User avatar
enilria
Posts: 9483
Joined: Fri Feb 22, 2008 7:15 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 9:20 am

It seems like there is such joy and enthusiasm in the media and on this site for the complete elimination of low priced Atlantic travel. The legacies say Atlantic is their best region, so it’s not even hurting the big carriers. I guess the elites don’t want the peasants to see the world.
 
ltbewr
Posts: 14170
Joined: Thu Jan 29, 2004 1:24 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 9:25 am

Norwegian is facing the same issues that plagued many other TATL LCC's, pressure from majors who want to keep their fares up, if a problem with a plane or from weather pax find no options but to wait maybe days for another seat, they run out of capital and costs go up.
 
Cointrin330
Posts: 1115
Joined: Sat Jul 16, 2016 12:23 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 11:23 am

Have flown Norwegian twice on TATL. The experience was just fine and just like any other legacy carrier. Minor delays on each segment but no major problems. History and economics are not on Norwegian's side. Rising fuel prices will be far more difficult for Norwegian to adapt to than the legacy carriers. If the global economy shows signs of stress, contraction, or other, suddenly jaunts across the Atlantic won't be as prevalent from a customer base that remains overwhelmingly tourist. Some of Norwegian's recent TATL adds haven't been successful. I personally see Norwegian eventually being acquired by IAG. It's a matter of time.
 
Prost
Posts: 2406
Joined: Wed Oct 03, 2012 6:23 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 11:36 am

I guess I don’t understand why rising fuel costs will hurt Norwegian so much when they have modern 787s. You’d think DL would be hurting flying 767s.
 
User avatar
Mortyman
Posts: 5685
Joined: Sat Aug 12, 2006 8:26 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 11:52 am

Flying high after falling sharply on Oslo Stock Exchange

The Norwegian share price increase almost 10 percent after two hours trading on figures that at first glance was worse than expected.


https://www.nrk.no/norge/norwegian-okte ... 1.14263722


Cointrin330 wrote:
I personally see Norwegian eventually being acquired by IAG. It's a matter of time.



The question is if IAG is allowed to, by the competition Authority
Last edited by Mortyman on Thu Oct 25, 2018 12:14 pm, edited 1 time in total.
 
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PatrickZ80
Posts: 3818
Joined: Tue Jul 13, 2010 5:33 am

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 12:00 pm

Norwegian is unlikely to go bust at short term, they're in a better financial position than some people like us to think. I can see their main competitor, WOW Air, go bust as they're in serious financial trouble. But Norwegian will attract the passengers that would otherwise have flown WOW Air.

As a matter of fact, I've flown Norwegian TATL a few days ago myself. It was a rather good experience at exactly the service level that suits me. That is low indeed, but for me it's good enough. The legacy carriers offer a higher service level, but also higher ticket prices. And those higher ticket prices are a turn-off, specially when you pay for a service level you don't need. If I would have had to pay the fares of a legacy carrier I would not have gone at all, the reason I went on that trip was because I could get it cheap.

Of course there'll always be things to improve on Norwegian just like there are with any airline, but in general they're not doing too bad.
 
HPAEAA
Posts: 1093
Joined: Mon May 08, 2006 7:24 am

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 12:04 pm

Prost wrote:
I guess I don’t understand why rising fuel costs will hurt Norwegian so much when they have modern 787s. You’d think DL would be hurting flying 767s.

I believe Norwiegen historically has had narrow margins on their flying compared to Delta & other legacy carriers, while yes, they consume overall less fuel per trip, anytime one of your major input costs rises it puts further pressure in your margins and potentially puts some of your operation in the red until revenue can increase to offset the additional costs.

I would expect that while Delta’s fuel cost make up a higher percentage of their operating costs, overall the operating costs may be lower than Norweigen largely due to the fact that the 767s are older and likely paid for while Norweigen is paying handsomely for those new aircraft.

The question really is, does Norweigen have sufficient cash flow to sustain the losses until they can raise fares.
1.4mm and counting...
 
MIflyer12
Posts: 5399
Joined: Mon Feb 18, 2013 11:58 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 12:09 pm

Prost wrote:
I guess I don’t understand why rising fuel costs will hurt Norwegian so much when they have modern 787s. You’d think DL would be hurting flying 767s.


One quick answer: Because Norwegian has a big fraction of aircraft tied in TATL flights, and Delta does not. 763s in long-haul service make up about 50 of Delta and Delta Connection's ~1,400 aircraft.
 
User avatar
PatrickZ80
Posts: 3818
Joined: Tue Jul 13, 2010 5:33 am

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 12:16 pm

HPAEAA wrote:
The question really is, does Norweigen have sufficient cash flow to sustain the losses until they can raise fares.


Who says they're making losses? On some flights indeed, I can see them make a loss. But other flights could just be profitable and those profits can be used to compensate the loss-making flights until those are either being cut or grow into profitability.

It's true that Norwegian has high costs for paying off those brand new aircraft, but Delta has those same costs for their newer aircraft. And on top of that, in 10 years from now those Delta 767s will be history but those Norwegian 787s will still be in operation. At that point of time Norwegian will have them paid-off and still have the low fuel burn they have today.
 
LupineChemist
Posts: 801
Joined: Wed Oct 07, 2015 9:03 am

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 12:32 pm

PatrickZ80 wrote:
HPAEAA wrote:
The question really is, does Norweigen have sufficient cash flow to sustain the losses until they can raise fares.


Who says they're making losses? On some flights indeed, I can see them make a loss. But other flights could just be profitable and those profits can be used to compensate the loss-making flights until those are either being cut or grow into profitability.

It's true that Norwegian has high costs for paying off those brand new aircraft, but Delta has those same costs for their newer aircraft. And on top of that, in 10 years from now those Delta 767s will be history but those Norwegian 787s will still be in operation. At that point of time Norwegian will have them paid-off and still have the low fuel burn they have today.


Norwegian themselves say they are losing money.

Here's the PDF of their most recent quarter. They tout their lowering of costs excl fuel, but fuel is their biggest cost and is going up. If you look into the report they had an operating loss in Q3. If they can't have an operating profit in Q3 in Europe, when exactly CAN they make money. They are only bringing in cash by selling other assets.

Until CASK is below RASK, they are unsustainable. Period.

https://www.norwegian.com/globalassets/ ... report.pdf
 
Bostrom
Posts: 772
Joined: Tue Feb 02, 2016 7:11 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 12:43 pm

PatrickZ80 wrote:
It's true that Norwegian has high costs for paying off those brand new aircraft, but Delta has those same costs for their newer aircraft. And on top of that, in 10 years from now those Delta 767s will be history but those Norwegian 787s will still be in operation. At that point of time Norwegian will have them paid-off and still have the low fuel burn they have today.


On the other hand, at that time Delta might be flying 797s, A322LRs or some other kind of new plane with an ever lower fuel burn than 787s.
 
HPAEAA
Posts: 1093
Joined: Mon May 08, 2006 7:24 am

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 12:49 pm

PatrickZ80 wrote:
HPAEAA wrote:
The question really is, does Norweigen have sufficient cash flow to sustain the losses until they can raise fares.


Who says they're making losses? On some flights indeed, I can see them make a loss. But other flights could just be profitable and those profits can be used to compensate the loss-making flights until those are either being cut or grow into profitability.

Well my comment didnt mention particular routes or flights rather was a comment on their historical financial performance as indicated in the financial filings. While it’s good news that they’ve been narrowing the losses year to date, time will tell if they can continue a profitable operation during the slower travel period and put up a profit for the year.

Back to the origional comment, increasing fuel prices will continue to drive up their overall costs and could cause more of the current route system to loose money than at to days current prices.

PatrickZ80 wrote:
It's true that Norwegian has high costs for paying off those brand new aircraft, but Delta has those same costs for their newer aircraft. And on top of that, in 10 years from now those Delta 767s will be history but those Norwegian 787s will still be in operation. At that point of time Norwegian will have them paid-off and still have the low fuel burn they have today.

Not necissarily true, Yes, planes have to be replaced but other lower cost options could be executed and also the cash flow could be spread out over longer periods of time but this really is getting into a hypothetical exercise of how to manage fleet renewal & operating cash flow. As it related to the original question, as of today, Norweigen has large payments going out for new aircraft where Delta does not on TATL markets. Because of this, rising fuel prices are a threat to them despite having a more fuel efficient fleet than Delta.
1.4mm and counting...
 
aileron1999
Posts: 11
Joined: Sun Aug 02, 2015 4:57 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 1:17 pm

enilria wrote:
It seems like there is such joy and enthusiasm in the media and on this site for the complete elimination of low priced Atlantic travel. The legacies say Atlantic is their best region, so it’s not even hurting the big carriers. I guess the elites don’t want the peasants to see the world.


Hi Enilria,

First let me say I work for a major U.S. carrier so I realize my opinions are slanted, but put me in the camp of cheering the speculated demise of Norwegian. Legacy carriers across the Atlantic have brought reasonable fares and exceptional safety records to millions of travelers. They employ thousands of people in high paying jobs in the communities they serve and provide consistent reliable transportation, while paying consistent local taxes. They tend to be dedicated corporate citizens often contributing mightily to local arts and charities. When a legacy carrier starts a long haul trans Atlantic route, they intend to serve it permanently. ULCC in contrast don’t typically take a stake in the communities they serve. They source labor from the cheapest parts of the world, often mixing crews with little common language experience. They purchase their aircraft using subsidized financing at the expense of U.S. tax Payers. They set up head quarters in countries they barely serve to take advantage of favorable tax laws. ULCC carriers quickly enter and exit markets, often after they have already sold tickets that they can’t honor. They provide no long term consistent service. When purchasing aircraft new, with low cost subsidized financing and new low cost labor it’s fairly easy to provide cheap fares. However as aircraft begin to age and labor wants fair wages, these types of operations struggle to survive. Ultimately they have historically gone out of business leaving communities and individuals stranded.
ULCC across the Atlantic do provide cheap service to many people who otherwise would not be able to travel. This is good in the short term but history has shown that they are not sustainable in long term and do great damage to airlines who do serve these communities for the long term.

Eric
 
tphuang
Posts: 2983
Joined: Tue Mar 14, 2017 2:04 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 1:23 pm

Legacy carriers across TATL have not brought reasonable fares to us. Compared to the fares across TPAC, TATL fares especially in premium cabin are astronomical. While I personally don't like DY's reckless route planning, they have at least done something to lower the fares for consumers. For that, I support them 100%. The problem I have is with their reckless CEO who is going to burn them to the ground with his expansion planning.
 
Aptivaboy
Posts: 776
Joined: Fri Jul 15, 2016 3:32 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 1:34 pm

Legacy carriers across the Atlantic have brought reasonable fares


Apologies, kind Sir, but I must disagree. TATL legacy flights are often exceptionally expensive and outside the reach of most people. There is a reason that Wow, Norwegian and others exist. While I don't disagree with the rest of what you wrote - much of it is spot on - in the end the fare war is what the average person looks at. The rest of us who have to sometimes scrimp and save to travel (scrimp and save a lot!) look kindly upon LCCs and ULCCs. They make our travel dreams possible. The legacies have consistently reduced the quality of their onboard product while raising fares and fees, cutting back on their rewards programs, and generally not making flying easier for the general public. Given that background, is it any wonder that LCCs and ULCCs are viewed so favorably by the flying public?
 
aileron1999
Posts: 11
Joined: Sun Aug 02, 2015 4:57 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 2:02 pm

tphuang wrote:
Legacy carriers across TATL have not brought reasonable fares to us. Compared to the fares across TPAC, TATL fares especially in premium cabin are astronomical. While I personally don't like DY's reckless route planning, they have at least done something to lower the fares for consumers. For that, I support them 100%. The problem I have is with their reckless CEO who is going to burn them to the ground with his expansion planning.


Fares arcross the Pacific are trashed by subsidized Chinese Airlines. Look at some of the prices and tell me how an airline can survive charging that without subsidies. Case in point Americans withdrawal from the Chicago China market. Again not sustainable.

I could change the word “reasonable” with sustainable. But ultimately they mean the same thing. The fares Norwegian charges are not sustainable. They are great for those who can take advantage of it but they are not sustainable. Legacy airlines charge a higher fare, but it is a fare that can sustain the cost of business over the long haul. Thus a “reasonable fare”
 
mcdu
Topic Author
Posts: 1516
Joined: Thu Apr 28, 2005 5:23 am

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 2:04 pm

Aptivaboy wrote:
Legacy carriers across the Atlantic have brought reasonable fares


Apologies, kind Sir, but I must disagree. TATL legacy flights are often exceptionally expensive and outside the reach of most people. There is a reason that Wow, Norwegian and others exist. While I don't disagree with the rest of what you wrote - much of it is spot on - in the end the fare war is what the average person looks at. The rest of us who have to sometimes scrimp and save to travel (scrimp and save a lot!) look kindly upon LCCs and ULCCs. They make our travel dreams possible. The legacies have consistently reduced the quality of their onboard product while raising fares and fees, cutting back on their rewards programs, and generally not making flying easier for the general public. Given that background, is it any wonder that LCCs and ULCCs are viewed so favorably by the flying public?


The legacy carriers have not raised fares across the Atlantic. In fact if you price a ticket today in what it would cost you in the 1990’s in today’s dollars you would be paying much less. The legacy carriers have had to reduce product offerings as the competition lowers the bar in service levels. Everything has a price. If your competitor is not offering amenity kits, free food, checked bags and seat assignments you have to match them on prices to get the price buyers. You can’t afford to give your product away.

In a sense the legacy has to be all things to all customers. They have premium cabins for those willing to pay for those extras.

It is a bad business plan to give your product away or sell it below cost. That is what is killing the LCC. Rising fuel and slowing economy is going to kill a lot of these type of third string operators.
 
User avatar
zululima
Posts: 458
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 2:05 pm

The general public are cheap as hell, and want something for nothing. TATL fares are only "expensive" in the summer or in premium cabins, neither of which the public "deserves" just because they desire it. Flying across oceans and continents is not cheap, and it simply doesn't matter what fares are for TPAC, which are currently only depressed because of overcapacity and are costing airlines money to sustain. There's a huge difference between cheap fares and reasonable fares. Norwegian is in business to make money, and not to make peasants' dreams come true.
I didn't get a 'Harumph' outta that guy!
 
slcdeltarumd11
Posts: 4365
Joined: Fri Jan 09, 2004 7:30 am

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 2:11 pm

Norweigan keeps everyones fares low. No matter who or what you fly, you should cheer for them. I don't understand peoples passion on here for them to die.

We all know the general media knows nothing about commercial aviation. That author is probably just an a.net reader/contributor and saw an easy article to write.
 
DCA-ROCguy
Posts: 4178
Joined: Fri Apr 21, 2000 5:03 am

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 2:15 pm

enilria wrote:
It seems like there is such joy and enthusiasm in the media and on this site for the complete elimination of low priced Atlantic travel. The legacies say Atlantic is their best region, so it’s not even hurting the big carriers. I guess the elites don’t want the peasants to see the world.


Unionized employees of legacy carriers often don't like lower-cost competition, just as much as management elites don't. Unions and management are two side of the same coin.

"The Don saw that competition was wasteful, monopoly efficient." --Mario Puzo, The Godfather.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
tphuang
Posts: 2983
Joined: Tue Mar 14, 2017 2:04 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 2:23 pm

aileron1999 wrote:
tphuang wrote:
Legacy carriers across TATL have not brought reasonable fares to us. Compared to the fares across TPAC, TATL fares especially in premium cabin are astronomical. While I personally don't like DY's reckless route planning, they have at least done something to lower the fares for consumers. For that, I support them 100%. The problem I have is with their reckless CEO who is going to burn them to the ground with his expansion planning.


Fares arcross the Pacific are trashed by subsidized Chinese Airlines. Look at some of the prices and tell me how an airline can survive charging that without subsidies. Case in point Americans withdrawal from the Chicago China market. Again not sustainable.

I could change the word “reasonable” with sustainable. But ultimately they mean the same thing. The fares Norwegian charges are not sustainable. They are great for those who can take advantage of it but they are not sustainable. Legacy airlines charge a higher fare, but it is a fare that can sustain the cost of business over the long haul. Thus a “reasonable fare”


Not just Chinese airline fares. CX, JL, BR and SQ all offer better fares than US3. I can do R/T EWR-SIN for 5-6K in J or $1500 in PE. That's an 18 hour flight. TATL fare are ridiculous. There is no reason for JFK-LHR J fares to be that much higher than JFK-SFO other than the fact that there is no low cost competition.
 
CDGIAD
Posts: 57
Joined: Mon Aug 20, 2018 3:26 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 2:27 pm

LupineChemist wrote:
PatrickZ80 wrote:
HPAEAA wrote:
The question really is, does Norweigen have sufficient cash flow to sustain the losses until they can raise fares.


Who says they're making losses? On some flights indeed, I can see them make a loss. But other flights could just be profitable and those profits can be used to compensate the loss-making flights until those are either being cut or grow into profitability.

It's true that Norwegian has high costs for paying off those brand new aircraft, but Delta has those same costs for their newer aircraft. And on top of that, in 10 years from now those Delta 767s will be history but those Norwegian 787s will still be in operation. At that point of time Norwegian will have them paid-off and still have the low fuel burn they have today.


Norwegian themselves say they are losing money.

Here's the PDF of their most recent quarter. They tout their lowering of costs excl fuel, but fuel is their biggest cost and is going up. If you look into the report they had an operating loss in Q3. If they can't have an operating profit in Q3 in Europe, when exactly CAN they make money. They are only bringing in cash by selling other assets.

Until CASK is below RASK, they are unsustainable. Period.

https://www.norwegian.com/globalassets/ ... report.pdf



I looked at that PDF and I didn't see a loss in Q3, but a net profit of 1303 Million NOK (137M€) and a net profit of 1557 Million NOK for the first 9 months of 2018.

Their EBITDA is always positive which means the operation themselves are profitable (barely profitable I agree).

Remember Depreciations and Amortizations decrease the results but you don't pay out any cash for them.

Their cash flow statement is not too bad.
 
reality
Posts: 433
Joined: Fri Apr 06, 2007 1:01 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 2:29 pm

As the Forbes article mentioned above points out . .


"Naysayers on Norwegian were somewhat quieted in July when the airline actually reported a profit of NKr300m, (about $36 million USD) rebounding from a loss of NKr700m ($84 million) in the same period last year. “Despite being at the peak of our growth phase, we have been able to present a profit and decreased unit costs during the second quarter,” CEO Bjørn Kjos said. “Going forward, the growth will slow down and we will reap what we have sown for the benefit of our customers, staff, and shareholders.”
 
WaywardMemphian
Posts: 1216
Joined: Sat Dec 13, 2014 9:05 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 2:48 pm

They need an US LCC to code share/ partner with. It actually seems very doable. Take a Market like Denver where many of Frontier's flights are less than daily and could match up with Norwegian's flights. Austin is another example
 
musman9853
Posts: 736
Joined: Mon May 14, 2018 12:30 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 2:51 pm

norwegian tatl was a great experience, would be sad if they went under.
Welcome to the City Beautiful.
 
kalvado
Posts: 1809
Joined: Wed Mar 01, 2006 4:29 am

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 3:18 pm

aileron1999 wrote:
enilria wrote:
It seems like there is such joy and enthusiasm in the media and on this site for the complete elimination of low priced Atlantic travel. The legacies say Atlantic is their best region, so it’s not even hurting the big carriers. I guess the elites don’t want the peasants to see the world.


Hi Enilria,

First let me say I work for a major U.S. carrier so I realize my opinions are slanted, but put me in the camp of cheering the speculated demise of Norwegian. Legacy carriers across the Atlantic have brought reasonable fares and exceptional safety records to millions of travelers. They employ thousands of people in high paying jobs in the communities they serve and provide consistent reliable transportation, while paying consistent local taxes. They tend to be dedicated corporate citizens often contributing mightily to local arts and charities. When a legacy carrier starts a long haul trans Atlantic route, they intend to serve it permanently. ULCC in contrast don’t typically take a stake in the communities they serve. They source labor from the cheapest parts of the world, often mixing crews with little common language experience. They purchase their aircraft using subsidized financing at the expense of U.S. tax Payers. They set up head quarters in countries they barely serve to take advantage of favorable tax laws. ULCC carriers quickly enter and exit markets, often after they have already sold tickets that they can’t honor. They provide no long term consistent service. When purchasing aircraft new, with low cost subsidized financing and new low cost labor it’s fairly easy to provide cheap fares. However as aircraft begin to age and labor wants fair wages, these types of operations struggle to survive. Ultimately they have historically gone out of business leaving communities and individuals stranded.
ULCC across the Atlantic do provide cheap service to many people who otherwise would not be able to travel. This is good in the short term but history has shown that they are not sustainable in long term and do great damage to airlines who do serve these communities for the long term.

Eric


Eric,
just a quick question: where does your company performs C- and D-checks on the aircraft?
 
mcdu
Topic Author
Posts: 1516
Joined: Thu Apr 28, 2005 5:23 am

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 3:27 pm

tphuang wrote:
aileron1999 wrote:
tphuang wrote:
Legacy carriers across TATL have not brought reasonable fares to us. Compared to the fares across TPAC, TATL fares especially in premium cabin are astronomical. While I personally don't like DY's reckless route planning, they have at least done something to lower the fares for consumers. For that, I support them 100%. The problem I have is with their reckless CEO who is going to burn them to the ground with his expansion planning.


Fares arcross the Pacific are trashed by subsidized Chinese Airlines. Look at some of the prices and tell me how an airline can survive charging that without subsidies. Case in point Americans withdrawal from the Chicago China market. Again not sustainable.

I could change the word “reasonable” with sustainable. But ultimately they mean the same thing. The fares Norwegian charges are not sustainable. They are great for those who can take advantage of it but they are not sustainable. Legacy airlines charge a higher fare, but it is a fare that can sustain the cost of business over the long haul. Thus a “reasonable fare”


Not just Chinese airline fares. CX, JL, BR and SQ all offer better fares than US3. I can do R/T EWR-SIN for 5-6K in J or $1500 in PE. That's an 18 hour flight. TATL fare are ridiculous. There is no reason for JFK-LHR J fares to be that much higher than JFK-SFO other than the fact that there is no low cost competition.


There are many reasons international fares are higher. Gates, slots, customs fees, landing fees, fuel, catering, air traffic control fees outside of the USA, foreign employees cost, crew layover hotel cost. The cost to to fly domestically is drastically different than domestic.
 
mcdu
Topic Author
Posts: 1516
Joined: Thu Apr 28, 2005 5:23 am

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 3:30 pm

WaywardMemphian wrote:
They need an US LCC to code share/ partner with. It actually seems very doable. Take a Market like Denver where many of Frontier's flights are less than daily and could match up with Norwegian's flights. Austin is another example


Frontier can’t even run its own operation without regular meltdowns on connections. I can imagine the disaster of missing your Norwegian flight and being rebooked 5 days later.
 
cledaybuck
Posts: 1461
Joined: Thu Aug 18, 2016 6:07 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 3:53 pm

aileron1999 wrote:
enilria wrote:
It seems like there is such joy and enthusiasm in the media and on this site for the complete elimination of low priced Atlantic travel. The legacies say Atlantic is their best region, so it’s not even hurting the big carriers. I guess the elites don’t want the peasants to see the world.


Hi Enilria,

First let me say I work for a major U.S. carrier so I realize my opinions are slanted, but put me in the camp of cheering the speculated demise of Norwegian. Legacy carriers across the Atlantic have brought reasonable fares and exceptional safety records to millions of travelers. They employ thousands of people in high paying jobs in the communities they serve and provide consistent reliable transportation, while paying consistent local taxes. They tend to be dedicated corporate citizens often contributing mightily to local arts and charities. When a legacy carrier starts a long haul trans Atlantic route, they intend to serve it permanently. ULCC in contrast don’t typically take a stake in the communities they serve. They source labor from the cheapest parts of the world, often mixing crews with little common language experience. They purchase their aircraft using subsidized financing at the expense of U.S. tax Payers. They set up head quarters in countries they barely serve to take advantage of favorable tax laws. ULCC carriers quickly enter and exit markets, often after they have already sold tickets that they can’t honor. They provide no long term consistent service. When purchasing aircraft new, with low cost subsidized financing and new low cost labor it’s fairly easy to provide cheap fares. However as aircraft begin to age and labor wants fair wages, these types of operations struggle to survive. Ultimately they have historically gone out of business leaving communities and individuals stranded.
ULCC across the Atlantic do provide cheap service to many people who otherwise would not be able to travel. This is good in the short term but history has shown that they are not sustainable in long term and do great damage to airlines who do serve these communities for the long term.

Eric

So much I disagree with in here:
1. I disagree that they have brought reasonable fares across the Atlantic
2. I disagree that when a legacy airlines starts a TA route, they intend to service it permanently. Hope, maybe. But I don't think that is much different than LCC's.
3. Exim bank takes no subsidy and returns money to the US Treasury. Can we say the same about DL's purchase of the C-series and Canada?
4. LCC's are responsible for a tremendous amount of growth in the airline industry over the past 25 years.
5. As someone from Ohio, I find the idea that airlines are committed to communities long term somewhat laughable.
As we celebrate mediocrity, all the boys upstairs want to see, how much you'll pay for what you used to get for free.
 
kalvado
Posts: 1809
Joined: Wed Mar 01, 2006 4:29 am

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 4:07 pm

mcdu wrote:
WaywardMemphian wrote:
They need an US LCC to code share/ partner with. It actually seems very doable. Take a Market like Denver where many of Frontier's flights are less than daily and could match up with Norwegian's flights. Austin is another example


Frontier can’t even run its own operation without regular meltdowns on connections. I can imagine the disaster of missing your Norwegian flight and being rebooked 5 days later.


Can you imagine a disaster of having a ticket for a cancelled flight on US3 and being rebooked 4 days later?
Been there, lived through that.
 
senatorflyer
Posts: 321
Joined: Tue Jul 24, 2012 10:57 am

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 4:18 pm

CDGIAD wrote:
LupineChemist wrote:
PatrickZ80 wrote:

Who says they're making losses? On some flights indeed, I can see them make a loss. But other flights could just be profitable and those profits can be used to compensate the loss-making flights until those are either being cut or grow into profitability.

It's true that Norwegian has high costs for paying off those brand new aircraft, but Delta has those same costs for their newer aircraft. And on top of that, in 10 years from now those Delta 767s will be history but those Norwegian 787s will still be in operation. At that point of time Norwegian will have them paid-off and still have the low fuel burn they have today.


Norwegian themselves say they are losing money.

Here's the PDF of their most recent quarter. They tout their lowering of costs excl fuel, but fuel is their biggest cost and is going up. If you look into the report they had an operating loss in Q3. If they can't have an operating profit in Q3 in Europe, when exactly CAN they make money. They are only bringing in cash by selling other assets.

Until CASK is below RASK, they are unsustainable. Period.

https://www.norwegian.com/globalassets/ ... report.pdf



I looked at that PDF and I didn't see a loss in Q3, but a net profit of 1303 Million NOK (137M€) and a net profit of 1557 Million NOK for the first 9 months of 2018.

Their EBITDA is always positive which means the operation themselves are profitable (barely profitable I agree).

Remember Depreciations and Amortizations decrease the results but you don't pay out any cash for them.

Their cash flow statement is not too bad.


Their balance sheet is not looking very healthy.
 
AF022
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 4:22 pm

cledaybuck wrote:
aileron1999 wrote:
enilria wrote:
It seems ... the world.


So much I disagree with in here:
1. I disagree that they have brought reasonable fares across the Atlantic
2. I disagree that when a legacy airlines starts a TA route, they intend to service it permanently. Hope, maybe. But I don't think that is much different than LCC's.
3. Exim bank takes no subsidy and returns money to the US Treasury. Can we say the same about DL's purchase of the C-series and Canada?
4. LCC's are responsible for a tremendous amount of growth in the airline industry over the past 25 years.
5. As someone from Ohio, I find the idea that airlines are committed to communities long term somewhat laughable.


Travel in low season and you can get great fares TATL. But maybe you want cheap fares on a Saturday in July. Norwegian isn´t going to bring those fares down.
 
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PatrickZ80
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 5:32 pm

mcdu wrote:
There are many reasons international fares are higher. Gates, slots, customs fees, landing fees, fuel, catering, air traffic control fees outside of the USA, foreign employees cost, crew layover hotel cost. The cost to to fly domestically is drastically different than domestic.


True, but with a bit of creativity those costs can come down significantly. That's the difference between a legacy and an LCC, legacies aren't creative. They just accept those costs as they are and make no effort to save on them. LCCs do. For example they use cheaper alternative airports instead of big ones to save on gates, slots and landing fees.

About catering I got the feeling that Norwegian does this better than other airlines, they require you to select a meal at the time of booking for which they charge a fee. There's also the option for "no meal" which is free. That way they know exactly how many meals of each kind they have to load for the flight and because of the fee they charge for them they earn the costs for catering back. On board they don't have to ask you what meal you want, they already know. They got a list of seat numbers with the meals belonging to them. No meal ever ends up unconsumed in the trash. Also their drinks and snacks are buy-on-board so they earn those costs back as well.
 
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PatrickZ80
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 6:07 pm

aileron1999 wrote:
First let me say I work for a major U.S. carrier so I realize my opinions are slanted, but put me in the camp of cheering the speculated demise of Norwegian. Legacy carriers across the Atlantic have brought reasonable fares and exceptional safety records to millions of travelers. They employ thousands of people in high paying jobs in the communities they serve and provide consistent reliable transportation, while paying consistent local taxes. They tend to be dedicated corporate citizens often contributing mightily to local arts and charities. When a legacy carrier starts a long haul trans Atlantic route, they intend to serve it permanently. ULCC in contrast don’t typically take a stake in the communities they serve. They source labor from the cheapest parts of the world, often mixing crews with little common language experience. They purchase their aircraft using subsidized financing at the expense of U.S. tax Payers. They set up head quarters in countries they barely serve to take advantage of favorable tax laws. ULCC carriers quickly enter and exit markets, often after they have already sold tickets that they can’t honor. They provide no long term consistent service. When purchasing aircraft new, with low cost subsidized financing and new low cost labor it’s fairly easy to provide cheap fares. However as aircraft begin to age and labor wants fair wages, these types of operations struggle to survive. Ultimately they have historically gone out of business leaving communities and individuals stranded.
ULCC across the Atlantic do provide cheap service to many people who otherwise would not be able to travel. This is good in the short term but history has shown that they are not sustainable in long term and do great damage to airlines who do serve these communities for the long term.


Sorry, but I have to disagree. The legacies did nothing to bring the TATL fares down. It was the LCCs that brought them down and the legacies had to follow in order to not lose market share. There was never a leading role for the legacies to lower the fares. If there hadn't been LCCs the fares would still be skyhigh and out of reach for most people, the legacies would never have lowered them out of their own.

Legacies employ thousands of people in high paying jobs, that's true and it costs a whole lot of money. Money that has to be earned on air fares. Most people think that's a waste of money, they don't want their hard earned money to go to all those guys in suits that need to be paid. LCCs don't have those people, or at least a whole lot less of them. That means they got lower costs when it comes to that.

Legacies are serving communities? What do most people care? Serving a community costs money, it costs their money. It's making tickets needlessly expensive. LCCs don't serve communities, so they can be cheaper. That's what customers want, the lowest price.

Legacies intend to operate a route permanently. Honestly, what do most people care? As long as the route is flown at the time they travel, they don't care about other times. They don't care if it's flown next year. They don't fly then anyway.

LCCs are placing their headquarters in countries they barely serve. True, just like any international company they place their headquarters in a country that offers the best tax climate to them. It's a way of saving money, which in the end benefits the customer as they get a cheaper ticket. LCCs have no loyalty as they realise loyalty costs money.

Of course LCCs do damage to airlines that don't play as smart as the LCCs do, that's the fault of the other airlines. They don't take the opportunity to save on costs where the LCCs do. They compensate that with a higher service level, which also costs money. In the end it's the legacies that are unsustainable. Norwegian may lose money, they may go bust some day. Another LCC will simply take it's place. In te end, the LCC business model will continue to bring the fares down.
 
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DominikR83
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 6:20 pm

PatrickZ80 wrote:

True, but with a bit of creativity those costs can come down significantly. That's the difference between a legacy and an LCC, legacies aren't creative.


LCC are especially creative in avoiding taxes or emplyee unions and and in getting subsidies from which authority ever.
They do have the most creative constructions to pay as little taxes as possible and to get the employees as cheap as possible.

Yes,they also save money by using smaller airports or by only flying profitable routes but that is not the ultimate solution in getting the airfares so low.
The working conditions of the employees are somewhere between bad and disastrous ,depending on the LCC.

They make TATL flights affordable for many people who can`t afford the legacy carrier fares but i doubt that it is possble to run a TATL or TPAC LCC in a profitable way on a long term view.
LCC usually don`t have any noticable prium service (business/first,etc.) but these premium services is wherre the legacy carriers to make their money.
Carriers like LH or UA do make more money with 50 people in a full J class than Norwegian might do with a full plane in eco.
 
CeddP
Posts: 24
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 6:35 pm

DominikR83 wrote:
PatrickZ80 wrote:

True, but with a bit of creativity those costs can come down significantly. That's the difference between a legacy and an LCC, legacies aren't creative.


LCC are especially creative in avoiding taxes or emplyee unions and and in getting subsidies from which authority ever.
They do have the most creative constructions to pay as little taxes as possible and to get the employees as cheap as possible.

Yes,they also save money by using smaller airports or by only flying profitable routes but that is not the ultimate solution in getting the airfares so low.
The working conditions of the employees are somewhere between bad and disastrous ,depending on the LCC.



Hum... Is it still a thread about Norwegian ?? Because if so, everything you said is then so irrelevent !
 
787Driver
Posts: 458
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 6:36 pm

“The rumors of Norwegian’s death have been greatly exaggerated”

Well looks like Chinese investments in Norwegian are imminent.

https://www.berlingske.dk/oekonomi/norw ... proejtning

Furthermore, it seems Norwegian made a decent profit in Q3:
https://min.e24.no/norwegian-kuttet-kos ... t/a/jP2rBq
 
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AAR
Posts: 51
Joined: Mon Mar 05, 2018 7:58 pm

Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 7:17 pm

NAS likes to make small stories to calm the creditors... How can chinese folks buy a leased airplane...if they pay who should get the money first ? NAS told they would sell 140 airplanes - how can you sell something which belongs to someone else ? CFO in Oslo today would not say anything but said we talk with someone but it might never be a reality !!!! Suddently Bloomberg has a rumour from an anonymous ....
What about the story in the Spring CEO Mr B Kjos said they were in talks with Ryanair, Mr Michael O'Leary said after there have never been any talks...
NAS said today that IAG still got the stakes - how do they know - they did not know IAG ever bought them....
 
787Driver
Posts: 458
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 7:27 pm

It’s explained in the article.
 
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AAR
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 7:50 pm

CEO CPH Airport says they are checking all airliners now if they are stable and in good shape..

4 airliners mentioned - SAS - Ryanair - EasyJet - NAS

https://www.berlingske.dk/virksomheder/ ... alle-store
 
mcdu
Topic Author
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 8:00 pm

787Driver wrote:
“The rumors of Norwegian’s death have been greatly exaggerated”

Well looks like Chinese investments in Norwegian are imminent.

https://www.berlingske.dk/oekonomi/norw ... proejtning

Furthermore, it seems Norwegian made a decent profit in Q3:
https://min.e24.no/norwegian-kuttet-kos ... t/a/jP2rBq



Didn’t see that in the article as it’s not in English. The “profit” that Norwegian made was below expectations. They are lagging in every direction. Once the furniture to burn is used up what have they left?

The death of Norwegian is upon us. I would not but a ticket for travel more than a week in advance.
 
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seabosdca
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 8:12 pm

The ULCC product is what it is. It's cheap travel with more risk in the event of IROPS. That's fine, and eventually consumers will learn about the risk and adjust their buying behavior accordingly. I wouldn't book a ULCC unless I were traveling both (1) by myself, without kids, and (2) for pleasure rather than business, which means I won't book a ULCC in this part of my life, but I have no problem with those who do.

What isn't good about Norwegian is its determination to avoid regulation through country shopping. I would like to see ULCCs and legacies compete on the same playing field, and by shopping selectively for the world's most relaxed regulatory environments Norwegian is not doing so. The behavior of is not good for working conditions, safety, or accountability to investors, and should be banned.
 
senatorflyer
Posts: 321
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 8:23 pm

787Driver wrote:
“The rumors of Norwegian’s death have been greatly exaggerated”

Well looks like Chinese investments in Norwegian are imminent.

https://www.berlingske.dk/oekonomi/norw ... proejtning

Furthermore, it seems Norwegian made a decent profit in Q3:
https://min.e24.no/norwegian-kuttet-kos ... t/a/jP2rBq


It’s. It decent by any means and their balance sheet looks sh*%t. So there are problems ahead of them.
 
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PatrickZ80
Posts: 3818
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 8:35 pm

mcdu wrote:
The death of Norwegian is upon us. I would not but a ticket for travel more than a week in advance.


It's not too good indeed, but it's not that bad either. In the long term they might not make it, but on short term I can't see them go bust. They'll be around for a few more years at least. If things are turning really bad you usually notice that, they start selling aircraft and such just to keep the balance up. They're far from there yet.
 
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lightsaber
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 8:40 pm

seabosdca wrote:
The ULCC product is what it is. It's cheap travel with more risk in the event of IROPS. That's fine, and eventually consumers will learn about the risk and adjust their buying behavior accordingly. I wouldn't book a ULCC unless I were traveling both (1) by myself, without kids, and (2) for pleasure rather than business, which means I won't book a ULCC in this part of my life, but I have no problem with those who do.

What isn't good about Norwegian is its determination to avoid regulation through country shopping. I would like to see ULCCs and legacies compete on the same playing field, and by shopping selectively for the world's most relaxed regulatory environments Norwegian is not doing so. The behavior of is not good for working conditions, safety, or accountability to investors, and should be banned.

Norwegian just has a broken yield model.

Oh, I 100% agree with your assessment of ULCCs. Only flying solo for leisure.

Lightsaber
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
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PatrickZ80
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 8:43 pm

seabosdca wrote:
The ULCC product is what it is. It's cheap travel with more risk in the event of IROPS. That's fine, and eventually consumers will learn about the risk and adjust their buying behavior accordingly. I wouldn't book a ULCC unless I were traveling both (1) by myself, without kids, and (2) for pleasure rather than business, which means I won't book a ULCC in this part of my life, but I have no problem with those who do.


The problem with the assumption that consumers wil adjust their buying behavior is that for some people that's not an option. They haven't got the money for it. It's either travel on an LCC or not travel at all.

I've recently done an LCC trip with two self-transfers, just got back a few days ago. Transavia + Norwegian Eindhoven - Copenhagen - Los Angeles and back Norwegian + Transavia Los Angeles - Barcelona - Eindhoven. All went well and it saved me a whole bunch of money compared to legacy airlines, they're far more expensive. If I'd have to pay that fare I wouldn't have gone at all.
 
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TheLion
Posts: 666
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 9:06 pm

Aptivaboy wrote:
Legacy carriers across the Atlantic have brought reasonable fares


Apologies, kind Sir, but I must disagree. TATL legacy flights are often exceptionally expensive and outside the reach of most people. There is a reason that Wow, Norwegian and others exist.

While I don't disagree with the rest of what you wrote - much of it is spot on - in the end the fare war is what the average person looks at. The rest of us who have to sometimes scrimp and save to travel (scrimp and save a lot!) look kindly upon LCCs and ULCCs. They make our travel dreams possible.

The legacies have consistently reduced the quality of their onboard product while raising fares and fees, cutting back on their rewards programs, and generally not making flying easier for the general public.

Given that background, is it any wonder that LCCs and ULCCs are viewed so favorably by the flying public?


Very well put and eloquently so :yes:
 
IADCA
Posts: 1846
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 10:24 pm

Mortyman wrote:
The question is if IAG is allowed to, by the competition Authority


If a company is truly failing (as in, is imminently going to be insolvent or already is insolvent) without reasonable hope of recovery as a standalone, competition authorities generally won't block or place a huge number of conditions on an acquisition - assuming there are not other reasonable merger parties who have actually bid and the merger isn't worse for consumers than the acquired firm simply going under.
 
mcdu
Topic Author
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Re: Norwegian survival questioned-Forbes

Thu Oct 25, 2018 10:49 pm

PatrickZ80 wrote:
mcdu wrote:
The death of Norwegian is upon us. I would not but a ticket for travel more than a week in advance.


It's not too good indeed, but it's not that bad either. In the long term they might not make it, but on short term I can't see them go bust. They'll be around for a few more years at least. If things are turning really bad you usually notice that, they start selling aircraft and such just to keep the balance up. They're far from there yet.


What do they own to sell?

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