joeblow10
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Reuters/Norwegian Media: DY at Risk of Collapse

Sat Dec 22, 2018 10:42 pm

https://www.forbes.com/sites/grantmarti ... b2efe74e9b

Doesn't sound good - apparently they are going to struggle mightily to make debt service payments at the end of this month. Norwegian media reportedly seems confident stakeholders will inject additional cash, but one has to wonder how much longer DY and WW are going to survive. The LGW mess hasn't helped either...
 
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LuxuryTravelled
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sat Dec 22, 2018 10:58 pm

There isn’t much credabiity in the article. All very superficial with no substanance, just tittle tattle from an analyst.
 
dcajet
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sat Dec 22, 2018 11:18 pm

LuxuryTravelled wrote:
There isn’t much credabiity in the article. All very superficial with no substanance, just tittle tattle from an analyst.


Agree; long weekend ahead and slow news-wise in the airline sector. Dust off the imminent Norwegian collapse story. Makes for good filler.
"Unattended children will be given espresso and a free kitten"
 
MaksFly
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 12:33 am

All you have to do is look at the financial statements to see the dire situation.

The truth is generally there in small print. What management says is all marketing BS and wishful thinking.
 
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SuperTwin
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 12:39 am

dcajet wrote:
LuxuryTravelled wrote:
There isn’t much credabiity in the article. All very superficial with no substanance, just tittle tattle from an analyst.


Agree; long weekend ahead and slow news-wise in the airline sector. Dust off the imminent Norwegian collapse story. Makes for good filler.


Are we to read that as in you don't think it's a likely probability?

Do you know something that financial statements don't let on? Or is this just your own head-in-the-sand opinion?
SuperTwin
 
Galwayman
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 1:16 am

If it’s in Reuters , they’re toast ...
 
armchairceonr1
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 1:17 am

They are going to book very heavy losses in Q4, oil hedge losses over 2000 mNOK, NOFI shares value down about 1000mNOK and operating loss around 1500-2000mNOK. They need urgently new equity and also cash.
 
MIflyer12
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 2:00 am

The writer's a Travel section contributor, not a regular writer for investment banking (who might be clued in to desperate inquiries for financing).
 
aviationaware
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 2:24 am

Completely beyond me how anyone with a brain can call an article predicting the imminent demise of Norwegian unbelievable. They were in dire straits in summer, it's only natural that they are in even worse shape now in winter. They will go down one way or another. If not now, then in a few months or a few years. They are not a sustainable business and never will be. Just like Air Berlin, they are a total disaster and it is more than painfully obvious to anyone who knows how to read a financial statement.
 
jagraham
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 2:33 am

But he works for Forbes. And the Economist. And is a business editor for BBC. The writer should be able to distinguish between a technical breach and an event which would cause seizure of planes in particular.

The article says

Analyst Martin Stenshall at Danske Bank thinks Norwegian will violate the terms of its loans by New Year, if it fails to sell off many of its new aircraft. That in turn can cause suppliers to demand cash to pay for fuel of aircraft landing fees. “If the company has to report a violation of the conditions surrounding its debt, it can land in an evil spiral and the crisis will escalate,” Stenshall told DN.

Most suppliers will not demand cash until the airline is late on payments to that supplier. The exception is aircraft leases and loans, which have been known to be called on a technical default. But not always.

For the record, technical defaults are usually lack of equity issues. Not missing debt payment issues, which is an actual (not technical) default.

Of course it is possible that Analyst Martin Stenshall is mixing up his terminology. Or something got lost in the translation. Either way, the article should have been clearer about whether they expect Norweigan to miss debt payments - or violate equity covenants or something like that.
 
Varsity1
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 3:09 am

Pilots today are saying that Norwegian has cancelled all pilot new hire classes and upgrade classes of 2019.
"PPRuNe will no longer allow discussions regarding Etihad Airlines, its employees, executives, agents, or other representatives. Such threads will be deleted." - ME3 thug airlines suing anyone who brings negative information public..
 
jetwet1
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 3:16 am

Varsity1 wrote:
Pilots today are saying that Norwegian has cancelled all pilot new hire classes and upgrade classes of 2019.


Could they be finally putting the brakes on expansion ?

Time to let yields catch up ?
 
Mangs
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 4:15 am

jetwet1 wrote:
Varsity1 wrote:
Pilots today are saying that Norwegian has cancelled all pilot new hire classes and upgrade classes of 2019.


Could they be finally putting the brakes on expansion ?

Time to let yields catch up ?


More like it's stupid to hire more pilot when there's 5 787 AOG due to RR engines issues and the 737 is adequately staffed until the summer begins. Why hire more pilots when the average is at ~45-70hrs per month per pilot now..

Still hiring Cabin Crews though :-)
 
skipness1E
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 4:22 am

How many more 787s are coming?
 
winginit
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 4:57 am

As others have pointed out, even passing glances at Norwegian’s financial statements the past year have made an unhappy ending for the carrier more than obvious and inevitable.
 
aviationaware
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 5:38 am

jetwet1 wrote:
Varsity1 wrote:
Pilots today are saying that Norwegian has cancelled all pilot new hire classes and upgrade classes of 2019.


Could they be finally putting the brakes on expansion ?

Time to let yields catch up ?


They're out of time and money to let anything catch up.

jagraham wrote:
But he works for Forbes. And the Economist. And is a business editor for BBC. The writer should be able to distinguish between a technical breach and an event which would cause seizure of planes in particular.

The article says

Analyst Martin Stenshall at Danske Bank thinks Norwegian will violate the terms of its loans by New Year, if it fails to sell off many of its new aircraft. That in turn can cause suppliers to demand cash to pay for fuel of aircraft landing fees. “If the company has to report a violation of the conditions surrounding its debt, it can land in an evil spiral and the crisis will escalate,” Stenshall told DN.

Most suppliers will not demand cash until the airline is late on payments to that supplier. The exception is aircraft leases and loans, which have been known to be called on a technical default. But not always.

For the record, technical defaults are usually lack of equity issues. Not missing debt payment issues, which is an actual (not technical) default.

Of course it is possible that Analyst Martin Stenshall is mixing up his terminology. Or something got lost in the translation. Either way, the article should have been clearer about whether they expect Norweigan to miss debt payments - or violate equity covenants or something like that.


If they are in breach of loan covenants, their debt will usually become due immediately. As anyone who can read financials can see, they don't have the means or cash flow to repay their debt. At that point, creditors can basically demand whatever they want to refinance that debt or be more lenient with their covenant enforcement.

Norwegian is toast. I expect their domestic Norwegian core operations will continue in some form (they are rather vital to the Norwegian government) and IAG to purchase some of the distressed assets. The rest will go under.
 
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madpropsyo
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 6:09 am

Someone will invest in them. The interesting question is who does it and what portions of the business do they keep? They do have some valuable assets which various entities would be happy to carve up at bargain prices.
 
scootaway
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 7:54 am

[*]
LuxuryTravelled wrote:
There isn’t much credabiity in the article. All very superficial with no substanance, just tittle tattle from an analyst.


You can laugh it off...until you get left behind at the airport with your itenanry in flames.

Travel agents are already collapsing this month without warning. Again, “finding new investors” and actually claimed to have found them before they went belly up. One obvious warning sign is an agent or airline lowering prices in the last weeks.
 
jagraham
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 8:04 am

Norwegian has issues. But its demise has been predicted for some time . .

Daniel Roeska, analyst at Bernstein, said: “If you’re a holder, you need to sell. If you can short the stock, short the stock.” A second analyst, who did not want to be named, is blunter: Norwegian could “go bust in the autumn(of 2018)”. 
Financial Times, Jun 22 2018 https://www.ft.com/content/69612f36-755 ... da4279a601

Autumn has come and gone; Norwegian is still flying. A cash infusion may be necessary soon, but the analysts won't say how much. So it's research time.
 
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spinkid
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 8:07 am

scootaway wrote:
[*]
LuxuryTravelled wrote:
There isn’t much credabiity in the article. All very superficial with no substanance, just tittle tattle from an analyst.


You can laugh it off...until you get left behind at the airport with your itenanry in flames.

Travel agents are already collapsing this month without warning. Again, “finding new investors” and actually claimed to have found them before they went belly up. One obvious warning sign is an agent or airline lowering prices in the last weeks.


Something about this article reads like "The top ten airlines most likely to collapse by the end of the year" could be the title as if it were clickbait. Its nothing new to the follower's of this forum.

We've discussed all that before.
 
LupineChemist
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 8:17 am

I would say IAG sale is imminent. Not selling in the spring is going to come back as a very stupid decision as they'll now be able to pick it up at distressed prices.

I also think what IAG really wants is the 787 order book in order to grow more.
 
scootaway
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 8:17 am

Against the backdrop of rising interest rates.

And the stock market is already starting to drop like a stone. Who still has the capital to take a chance and feed companies barely surviving?

Airline collapses happen faster than you think. And then catches everyone ‘by surprise’.
 
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PatrickZ80
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 8:47 am

jagraham wrote:
Norwegian has issues. But its demise has been predicted for some time . .

Daniel Roeska, analyst at Bernstein, said: “If you’re a holder, you need to sell. If you can short the stock, short the stock.” A second analyst, who did not want to be named, is blunter: Norwegian could “go bust in the autumn(of 2018)”. 
Financial Times, Jun 22 2018 https://www.ft.com/content/69612f36-755 ... da4279a601

Autumn has come and gone; Norwegian is still flying. A cash infusion may be necessary soon, but the analysts won't say how much. So it's research time.


I agree. Of course we all know the Norwegian business model isn't sustainable, but I wouldn't call their collapse imminent. They were on the break of collapse two years ago, it didn't happen. They were last year, but still it didn't happen. Why would it happen this year?

WOW Air is another thing, they've been cutting operations so drastically it's obvious they're in trouble on the short term. Norwegian is in trouble on the long term, but not in the short term. They still have time to adapt their operations into a profitable business model. Of course if they don't change, sooner or later they're toast. But they still have time to change, they're not as dead as WOW Air yet.
 
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PatrickZ80
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 8:53 am

scootaway wrote:
Against the backdrop of rising interest rates.

And the stock market is already starting to drop like a stone. Who still has the capital to take a chance and feed companies barely surviving?

Airline collapses happen faster than you think. And then catches everyone ‘by surprise’.


I'm betting on Ryanair here. Ryanair has the funds and the knowledge to make the Norwegian business model sustainable. Of course this would mean changes to Norwegian, they can't keep operating the way they do. Their cost base is too high and Ryanair can help them lower it. But with Ryanair behind them and leading the business, I think they got a good chance to not only survive but eventually become profitable.
 
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LuxuryTravelled
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 8:55 am

I still stand by my reaction that I don’t think a collapse is going to happen within the next couple of weeks. I can only liken it to a first time buyer purchasing a 5 bedroom house when they can only just afford it, the interest rate changes on the mortgage and the market drops. Pushing it so far to the limit on CapEx, and a slow reaction on how to manage yield on LH is just part of the bigger picture.

IF there is a risk of a collapse, I expect someone come in a scoop it up - either in parts or as a whole as structurally they seem to be turning a corner.

I would bet on any one of the following to have an interest: IAG, TUI, Ryanair, EasyJet and Qatar.
Last edited by LuxuryTravelled on Sun Dec 23, 2018 8:57 am, edited 1 time in total.
 
lhrsfosyd
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 8:55 am

A large size of their operation is long haul at LGW and BA's newly densified B777s have better CASM than Norwegian's B787s so I can't see how DY can raise it's yields which it so desperately needs.
 
sonicruiser
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 9:06 am

PatrickZ80 wrote:
I agree. Of course we all know the Norwegian business model isn't sustainable, but I wouldn't call their collapse imminent. They were on the break of collapse two years ago, it didn't happen. They were last year, but still it didn't happen. Why would it happen this year?

WOW Air is another thing, they've been cutting operations so drastically it's obvious they're in trouble on the short term. Norwegian is in trouble on the long term, but not in the short term. They still have time to adapt their operations into a profitable business model. Of course if they don't change, sooner or later they're toast. But they still have time to change, they're not as dead as WOW Air yet.


Couldn't have said it better myself.
 
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seahawk
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 9:16 am

LupineChemist wrote:
I would say IAG sale is imminent. Not selling in the spring is going to come back as a very stupid decision as they'll now be able to pick it up at distressed prices.

I also think what IAG really wants is the 787 order book in order to grow more.


IAG tried under better conditions, now they can wait for Norwegian to fall and pick up the pieces. And IAG is not the only one looking at piece of the pie.
 
FCAFLYBOY
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 9:33 am

I think their time is up sadly... not looking positive on any front, expansion FAR to quickly in a failed attempt at economy of scale..
 
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vhtje
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 9:39 am

lhrsfosyd wrote:
BA's newly densified B777s have better CASM than Norwegian's B787s


Interesting. I did not know this. Do you have a source for this statement, may I ask?
I only turn left when boarding aircraft. Well, mostly. All right, sometimes. OH OKAY - rarely.
 
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PatrickZ80
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 9:43 am

lhrsfosyd wrote:
A large size of their operation is long haul at LGW and BA's newly densified B777s have better CASM than Norwegian's B787s so I can't see how DY can raise it's yields which it so desperately needs.


Indeed they made the mistake of making Gatwick their primary long haul hub, I've always said this was a bad decision. Too much and too strong competition, they'd better not involve.

What Norwegian needs to do is pull out of Gatwick and focus on their other long haul hubs. Focus on routes where they got little to no competition. Those don't exist in Gatwick, but they do exist elsewhere in Europe. Their long haul hubs also need to be strengthened by short haul feeder operations, too many of their hubs don't have them and their long haul operations can't rely on local demand only. It's important for Norwegian to grow in the short haul department before growing in the long haul department.
 
a350lover
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 9:48 am

PatrickZ80 wrote:
[Norwegian is in trouble on the long term, but not in the short term. They still have time to adapt their operations into a profitable business model. Of course if they don't change, sooner or later they're toast. But they still have time to change, they're not as dead as WOW Air yet.


This is a key point to me here.

What has Norwegian done ever since first financial warnings came up? I have the feeling they aren’t well aware of how big they are. Other than some internal letters to rise up the topic about how important “cost control through the organisation was” - pretty much nothing.

What would you do in order to brighten up the company?
 
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PatrickZ80
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 10:09 am

a350lover wrote:
What would you do in order to brighten up the company?


I would start by shaking it up. Scrapping routes with a too high cost base, lowering frequencies on others. With the freed up capacity, new routes can be opened and they need to be picked carefully. Never take anything for granted, always ask (and keep asking) the question what can be done to lower the costs. Is it perhaps possible to move a route to another airport? Congest two parallel routes into one? Operate it from another base? I got the feeling these kind of questions aren't asked within Norwegian and that's a bad thing.
 
lhrsfosyd
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 10:14 am

vhtje wrote:
lhrsfosyd wrote:
BA's newly densified B777s have better CASM than Norwegian's B787s


Interesting. I did not know this. Do you have a source for this statement, may I ask?


IAG Capital Markets Day
 
senatorflyer
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 10:44 am

PatrickZ80 wrote:
jagraham wrote:
Norwegian has issues. But its demise has been predicted for some time . .

Daniel Roeska, analyst at Bernstein, said: “If you’re a holder, you need to sell. If you can short the stock, short the stock.” A second analyst, who did not want to be named, is blunter: Norwegian could “go bust in the autumn(of 2018)”. 
Financial Times, Jun 22 2018 https://www.ft.com/content/69612f36-755 ... da4279a601

Autumn has come and gone; Norwegian is still flying. A cash infusion may be necessary soon, but the analysts won't say how much. So it's research time.


I agree. Of course we all know the Norwegian business model isn't sustainable, but I wouldn't call their collapse imminent. They were on the break of collapse two years ago, it didn't happen. They were last year, but still it didn't happen. Why would it happen this year?

WOW Air is another thing, they've been cutting operations so drastically it's obvious they're in trouble on the short term. Norwegian is in trouble on the long term, but not in the short term. They still have time to adapt their operations into a profitable business model. Of course if they don't change, sooner or later they're toast. But they still have time to change, they're not as dead as WOW Air yet.


The financial statements do look very very very poor. WOW at least recognised that they need to do something. Norwegian not so much... it’s a question of time and I think the time will be in January.
 
skipness1E
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 12:01 pm

PatrickZ80 wrote:
a350lover wrote:
What would you do in order to brighten up the company?


I would start by shaking it up. Scrapping routes with a too high cost base, lowering frequencies on others. With the freed up capacity, new routes can be opened and they need to be picked carefully. Never take anything for granted, always ask (and keep asking) the question what can be done to lower the costs. Is it perhaps possible to move a route to another airport? Congest two parallel routes into one? Operate it from another base? I got the feeling these kind of questions aren't asked within Norwegian and that's a bad thing.

They already have a substantial short haul program, it either feeds long haul with economies of scale, or exists on point-to-point.
Your strategy of getting out of Gatwick is curious, but well done for not mentioning APD this time. If you have ambitions to be a major player you need to be on core routes with high volume and yield, hence 13 heavy aircraft in London. Niche and unserved routes as you suggest are 1) unserved for a good reason 2) profitable ones are like hen’s teeth (rare)

So you have nowhere to go, aircraft to finance without the volume to fill them flying in new markets which won’t make money for a while if at all, and if your niche route proves there IS a new market, the first thing that happens is someone else competes with you, trashing your market share and killing your yields, pushing profitability even further away. Am not being picky for fun, just making it clear that at this level there are NO easy answers and you can’t change this strategy in the short term without spending a whole lot of money you don’t have as well as divesting yourself of much of the existing B787 fleet.
 
Cointrin330
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 12:38 pm

The imminent demise of DY is a story that's been circulating for years. The airline probably isn't long for this world. The business model is flawed and the company has way too much debt. It is primarily a leisure carrier and its expansion this year was hurt by the 787 engine issues and frankly, ill advised route launches particularly on TATL. What makes DY more compelling than WOW, Primera, and others in this space is that it has investable assets, like a large fleet of new planes, valuable slots at key airports, and an employment structure that others will exploit eventually to keep their costs down. Long term, one of the big European airline groups, most likely, IAG, will buy them, merge it with Level or Vueling, or both, and try to make the airline within an airline concept work, or they will simply deploy the assets like the 787s into their mainline fleets as a way to accelerate aging aircraft retirements. I've flown DY a few times. They are fine, but the LCC long haul model has enabled the established carriers to make the flying experience simply that much more miserable and the long haul LCC model hasn't worked before, and unlikely to succeed this time, without the anchor of a major airline holding company. If DY goes under, it might actually make the flying experience on the legacies a bit more pleasant when flying in the back of the bus.
 
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PatrickZ80
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 12:44 pm

skipness1E wrote:
If you have ambitions to be a major player you need to be on core routes with high volume and yield


Wrong! High volume and yield don't go hand in hand, certainly not in markets with heavy competition like London. Norwegian may have high load factors out of London, but their yields are trash. The competition is crushing them.

Norwegian is a LCC, although they sometimes seem to forget that. Management for a LCC is very different from management for a legacy airline. The thing that attracts passengers to Norwegian is not convenience or service, it's the lowest ticket price. Therefor they should constantly ask themselves, where (and how) can that lowest ticket price be offered. Obviously it can't be offered in high-cost markets, those high costs are the reason they have to ask higher fares than they should. In low-cost markets, they can charge lower fares and still make a higher profit due to the absence of high costs.

If the fares are low enough, the passengers will come naturally. Of course they'll not all be locals, therefor a good feeder network is important. Not every route needs to be served non-stop, sometimes serving it one-stop makes more sense. That way you get one full plane instead of two half-full planes which reduces costs.
 
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PatrickZ80
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 12:51 pm

Cointrin330 wrote:
If DY goes under, it might actually make the flying experience on the legacies a bit more pleasant when flying in the back of the bus.


More pleasant, I guess. More expensive, no doubt. That is until the next long haul ULCC steps up, again offering not the most pleasant but the cheapest way to travel. There'll always be people who prefer a lower ticket price over comfort and convenience. And then the legacies have no choice but to lower their service level once again to match the ticket prices of that new long haul ULCC.
Last edited by PatrickZ80 on Sun Dec 23, 2018 12:52 pm, edited 1 time in total.
 
bennett123
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 12:52 pm

Not clear which part of the Norwegian Group that they refer to in the article.

If one part fails, can the others continue.
 
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SEPilot
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 1:12 pm

If frequent predictions of disaster based on sound reasoning do not come to pass, it does not mean that they won’t. It only means they haven’t yet. I forgot who said that if something cannot continue indefinitely it will stop. Just because DY escaped previous predictions of its demise does not mean it is out of the woods. It seems they are in worse shape this time. But if they escape again and do not change, sooner or later they will not.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
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LTU932
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 1:53 pm

Honestly, it would not surprise me a bit. They expanded at a very high pace and probably too fast for them to be sustainable. I've seen this already a few times with the demise of other longhaul (U)LCC airlines such as Air Madrid and Air Comet.

Worst case is that they will get crushed by their own debt, best case would be the shutdown or sale of "only" a few of their subsidiaries.
Sometimes the only thing more dangerous than a question is an answer. - Ferengi Rule of Acquisition 208
 
oslmgm
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 2:03 pm

aviationaware wrote:
Norwegian is toast. I expect their domestic Norwegian core operations will continue in some form (they are rather vital to the Norwegian government) and IAG to purchase some of the distressed assets. The rest will go under.

How are they "rather vital to the Norwegian government"? As a Norwegian citizen, this is news to me.
 
gunnerman
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Joined: Fri May 19, 2017 7:55 pm

Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 2:04 pm

bennett123 wrote:
Not clear which part of the Norwegian Group that they refer to in the article.

If one part fails, can the others continue.

The article refers to the holding company Norwegian Air Shuttle which also owns other airlines such as UK-based DI and Ireland-based D8. Normally I'd expect the whole group to collapse when the parent company fails but it's possible for a profitable subsidiary to survive. I may be wrong but I have some recollection that CO spun off Air Mike to a subsidiary so that it could be insulated from the problems afflicting CO.
 
davidjohnson6
Posts: 300
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 2:59 pm

Typically when a major subsidiary or parent of a group of airline companies collapses, there is an attempt to ensure the remaining companies in the group survive

While this may occur in the strict legal sense, the reputational damage is usually too large to ensure ticket sales (and revenues) are unaffected and it often becomes a matter of time before other negative factors start to appear.

That said, Norwegian is a significant player in a country (perhaps Sweden as well as just Norway) which by virtue of a modest population spread over a large area whose geography (ie mountainous terrain and bad weather in winter) makes air transport a social and commercial necessity. Sure Wideroe performs the greatest and most immediate social function but the demise of Norwegian would likely be a non trivial event for Norway. To the people who praise only the free market who are reading this, please remember that Scandinavians may take a different view of the world. Ensuring SAS avoid the bad old days of being a monopolist with high fares may be sufficient reason for the Norwegian or Swedish Govts to take action to avoid uncontrolled implosion
Last edited by davidjohnson6 on Sun Dec 23, 2018 3:08 pm, edited 1 time in total.
 
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AAR
Posts: 51
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Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 3:06 pm

The interest goes up - Hard Brexit ahead - not sold the 140 frames yet... Norwegian sees a hard time ahead... The Airbus order ?
 
Breathe
Posts: 481
Joined: Sat Mar 18, 2017 8:06 pm

Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 3:22 pm

Norwegian have been in deep toilet for ages!
 
MalevTU134
Posts: 2059
Joined: Tue Oct 11, 2016 8:04 pm

Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 3:41 pm

davidjohnson6 wrote:
Typically when a major subsidiary or parent of a group of airline companies collapses, there is an attempt to ensure the remaining companies in the group survive

While this may occur in the strict legal sense, the reputational damage is usually too large to ensure ticket sales (and revenues) are unaffected and it often becomes a matter of time before other negative factors start to appear.

That said, Norwegian is a significant player in a country (perhaps Sweden as well as just Norway) which by virtue of a modest population spread over a large area whose geography (ie mountainous terrain and bad weather in winter) makes air transport a social and commercial necessity. Sure Wideroe performs the greatest and most immediate social function but the demise of Norwegian would likely be a non trivial event for Norway. To the people who praise only the free market who are reading this, please remember that Scandinavians may take a different view of the world. Ensuring SAS avoid the bad old days of being a monopolist with high fares may be sufficient reason for the Norwegian or Swedish Govts to take action to avoid uncontrolled implosion

As a Scandinavian, I can assure you that people here do not "take a different view of the world". If Norwegian goes bust, somebody else will fill the gap. And the government of neither Norway nor Sweden will as much as lift a finger to save it. They wouldn't and legally couldn't. Norwegian is a private company, no government bailout (even if needed) will happen.
 
oslmgm
Posts: 208
Joined: Wed Dec 03, 2014 6:29 pm

Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 3:47 pm

davidjohnson6 wrote:
That said, Norwegian is a significant player in a country (perhaps Sweden as well as just Norway) which by virtue of a modest population spread over a large area whose geography (ie mountainous terrain and bad weather in winter) makes air transport a social and commercial necessity. Sure Wideroe performs the greatest and most immediate social function but the demise of Norwegian would likely be a non trivial event for Norway. To the people who praise only the free market who are reading this, please remember that Scandinavians may take a different view of the world. Ensuring SAS avoid the bad old days of being a monopolist with high fares may be sufficient reason for the Norwegian or Swedish Govts to take action to avoid uncontrolled implosion


The domestic market in Norway is a lucrative one - that's where SAS makes most of it's money. If Norwegian collapses, other airlines will jump in fast. No need for the government to do anything.

6 months ago the Norwegian government sold its last SAS shares. If Norwegian collapses, the government won't do much to stop it. At most there will be a temporary solution until Ryanair, Easy Jet, KLM etc can move in.
 
MalevTU134
Posts: 2059
Joined: Tue Oct 11, 2016 8:04 pm

Re: Reuters/Norwegian Media: DY at Risk of Collapse

Sun Dec 23, 2018 3:51 pm

oslmgm wrote:
davidjohnson6 wrote:
That said, Norwegian is a significant player in a country (perhaps Sweden as well as just Norway) which by virtue of a modest population spread over a large area whose geography (ie mountainous terrain and bad weather in winter) makes air transport a social and commercial necessity. Sure Wideroe performs the greatest and most immediate social function but the demise of Norwegian would likely be a non trivial event for Norway. To the people who praise only the free market who are reading this, please remember that Scandinavians may take a different view of the world. Ensuring SAS avoid the bad old days of being a monopolist with high fares may be sufficient reason for the Norwegian or Swedish Govts to take action to avoid uncontrolled implosion


The domestic market in Norway is a lucrative one - that's where SAS makes most of it's money. If Norwegian collapses, other airlines will jump in fast. No need for the government to do anything.

6 months ago the Norwegian government sold its last SAS shares. If Norwegian collapses, the government won't do much to stop it. At most there will be a temporary solution until Ryanair, Easy Jet, KLM etc can move in.

Exactly.

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