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Norwegian stocks nearly as low as they were pre-IAG offer

Posted: Tue Oct 23, 2018 2:21 pm
by a350lover
They are trading today in Oslo at Kr173,20. Have reached minimums on the 169..., so the company stock value is now as low as it was before IAG made an offer to acquired the participation it has now in Norwegian.

https://www.bloomberg.com/quote/NAS:NO

Just a few weeks after the offer came through, the stocks reached maximums of Kr.320, increasing the airline value on the stock market by nearly 50%

Last results published by the airline were optimistic and showed signs of better performing, but those were from the first 6 months of the year. Let's wait till new results are announced, but taking into account the summer was kind of "hard" for all players in the aviation market in Europe, and the winter around the corner... Norwegian is likely to take further actions in order to reorganize and reshape its model. Just like all the rest are doing.

Re: Norwegian stocks nearly as low as they were pre-IAG offer

Posted: Tue Oct 23, 2018 3:27 pm
by CPHFF
Well, I am sure it makes Shareholders very nervous when a reputable institution like Credit Suisse is giving a warning in regards to Norwegians cash flow.

Re: Norwegian stocks nearly as low as they were pre-IAG offer

Posted: Tue Oct 23, 2018 5:25 pm
by LupineChemist
Cash flow warnings and Q3 earnings report on Thursday.

Buy the rumor, sell the news as it were and even a couple percent positive operating margin is just not enough.

Re: Norwegian stocks nearly as low as they were pre-IAG offer

Posted: Tue Oct 23, 2018 6:31 pm
by a350lover
I am pretty sure they can find the money to remain in the market. The model is good enough and Norwegian has truly become a global airline, BUT somehow they have to take action, and recognize that changes are needed so that investors can trust on them.

The model can be so revolutionary that the way its business works is different to the rest of the industry (okey, yeah, let's trust!), but the industry indicators are very well defined and Norwegian needs to respond to them at some point with something to convince the market. Meanwhile, it all looks rather unrealistic.

Re: Norwegian stocks nearly as low as they were pre-IAG offer

Posted: Tue Oct 23, 2018 9:26 pm
by LupineChemist
Norwegian still hasn't shown that they can actually make money. They've only ever had a slightly positive operating margin a few quarters and IIRC Q3 2017 was the last time. (Note the Q2 profit wasn't an operating profit). If they can't get CASK below RASK on an annual basis they just aren't a viable airline no matter what you think of their model and they are very far from that. Fuel prices going up is not great for them, though it does help a bit that NOK tracks with oil prices so it lowers their NOK denominated costs, but these days not much in their costs/revenue are actually in Norway, so it can be relatively neutral.

I do think low cost long haul would be in a better situation to weather a recession, but Norwegian's financials aren't one to be able to weather much of anything. Yeah, I know they talk about future profitability but you need the cash to get to the future. Lesson one in business school is that profitability isn't your goal as a business, positive cash flow is and profitability is a way to achieve that but you could have a 10000% return business but it matters for naught if you can't turn on the light tomorrow.

Re: Norwegian stocks nearly as low as they were pre-IAG offer

Posted: Tue Oct 23, 2018 9:56 pm
by a350lover
I think what we all agree on here is that we are missing Norwegian talking about this as a serious issue, enough to be the center of its agenda every day.

“Normal airlines” let’s say... take actions when things go wrong, business is weak or not as good as expected. This industry is particularly volatile, and sometimes airlines do not even have the time to mature routes before they drop in order to not loose any money. Thus, airlines drop routes, change flight times, reorganize their businesses, close bases... all working in one direction: stay profitable.

Norwegian instead seems to rather deny its poor performance and current movements are again kind of disorganized: start of domestic operations in Argentina, Singapore-London ends, Rio might be announced from LGW, purely leisure routes soon to launch Scandinavia-Krabi, etc.

Re: Norwegian stocks nearly as low as they were pre-IAG offer

Posted: Thu Oct 25, 2018 7:51 am
by a350lover
[threeid][/threeid]Some good results apparently...:

http://www.breakingtravelnews.com/news/ ... d-quarter/

Although challenges remain there. For the first time, they talk about conversations with a partner for a "fleet joint venture".

https://www.bloomberg.com/news/articles ... l-for-fuel

Re: Norwegian stocks nearly as low as they were pre-IAG offer

Posted: Thu Oct 25, 2018 12:34 pm
by LupineChemist
Good results? They pulled the same trick they pulled in Q2. Sell assets. play with valuations, and call it profitable.

CASK was higher than RASK. That's an operating loss. In Q3, in Europe. And their grand plan is trying to get supplemental income revenue in Argentine Pesos at a time with oil going up which raises the value of NOK, too so they get killed twice on the currency moves.

This winter will be BAD for them.

Re: Norwegian stocks nearly as low as they were pre-IAG offer

Posted: Thu Oct 25, 2018 1:00 pm
by CeddP
LupineChemist wrote:
Good results? They pulled the same trick they pulled in Q2. Sell assets. play with valuations, and call it profitable.

CASK was higher than RASK. That's an operating loss. In Q3, in Europe. And their grand plan is trying to get supplemental income revenue in Argentine Pesos at a time with oil going up which raises the value of NOK, too so they get killed twice on the currency moves.

This winter will be BAD for them.


Where do you see an operating loss in Q3 ?? YTD ok, but in Q3, I read 1.8bn NOK operating profit...

Re: Norwegian stocks nearly as low as they were pre-IAG offer

Posted: Thu Oct 25, 2018 1:11 pm
by LupineChemist
CeddP wrote:
LupineChemist wrote:
Good results? They pulled the same trick they pulled in Q2. Sell assets. play with valuations, and call it profitable.

CASK was higher than RASK. That's an operating loss. In Q3, in Europe. And their grand plan is trying to get supplemental income revenue in Argentine Pesos at a time with oil going up which raises the value of NOK, too so they get killed twice on the currency moves.

This winter will be BAD for them.


Where do you see an operating loss in Q3 ?? YTD ok, but in Q3, I read 1.8bn NOK operating profit...


Yeah, sorry I was going through it fast and read the CASK versus RASK. I'm still trying to figure out how they got an operating profit line with higher costs than revenue.

Re: Norwegian stocks nearly as low as they were pre-IAG offer

Posted: Thu Oct 25, 2018 2:52 pm
by hOMSaR
LupineChemist wrote:
CeddP wrote:
LupineChemist wrote:
Good results? They pulled the same trick they pulled in Q2. Sell assets. play with valuations, and call it profitable.

CASK was higher than RASK. That's an operating loss. In Q3, in Europe. And their grand plan is trying to get supplemental income revenue in Argentine Pesos at a time with oil going up which raises the value of NOK, too so they get killed twice on the currency moves.

This winter will be BAD for them.


Where do you see an operating loss in Q3 ?? YTD ok, but in Q3, I read 1.8bn NOK operating profit...


Yeah, sorry I was going through it fast and read the CASK versus RASK. I'm still trying to figure out how they got an operating profit line with higher costs than revenue.


Ancillary revenue adds another .07 to RASK. I think the .40 RASK is only ticket revenue. So, the total would be .47, vs. a CASK of .43.

Re: Norwegian stocks nearly as low as they were pre-IAG offer

Posted: Thu Oct 25, 2018 3:15 pm
by LupineChemist
hOMSaR wrote:
LupineChemist wrote:
CeddP wrote:

Where do you see an operating loss in Q3 ?? YTD ok, but in Q3, I read 1.8bn NOK operating profit...


Yeah, sorry I was going through it fast and read the CASK versus RASK. I'm still trying to figure out how they got an operating profit line with higher costs than revenue.


Ancillary revenue adds another .07 to RASK. I think the .40 RASK is only ticket revenue. So, the total would be .47, vs. a CASK of .43.


Ah...that would do it.

That makes this report as about uninspiring as anything else. A small but real profit in Q3. Pessimists (and I'm probably in this camp) will say that a modest profit in Q3 in Europe is just not enough.

The optimists will say they just need to sustain growth to get to critical mass.

We're just going to need to see full year reports at this point. I'll have to keep on holding off on really thinking too much about it until January then.