraft without increasing the total offer of new aircraft.
 
tphuang
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Re: Concerns that DY is running out of cash reserves

Thu Dec 21, 2017 2:31 pm

Nami wrote:
The airline has again sold shares in Bank Norwegian, collecting NOK 185 million.

* HAS SOLD 2,000,000 SHARES IN NORWEGIAN FINANS HOLDING ASA under a Cash Settled Total Return Swap agreement with Danske Bank as counterparty at NOK 92.50 pr share.

Reuters 19.12.2017


Today a Norwegian investment bank Sparebank 1 Markets cut the stock price target from NOK 240 to 100 and recommends investors to sell. The analyst says that they have to cut back on their growth or sell the whole company.

Google translated excerpts from dn.no (in Norwegian):

"We see a high risk that the cash flow from operations will not be sufficient to finance Norwegian's growth," Westby writes in his report, which doubts that the sale of shares in Bank Norwegian or the use of sales / lease contracts for the aircraft can secure it necessary funding.

The brokerage bases the analysis on the historical development in Norwegian's earnings per available seat kilometer, based on expected growth and expected costs in 2018.

"Our analysis shows that revenues per seat kilometer will fall 11 percent in 2018 and five percent in 2019, Westby writes.

Analyst Westby believes that Norwegian therefore has two options for maintaining operations. The first is that the airline returns to the business model from 2014, when it had not launched long-haul flights.


- According to our estimates, Norwegian had a return on invested capital after tax of around ten percent in the period 2009-2013. After the launch of long distance this has dropped to two percent, the analyst points out in the report.

The second option is to get rid of long-distance flights, according to the brokerage house.

"But it will probably have few buyers because it's a loss project," writes analyst Westby.

According to him, it is more realistic to sell the entire company.

- It should be attractive for buyers from the industry as they will be exposed to a consolidated Scandinavian market, writes Westby in Sparebank 1 Markets.

He also claims that buying Norwegian will be to remove a competitor and give access to new aircraft without increasing the total offer of new aircraft.


How much more do they have to sell. I wonder if this sale covers shortfalls from this quarter or if this to help them through next quarter. One would imagine q1 would be really tough.
 
jmmadrid
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Re: Concerns that DY is running out of cash reserves

Thu Dec 21, 2017 2:35 pm

Both suggested options are quite dramatic.

Isn't there a "third option" where Norwegian defer deliveries of new planes, ax the most unprofitable routes and consolidate the profitable ones? And then wait a couple of years until they have a sustainable cashflow and their books have improved a bit?
 
Someone83
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Re: Concerns that DY is running out of cash reserves

Thu Dec 21, 2017 2:45 pm

tphuang wrote:
How much more do they have to sell. I wonder if this sale covers shortfalls from this quarter or if this to help them through next quarter. One would imagine q1 would be really tough.


They still have about 16ish % of the bank.

However, this story has a lot more siden than shown here. One issue is that Norwegian and their associates, which here includes owners, board members etc, according to Norwegian law only can control 20% of Bank Norwegian combined, they are in reality in breach here. Add Norwegians own share with those associated here, they control in reality more than 20% of the bank. Thus they are partly forced to reduce their ownership

Looking at Norwegian's cash reserves after their Q3 reporting, they are nowhere near of running out of cash in the short term. That doesn't say anything about the situation in the longer term, but they do not have to sell the shares to get cash to survive the coming winter

The previous sale had more to do increase their equity, and not raising cash by itself
 
Someone83
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Re: Concerns that DY is running out of cash reserves

Thu Dec 21, 2017 2:47 pm

jmmadrid wrote:
Both suggested options are quite dramatic.

Isn't there a "third option" where Norwegian defer deliveries of new planes, ax the most unprofitable routes and consolidate the profitable ones? And then wait a couple of years until they have a sustainable cashflow and their books have improved a bit?


Absolutely, and people tend to forget that. Defering orders is quite common among other airlines.......
 
Nami
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Re: Concerns that DY is running out of cash reserves

Wed Jan 10, 2018 12:41 am

This week there's a story on a Norwegian paper, Dagens Næringsliv, on one of Norwegian's largest shareholders getting rid of its ownership in the airline.

Unfortunately the analysis is behind a paywall but a comparable Swedish publication (Dagens Industri) most likely has the main points in its article regarding the matter.

Luckily Google Translate works quite well in this case:

Fund dumps Norwegian - that's why it's a warning signal

Norwegian fund Skagen Kon-Tiki has dumped its entire holding in the airline Norwegian this week. When a former patient major owner unleashes the parachute, the company has to be in trouble, according to the Norwegian financial newspaper Dagens Näringsliv in an analysis.

"That Skagen Funds, after so many years as a Norwegian-owner throws in the towel, is really serious", writes Dagens Näringsliv.

The Norwegian fund administrator Skagen's Kon-Tiki fund has in all weathers held a major post in the pressed low-cost airline Norwegian. As late as last summer, the fund was the seventh largest owner with approximately 700,000 shares.


In the role of major owner, Skagen has had direct contact with the company management and that the fund sells the shares after a prolonged period of falling rate indicates that confidence has reached the bottom, according to Dagens Næringslivs analysis.

Already last summer, Skagen's other major fund, Skagen Vekst, sold all their Norwegian shares. However, since the turn of the year, Kon-Tiki has also sold its last shares after Norwegian's share price fell 40 percent in 2017.

Norwegian's share price has slid down since the record price of NOK 370 in the spring of 2016. According to Dagens Næringsliv, Kon-Tiki is still doing a good deal because the fund sold its last shares for around 190 crowns and entered when the stock was traded at little under 100 crowns.


Remaining owners can at the same time comfort themselves with the fact that the share has revived over the last few days. The share has risen by 23 percent since the turn of the year.

On January 5, the company published surprisingly strong traffic figures for the whole of 2017. The number of Norwegian travelers grew by 3.8 million to 33 million in the year.


di.se (in Swedish)
Last edited by Nami on Wed Jan 10, 2018 1:11 am, edited 3 times in total.
 
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11725Flyer
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Re: Concerns that DY is running out of cash reserves

Wed Jan 10, 2018 1:06 am

by738 wrote:
Subscription only article. Think we've seen the likes before in similar articles last year... "the end is nigh..."


You can register and get either five or six freebies per month.
 
slcdeltarumd11
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Re: Concerns that DY is running out of cash reserves

Wed Jan 10, 2018 3:59 am

I think norweigan is fine. The legacies just wish norweigan would go away :stirthepot: I think their model is here to stay , it's working and looks to be the future. Revolutions don't happen overnight, the LCC long haul is sticking

If they need an investor to pump money in, they can probably find one easily, they just don't want to give up shares of the company.
 
MaverickM11
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Re: Concerns that DY is running out of cash reserves

Wed Jan 10, 2018 3:59 am

slcdeltarumd11 wrote:
I think norweigan is fine. The legacies just wish norweigan would go away :stirthepot:

SK is outperforming them regularly
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dampfnudel
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Re: Concerns that DY is running out of cash reserves

Wed Jan 10, 2018 6:50 am

In the event DY went under, who do you think would be likely to buy their 787s?
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goboeing
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Re: Concerns that DY is running out of cash reserves

Wed Jan 10, 2018 7:24 am

slcdeltarumd11 wrote:
I think their model is here to stay , it's working and looks to be the future. Revolutions don't happen overnight, the LCC long haul is sticking


Based on what?

Their model has yet to make a profit.

So, how is it working?

slcdeltarumd11 wrote:
If they need an investor to pump money in, they can probably find one easily, they just don't want to give up shares of the company.


In another thread on this forum, there's an article about how investors are bailing, fast.
 
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CARST
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Re: Concerns that DY is running out of cash reserves

Wed Jan 10, 2018 8:00 am

goboeing wrote:
slcdeltarumd11 wrote:
I think their model is here to stay , it's working and looks to be the future. Revolutions don't happen overnight, the LCC long haul is sticking


Based on what?

Their model has yet to make a profit.

So, how is it working?


In 2016 they posted a net profit. As Long as they keep posting profts, there will be banks to finance them. That their cash reserves are low, because they are in a permanent growth mode, does not mean that they are not profitable. Revenue, profits and liquid funds are three different Things.

Low-cost carrier (LCC) Norwegian reported a 2016 net profit of NOK1.1 billion ($131.6 million), more than quadrupling its NOK246 million net result in 2015. Full-year revenue for the carrier rose 15.8% to NOK26.1 billion. Norwegian CEO Bjørn Kjos described the results as “our best ever.” Norwegian’s 2016 operating expenses increased 6.9% to NOK20.1 billion; full-year operating profit was NOK1.8 billion, a fivefold increase over NOK347.8 million in 2015 operating ...


Source: http://atwonline.com/airline-financials ... net-profit
 
Delta777Jet
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Re: Concerns that DY is running out of cash reserves

Wed Jan 10, 2018 10:34 am

Is a merger with Easyjet viable ?
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skipness1E
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Re: Concerns that DY is running out of cash reserves

Wed Jan 10, 2018 10:58 am

easyJet are in the midst of setting up easyJet Europe as well as launching TXL with former, Air Berlin assets. They already serve most of the D8 routes out of Gatwick so that leaves long haul which is where the real problems at DY are coming from. It would be a brave move IMHO, I mean "brave" in the British sense, i.e. bonkers.
 
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cv990Coronado
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Re: Concerns that DY is running out of cash reserves

Wed Jan 10, 2018 11:22 am

While they were just a European LCC they were just a thorn in the side of the European legacy carriers. Now seems a very different story, to take on the US3 plus IAG, Lufthansa and AF/KL on their key money-making Trans Atlantic routes are, to say the least, "brave'. This is especially so as these carriers have seen what "newcomer' EK has done and is still doing to them.Then to add to this the history of the lack of success of Long Haul Low-cost operations and it seems a little like a cat jumping into a dog pound.
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armchairceonr1
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Re: Concerns that DY is running out of cash reserves

Wed Jan 10, 2018 11:33 am

CARST wrote:
In 2016 they posted a net profit. As Long as they keep posting profts, there will be banks to finance them. That their cash reserves are low, because they are in a permanent growth mode, does not mean that they are not profitable. Revenue, profits and liquid funds are three different Things.

Actually it looks like banks stop to finance them. Their original plan last year was take 5 new 737-800 to their own balance sheet and S&LB an other 12. They end up with S&LB all 17 new 737-800 and S&LB 11 old frames. Those 11 were overvalued at their books and they had to book additional 645mNOK one time loss of those.
 
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PatrickZ80
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Re: Concerns that DY is running out of cash reserves

Sat Jan 13, 2018 10:39 am

MaverickM11 wrote:
slcdeltarumd11 wrote:
I think norweigan is fine. The legacies just wish norweigan would go away :stirthepot:

SK is outperforming them regularly


I don't think so. If I check SkyScanner for flights between any airport in Europe and any airport in America at a random date a few months in advance, mostly the cheapest option includes Norwegian. WOW Air also regularly pops up as one of the cheapest, but I've rarely seen Scandinavian up there. Maybe once or twice in a few hundred searches, but that doesn't mean anything. Search for the same flight on another date and you easily get a different result.
 
mattyfitzg
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Re: Concerns that DY is running out of cash reserves

Sat Jan 13, 2018 11:32 am

PatrickZ80 wrote:
I don't think so. If I check SkyScanner for flights between any airport in Europe and any airport in America at a random date a few months in advance, mostly the cheapest option includes Norwegian. WOW Air also regularly pops up as one of the cheapest, but I've rarely seen Scandinavian up there. Maybe once or twice in a few hundred searches, but that doesn't mean anything. Search for the same flight on another date and you easily get a different result.


Primera Air are 9x out of 10 coming up at the top of the list
 
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PatrickZ80
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Re: Concerns that DY is running out of cash reserves

Sat Jan 13, 2018 12:20 pm

mattyfitzg wrote:
Primera Air are 9x out of 10 coming up at the top of the list


That depends on what route you're searching for. For some routes Primera might come out the cheapest, as is the case with any TATL airline. But in general, from a random European airport to a random American airport on a random date and including self-transfers, Norwegian and WOW Air are listed the most often on the transatlantic leg. The connecting feeder legs are often operated by local LCCs.

By the way, the Norwegian TATL legs almost never connect at Gatwick for the European end. Mostly they connect at Copenhagen and Barcelona. Those seem to be the cheapest entry points into Europe.
 
eidvm
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Re: Concerns that DY is running out of cash reserves

Sat Jan 13, 2018 2:19 pm

PatrickZ80 wrote:
MaverickM11 wrote:
slcdeltarumd11 wrote:
I think norweigan is fine. The legacies just wish norweigan would go away :stirthepot:

SK is outperforming them regularly


I don't think so. If I check SkyScanner for flights between any airport in Europe and any airport in America at a random date a few months in advance, mostly the cheapest option includes Norwegian. WOW Air also regularly pops up as one of the cheapest, but I've rarely seen Scandinavian up there. Maybe once or twice in a few hundred searches, but that doesn't mean anything. Search for the same flight on another date and you easily get a different result.


Surely if SAS are able to charge a premium on a route that would be a strong indicator of a higher performance, while low fares might be the metric for "Outperforming" from a travelers point of view, it certainly isn't from an airlines point of view and higher fares from SAS would indicate they're able to charge a higher premium for the remaining seats and hence woud be "Outperforming Norwegian" on the route, whereas if Norwegian and WOW are having to offer lower fares to attract volumes that would surely indicate a poorer performance?

All with a pinch of salt and within reason of course, a once off may not indicate such, however if that is the trend you've seen whereby Norwegian are consistantly (1-2/200 times according to your searches) only able to sell tickets at a lower price, if would indicate a weaker performance.
 
LJ
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Re: Concerns that DY is running out of cash reserves

Sat Jan 13, 2018 3:31 pm

CARST wrote:
In 2016 they posted a net profit. As Long as they keep posting profts, there will be banks to finance them. That their cash reserves are low, because they are in a permanent growth mode, does not mean that they are not profitable. Revenue, profits and liquid funds are three different Things.


Not really. Financial institutions look at the risk associated with a company. If you look at Norwegian, you'll see a declining margin, increasing financing costs, not things banks would love to see. This will be something look at when they request financing. Moreover, they look at all the other ratios like debt-to-equity. Profitability is just one of the indicators for financial institutions.

eidvm wrote:
Surely if SAS are able to charge a premium on a route that would be a strong indicator of a higher performance, while low fares might be the metric for "Outperforming" from a travelers point of view, it certainly isn't from an airlines point of view and higher fares from SAS would indicate they're able to charge a higher premium for the remaining seats and hence woud be "Outperforming Norwegian" on the route, whereas if Norwegian and WOW are having to offer lower fares to attract volumes that would surely indicate a poorer performance?


It still depends on how you define "outperforming". Personally I would defining it as the company making the most profit on the same route. Given SAS cost structure it's not 100% certain they'll make the most profit on these routes. Netherless, if you can get more money for the same service than your competitor you must be doing it better. Though, we don't know if the average fare on the routes with whom SAS compete are indeed higher. You cannot use public fares as SAS has probably connecting passengers, which will not pay as much as those flying point-to-point (even worse, those connecting passengers make it even worse as it also depend on how much an airline attributes to those legs). In short, we don't know who is outperforming and it's impossible to know withou inside information.
Last edited by LJ on Sat Jan 13, 2018 3:54 pm, edited 2 times in total.
 
Planesmart
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Re: Concerns that DY is running out of cash reserves

Sat Jan 13, 2018 7:11 pm

slcdeltarumd11 wrote:
If they need an investor to pump money in, they can probably find one easily, they just don't want to give up shares of the company.

They already have Boeing Capital.
 
armchairceonr1
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Re: Concerns that DY is running out of cash reserves

Tue Jan 16, 2018 1:09 pm

Norwegian is expanding very aggressively, which also mean that they need new finance. This year their estimated capex is 2.200m$ ~ 18.000mNOK, while their market cap is under 8.000mNOK and equity under 5.000mNOK per 9/2017.

Last may/june Norwegian tried to made new bond issue and get unsecured finance from the market, but that failed. This money was supposed to use to finance expiring bond. After this they ended up to sell and lease back some older aircrafts and booked 600mNOK onetime loss of those. They have also 1000mNOK credit facility from bank, 675mNOK in use per 9/2017. Their NOFI shares is collateral for this loan.

For me it looks pretty clear, that they need new equity to keep going. BUT, there is a big problem. Their market cap is just under 8.000mNOK and they need at least 5.000mNOK new equity to kick can on the road. Upcoming share issue means also huge dilution for existing shareholders, if succesful.

Last, I want to remember that Norwegian was operationally profitable only three months during 2017. They need about 0,37 RASK to be profitable, and they achieved that only June, July and August, rest of the year they made loss. After Q4/17 and Q1/18 losses their equity is under 2.000mNOK, mean that bond covenants come to play, which mean more trouble to them.

For me it looks like Norwegian used all tricks what they had last year, this year is gone be hard for them.
 
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Mortyman
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Re: Concerns that DY is running out of cash reserves

Tue Jan 16, 2018 1:55 pm

by armchairceonr1: ( From closed thread ) Norwegian wealth funds have lots of money, but not in Norwegians shares. This Company have only one backer and it is Kjos. It is Norwegians death when his money or williness to finance this ponzi is over.


Norwegian has several banks and investment funds still backing them. You can check their latest yearly report who their shareholders are.
 
jamsco99
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Re: Concerns that DY is running out of cash reserves

Tue Jan 16, 2018 2:11 pm

Simple question.... based on their rumoured financial performance would you book a flight with them ?
 
armchairceonr1
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Re: Concerns that DY is running out of cash reserves

Tue Jan 16, 2018 2:11 pm

Mortyman wrote:
by armchairceonr1: ( From closed thread ) Norwegian wealth funds have lots of money, but not in Norwegians shares. This Company have only one backer and it is Kjos. It is Norwegians death when his money or williness to finance this ponzi is over.


Norwegian has several banks and investment funds still backing them. You can check their latest yearly report who their shareholders are.

:shakehead: No, they are just shareholders, but not backing them. Behind those banks ownerships is mostly funds, who doesn't have any commitment to fund Norwegians ponzi. They are gone much quicker than you can even realize.
 
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scbriml
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Re: Concerns that DY is running out of cash reserves

Tue Jan 16, 2018 2:18 pm

jamsco99 wrote:
Simple question.... based on their rumoured financial performance would you book a flight with them ?


Yes. My wife and I are flying with them TATL in Feb.
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armchairceonr1
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Re: Concerns that DY is running out of cash reserves

Tue Jan 16, 2018 2:23 pm

scbriml wrote:
jamsco99 wrote:
Simple question.... based on their rumoured financial performance would you book a flight with them ?


Yes. My wife and I are flying with them TATL in Feb.

Customers is very likely their biggest financier right now(6.895mNOK), and they are deeply dependant of customers. Safe landings for everyone :)
 
WaywardMemphian
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Re: Concerns that DY is running out of cash reserves

Tue Jan 16, 2018 2:32 pm

In a Heartbeat for anything during this summer. Case in point. My DD's Sweet Sixteen is in late April. She wants to see Imagine Dragons in Concert. They are playing in Stockholm or Oslo at that time. So, early flight on Southwest to Midway from Memphis, knock off in Chicago and get to Ohare to hit Norwegian to Gatwick , book a buffet of flight options to stockholm from Gatwick and be at the Ericsson in time for the show. Stay in Stockholm for Fri and most of Sat and take in opening weekend of Grona Lund and start the trek back to the States. That costs less than half of what flying a connecting flight with a US legacy did from MEM. Her cousins are coming along for the ride thanks to the sub 300 RT fare on the DY far and low fares on MEM/Chicago and London/Stockholm. With a mix of points on WN and LCC fares this is doable where as it would have been 5kr four of us on the big 3 and their alliance partners.
If something goes wrong, we get stuck in Chicago or London as a fall back for a couple of days. Turrible, I know.
 
BlueTrue
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Re: Concerns that DY is running out of cash reserves

Tue Jan 16, 2018 2:53 pm

Maybe I have got this wrong. In past times, has none of the big American carriers never lost money, been in Chapter 11? Has a large UK carrier never lost lots of money in the past? They survived, why wouldn't Norwegian? Or is there just a lot of people want them to go under?
 
leghorn
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Re: Concerns that DY is running out of cash reserves

Tue Jan 16, 2018 2:54 pm

I don't know if this has been posted here or elsewhere

https://www.aviationanalytics.com/2018/ ... stretched/

the map of europe with profitability is interesting.
Image
 
tallis
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Joined: Wed May 30, 2012 10:02 pm

Re: Concerns that DY is running out of cash reserves

Tue Jan 16, 2018 4:34 pm

BlueTrue wrote:
Maybe I have got this wrong. In past times, has none of the big American carriers never lost money, been in Chapter 11? Has a large UK carrier never lost lots of money in the past? They survived, why wouldn't Norwegian?


You’re correct to an extent - but there are key differences here.

Firstly, as you mention it, there’s no Chapter 11 in Europe. Bankruptcy is a much more terminal process and options for refinancing more limited than in the USA. Of course, Norwegian isn’t bankrupt but bear in mind that if ever it were, it won’t have Chapter 11 protections in the same way a US legacy would have.

Secondly, this is not really about an annual profit or loss - which you’re correct is something many many airlines have suffered in the past! It’s about running out of cash reserves, which is very different from losing money. Even profitable companies can run out of cash if they over expand, or of their creditors withhold funds due to liquidity concerns.
 
Amiga500
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Re: Concerns that DY is running out of cash reserves

Tue Jan 16, 2018 4:36 pm

dampfnudel wrote:
In the event DY went under, who do you think would be likely to buy their 787s?


O'Leary.

Ryanair's fleet has long since grown beyond economies of keeping a single type.
 
kiowa
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Re: Concerns that DY is running out of cash reserves

Tue Jan 16, 2018 4:54 pm

BlueTrue wrote:
Maybe I have got this wrong. In past times, has none of the big American carriers never lost money, been in Chapter 11? Has a large UK carrier never lost lots of money in the past? They survived, why wouldn't Norwegian? Or is there just a lot of people want them to go under?


Perhaps they would be supported by the taxes on the people of Norway. Isn’t that how Alitalia keeps in business?
 
mcdu
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Re: Concerns that DY is running out of cash reserves

Tue Jan 16, 2018 4:58 pm

BlueTrue wrote:
Maybe I have got this wrong. In past times, has none of the big American carriers never lost money, been in Chapter 11? Has a large UK carrier never lost lots of money in the past? They survived, why wouldn't Norwegian? Or is there just a lot of people want them to go under?


Don’t believe there is CH11 in Europe. See Monarch

To use CH11 in the US you needed tangible assets and creditors willing to renegotiate. DY has no assets or most likely any willing creditors that would want their money burned.
 
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PatrickZ80
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Re: Concerns that DY is running out of cash reserves

Tue Jan 16, 2018 5:18 pm

jamsco99 wrote:
Simple question.... based on their rumoured financial performance would you book a flight with them ?


If not too far in advance, yes, I would. They may be running out of cash, but the chances they'll cease operations within a few months aren't big. Most likely the booked flight will still go. However for a flight a year from now I wouldn't book yet. First I'd wait and see how their financial situation develops. If a few months before the flight it still looks like it does today it's still early enough to book.
 
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PatrickZ80
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Re: Concerns that DY is running out of cash reserves

Tue Jan 16, 2018 5:29 pm

kiowa wrote:
Perhaps they would be supported by the taxes on the people of Norway. Isn’t that how Alitalia keeps in business?


Can't compare the two of them. Alitalia has much stronger ties with the Italian government than Norwegian does with the Norwegian government. Alitalia is in fact still the state-run airline it once was, existing to provide air connections and jobs for the Italian people. Whether or not they were profitable was irrelevant, and that culture still remains within Alitalia. Norwegian is in a whole other position and if they get into financial trouble there won't be any interfearance from any government. They're on their own.
 
armchairceonr1
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Re: Concerns that DY is running out of cash reserves

Wed Jan 24, 2018 9:31 am

Norwegian released yesterday that they are looking investors to their unsecured bond worth 65 million euros. Last time they offered this same bond to investors in may but that issue failed. Let's see what happen this time.
 
BestWestern
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Re: Concerns that DY is running out of cash reserves

Wed Jan 24, 2018 9:38 am

armchairceonr1 wrote:
Norwegian released yesterday that they are looking investors to their unsecured bond worth 65 million euros. Last time they offered this same bond to investors in may but that issue failed. Let's see what happen this time.


It will be very interesting to see what % rate they pay for this, if they have any takers.
Greetings from Hong Kong.... a subsidiary of China Inc.
 
adambrau
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Joined: Sun Mar 25, 2007 11:44 pm

Re: Concerns that DY is running out of cash reserves

Wed Jan 24, 2018 9:51 am

While I understand the average flyer will opt for the lowest flight, I am stuck with UNITED which while may delay me a day or two I know will ultimately get me to my destination. I wouldn't want the sleepless nights of whether Norwegian could do that after the summer 2018 season ends.
Let's keep the skies friendly.
 
armchairceonr1
Posts: 207
Joined: Sun Jul 30, 2017 8:09 am

Re: Concerns that DY is running out of cash reserves

Wed Jan 24, 2018 10:05 am

One question about this bond issue is timing. They release their full year 2017 result at 15th of february and they already know what numbers look like. They also had investor call yesterday, did they told something to investors, what hasn't released yet to market?It would be good corporate governance to wait, until 2017 result is released.
 
armchairceonr1
Posts: 207
Joined: Sun Jul 30, 2017 8:09 am

Re: Concerns that DY is running out of cash reserves

Thu Jan 25, 2018 10:18 am

BestWestern wrote:
It will be very interesting to see what % rate they pay for this, if they have any takers.

This placement was succesful and they got 65 million EUR. This is existing bond and coupon is 7,25%. They not told what was yield in this issue. But obviously they had to buyback other loan by 169,5 million NOK from some investors. This other loan expire in May and there is still over 1000 million NOK outside.
Norwegian Air Shuttle ASA - successful placement of tap issue in NAS07

Reference is made to the press release dated 23 January 2018. Norwegian Air Shuttle ASA (the "Company") has successfully completed a tap issue of EUR 65 million in the outstanding EUR 185 million senior unsecured bonds issue with ISIN NO 001 0753437 and maturity in December 2019 (NAS07). Following the tap issue, the new outstanding amount in NAS07 will be EUR 250 million.

Net proceeds from the tap issue will be used for general corporate purposes and further growth of the Group.

In connection with the placement of the tap issue, the Company has repurchased bonds with nominal value of NOK 169.5 million in the existing bond issue NAS06 (ISIN: NO 001 0736549) with maturity in May 2018.

Danske Bank, Nordea and Pareto Securities acted as managers in the transaction.

For further information, please contact:
Tore Østby, acting CFO, Phone: +47 9954 6400
Stine Klund, Investor Relations Officer, Phone: +47 986 99 259

Fornebu, 24 January 2018
Norwegian Air Shuttle

http://www.newsweb.no/newsweb/search.do ... eId=442825
 
Bongodog1964
Posts: 3451
Joined: Wed Oct 18, 2006 6:29 am

Re: Concerns that DY is running out of cash reserves

Thu Jan 25, 2018 12:13 pm

armchairceonr1 wrote:
BestWestern wrote:
It will be very interesting to see what % rate they pay for this, if they have any takers.

This placement was succesful and they got 65 million EUR. This is existing bond and coupon is 7,25%. They not told what was yield in this issue. But obviously they had to buyback other loan by 169,5 million NOK from some investors. This other loan expire in May and there is still over 1000 million NOK outside.
Norwegian Air Shuttle ASA - successful placement of tap issue in NAS07

Reference is made to the press release dated 23 January 2018. Norwegian Air Shuttle ASA (the "Company") has successfully completed a tap issue of EUR 65 million in the outstanding EUR 185 million senior unsecured bonds issue with ISIN NO 001 0753437 and maturity in December 2019 (NAS07). Following the tap issue, the new outstanding amount in NAS07 will be EUR 250 million.

Net proceeds from the tap issue will be used for general corporate purposes and further growth of the Group.

In connection with the placement of the tap issue, the Company has repurchased bonds with nominal value of NOK 169.5 million in the existing bond issue NAS06 (ISIN: NO 001 0736549) with maturity in May 2018.

Danske Bank, Nordea and Pareto Securities acted as managers in the transaction.

For further information, please contact:
Tore Østby, acting CFO, Phone: +47 9954 6400
Stine Klund, Investor Relations Officer, Phone: +47 986 99 259

Fornebu, 24 January 2018
Norwegian Air Shuttle

http://www.newsweb.no/newsweb/search.do ... eId=442825


7.25% ?

That figure shows the markets have very little confidence in DY.

Bond yields for safe investments are presently around 3% or lower.
 
armchairceonr1
Posts: 207
Joined: Sun Jul 30, 2017 8:09 am

Re: Concerns that DY is running out of cash reserves

Thu Jan 25, 2018 12:30 pm

Bongodog1964 wrote:
7.25% ?

That figure shows the markets have very little confidence in DY.

Bond yields for safe investments are presently around 3% or lower.

Yes, they have to pay huge premium. Investment grade unsecured bonds yield 3-4%, and they have to pay double. And this is not only about bonds, it reflects in all their financing. Customers are their best lender right now. :)

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