Palumboism
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Updated: Norwegian offers bondholders security (LGW slots) in exchange for amended bond maturities

Mon Sep 02, 2019 6:39 pm

Norwegian Air fights for survival. Bondholders will determine its fate

By Hanna Ziady, CNN Business

Norwegian Air, Europe's third-largest low-cost carrier, is seeking a lifeline from bondholders as it grapples with a cash crunch.
It has asked for two more years to repay its largest outstanding bonds, worth $380 million, and is putting up its lucrative landing slots at London's second busiest airport as collateral.
"They are managing the crisis as best they can but they are on the verge of a cliff edge," Bernstein analyst Daniel Roeska told CNN Business.
Norwegian Air has grown rapidly. In 2012, as it prepared to take on the big players in the transatlantic market, it placed an order for 222 aircraft, the biggest in European aviation history. But this aggressive expansion left it with high levels of debt, which means it has little room to move if things go wrong.

https://www.cnn.com/2019/09/02/business/norwegian-air-debt-restructure/index.html


It seems like Norwegian has taken way more financial risks with debt than were needed. According to the article IAG and Lufthansa have both made offers to buy Norwegian and it that might be in Norwegians future. Thoughts?
Last edited by SQ22 on Tue Sep 10, 2019 8:27 am, edited 1 time in total.
Reason: Title updated
 
BrianDromey
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 7:23 pm

There were similar rumours as last years summer season drew to a close. They will have been hit hard by the MAX grounding. The 787 engine issues will also have hurt them. Although not an EU261 issue, they still have duty of care and have leased-in widebodies for the summer covering Dublin and Gatwick, at least.
The UK and Ireland trans Atlantic 737 flying has been cut for next summer, steps to stabilise the network are being taken. Let’s see if it’s enough.
 
HP69
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 7:26 pm

What are the odds they make it to 2020?
 
VSMUT
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 7:35 pm

How does the Norwegian makeup of many subsidiary airlines factor into this? Could Norwegian in Europe go bust, but Norwegian Argentina still stay in operation? (that would be a bit ironic)


HP69 wrote:
What are the odds they make it to 2020?


I for one won't be in a hurry to book tickets with them.
 
HP69
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 7:42 pm

VSMUT wrote:
How does the Norwegian makeup of many subsidiary airlines factor into this? Could Norwegian in Europe go bust, but Norwegian Argentina still stay in operation? (that would be a bit ironic).


I think that is possible.
 
tphuang
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 7:49 pm

They are finally making some decisions to rein in on crazy expansion ideas. It's too bad that their wacky ex-CEO didn't have any capacity discipline. If they collapse because of expanding too fast, it will be a sad day for consumers.
 
Bealine251
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 8:19 pm

There was also an article on the BBC news saying they don't see their 737 maxs flying this year.
 
Gulfstream500
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 8:20 pm

HP69 wrote:
What are the odds they make it to 2020?


Hmmm...

If they get bought? They'll almost certainly survive.

If they don't get bought? I'll give them six months.
Thinking of a good signature is hard...
 
BY1881
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 8:36 pm

Norwegian had been doing 3 lines of flying for TOM again this summer and decided to pull out mid contract in August leaving TOM to find more wet lease air frames for the rest of the summer season.
 
goosebayguy
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 8:50 pm

Every spring the story is higher sales more money in the bank. Then every autumn we don't seem to have quite enough cash in the bank. Lets have a whip round.
 
DWC
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 8:58 pm

Palumboism wrote:
According to the article IAG and Lufthansa have both made offers to buy Norwegian and it that might be in Norwegians future. Thoughts?

The EU should veto IAG, the LH group or FR from getting their hands on Norwegian, they already have oligopolistic power on the markets served.
Which leaves remote possibilities : EasyJet, Wow, AF-KLM & SAS, the latter two having other priorities at this time.
Perhaps QR can inject some money to make their one-time losses with Meridiana / Air Italy more palatable.
 
Arion640
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 9:12 pm

DWC wrote:
Palumboism wrote:
According to the article IAG and Lufthansa have both made offers to buy Norwegian and it that might be in Norwegians future. Thoughts?

The EU should veto IAG, the LH group or FR from getting their hands on Norwegian, they already have oligopolistic power on the markets served.
Which leaves remote possibilities : EasyJet, Wow, AF-KLM & SAS, the latter two having other priorities at this time.
Perhaps QR can inject some money to make their one-time losses with Meridiana / Air Italy more palatable.


You just as well hand it to IAG if you’re going to hand it to QR. All in bed together.
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DWC
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 9:14 pm

Arion640 wrote:
You just as well hand it to IAG if you’re going to hand it to QR. All in bed together.

Correct... Just what are the pro-competition regulators doing ?
Agreeing on JVs & Alliances like the FAA certified the Max ?
 
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enilria
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 9:27 pm

Palumboism wrote:
Norwegian Air fights for survival. Bondholders will determine its fate

By Hanna Ziady, CNN Business

Norwegian Air, Europe's third-largest low-cost carrier, is seeking a lifeline from bondholders as it grapples with a cash crunch.
It has asked for two more years to repay its largest outstanding bonds, worth $380 million, and is putting up its lucrative landing slots at London's second busiest airport as collateral.
"They are managing the crisis as best they can but they are on the verge of a cliff edge," Bernstein analyst Daniel Roeska told CNN Business.
Norwegian Air has grown rapidly. In 2012, as it prepared to take on the big players in the transatlantic market, it placed an order for 222 aircraft, the biggest in European aviation history. But this aggressive expansion left it with high levels of debt, which means it has little room to move if things go wrong.

https://www.cnn.com/2019/09/02/business/norwegian-air-debt-restructure/index.html


It seems like Norwegian has taken way more financial risks with debt than were needed. According to the article IAG and Lufthansa have both made offers to buy Norwegian and it that might be in Norwegians future. Thoughts?

IAG created Level just to drive Norwegian out of business. If it weren’t for Level and the MAX debacle, Norwegian would be doing fine. IAG’s strategy for shafting Norwegian has worked. The end result will be a further increase in the 80%+ market domination of the 2 ATI JVs. Congrats.
 
NWADC10BOS
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 9:29 pm

VSMUT wrote:
How does the Norwegian makeup of many subsidiary airlines factor into this? Could Norwegian in Europe go bust, but Norwegian Argentina still stay in operation? (that would be a bit ironic)


Could someone explain the relationship and differences among DI, DY and D8? :confused: I see all three of them flying to the US.
 
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AirPacific747
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 9:36 pm

Gulfstream500 wrote:
HP69 wrote:
What are the odds they make it to 2020?


Hmmm...

If they get bought? They'll almost certainly survive.

If they don't get bought? I'll give them six months.


Yes the situation in Norwegian is bad, but the bond holders will most likely agree to Norwegians request. The alternative is losing all of their investments entirely, and the situation could have been even worse by the fact that Norwegian could have requested a reduction in their debt, but they didn’t resort to that yet. So I’m quite positive they’ll make it through this winter too.

They have a big focus on restructuring and cost cutting at the moment so everything is going in the right direction.
 
bennett123
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 9:52 pm

DWC

I thought that WOW had already gone.
 
Trk1
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 10:03 pm

Time to get rid of companies that sell below cost. It is illegal in many parts if enforced
 
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jfklganyc
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 10:05 pm

Outside the box...how about a B6 hookup partnership?

Gives them access
 
musman9853
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 11:00 pm

VSMUT wrote:
I for one won't be in a hurry to book tickets with them.



its a damn shame. i flew them tatl once and they were pretty good.
Welcome to the City Beautiful.
 
DWC
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Re: Norwegian Air Fights for Survival

Mon Sep 02, 2019 11:19 pm

bennett123 wrote:
DWC
I thought that WOW had already gone.

Absolutely ! :bigthumbsup:
I meant WIZZ, I get confused with these dummy names I never fly anyway.

enilria wrote:
IAG created Level just to drive Norwegian out of business. If it weren’t for Level and the MAX debacle, Norwegian would be doing fine. IAG’s strategy for shafting Norwegian has worked. The end result will be a further increase in the 80%+ market domination of the 2 ATI JVs. Congrats.

Yes, while legal, these kind of (anti)competitive enterprises does not make it less thug thinking.
Add the RR problems to their 787.

That is the problem with these agressive strategies, if things go wrong, they sour rapidly.
Same for WOW mentionned above, AirBerlin too because the Berlin airport delays, EY, etc, etc,
 
LHUSA
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 12:12 am

enilria wrote:
Palumboism wrote:
Norwegian Air fights for survival. Bondholders will determine its fate

By Hanna Ziady, CNN Business

Norwegian Air, Europe's third-largest low-cost carrier, is seeking a lifeline from bondholders as it grapples with a cash crunch.
It has asked for two more years to repay its largest outstanding bonds, worth $380 million, and is putting up its lucrative landing slots at London's second busiest airport as collateral.
"They are managing the crisis as best they can but they are on the verge of a cliff edge," Bernstein analyst Daniel Roeska told CNN Business.
Norwegian Air has grown rapidly. In 2012, as it prepared to take on the big players in the transatlantic market, it placed an order for 222 aircraft, the biggest in European aviation history. But this aggressive expansion left it with high levels of debt, which means it has little room to move if things go wrong.

https://www.cnn.com/2019/09/02/business/norwegian-air-debt-restructure/index.html


It seems like Norwegian has taken way more financial risks with debt than were needed. According to the article IAG and Lufthansa have both made offers to buy Norwegian and it that might be in Norwegians future. Thoughts?

IAG created Level just to drive Norwegian out of business. If it weren’t for Level and the MAX debacle, Norwegian would be doing fine. IAG’s strategy for shafting Norwegian has worked. The end result will be a further increase in the 80%+ market domination of the 2 ATI JVs. Congrats.


I think you're giving Level way too much credit - their footprint is relatively minimal and only overlaps with a limited amount of Norwegian's routes. Norwegian's financials were abysmal long before Level was introduced. Also, many on here would agree the MAX grounding actually helped by allowing Norwegian to cut what were more than likely loss-making routes. If one, brand-new competitor can drive Norwegian out of business, they didn't have a very good business plan.
 
YIMBY
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 5:07 am

Trk1 wrote:
Time to get rid of companies that sell below cost. It is illegal in many parts if enforced


In EU, selling below cost is illegal for the company that has a dominant market position. Selling below operational costs is illegal if its purpose is to outcompete competitors and selling below average costs is forbidden as a reaction to new market entrant etc.

Market challengers are allowed to sell at any price, even give tickets free, as well as monopolists as long as there is no competition (upper limits may be imposed by other rules).

Practice is more complicated than theory, though, and may require armies of lawyers.

In which European markets does Norwegian have a dominant market position?

In the USA, the rules for price dumping are different, often protectionist.
 
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Pellegrine
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 5:18 am

WoW v2.0

Rapid growth without major financial backing (in the billions)...I know what this recipe smells like cooking.
oh boy, here we go!!!
 
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QuawerAir
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 5:26 am

NWADC10BOS wrote:
VSMUT wrote:
How does the Norwegian makeup of many subsidiary airlines factor into this? Could Norwegian in Europe go bust, but Norwegian Argentina still stay in operation? (that would be a bit ironic)


Could someone explain the relationship and differences among DI, DY and D8? :confused: I see all three of them flying to the US.

DI and D8 are both subsidiaries of Norwegian Air Shuttle (DY). DI is Norwegian Air UK based in the UK and operates most of the LGW–U.S flights. D8 is Norwegian Air International, based in Ireland and operates Ireland–U.S flights as well as several intra-European flights. DY itself operates several Europe–U.S flights as well, such as flights from Scandinavia.
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Aisak
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 6:22 am

enilria wrote:
IAG created Level just to drive Norwegian out of business. If it weren’t for Level and the MAX debacle, Norwegian would be doing fine. IAG’s strategy for shafting Norwegian has worked. The end result will be a further increase in the 80%+ market domination of the 2 ATI JVs. Congrats.


Yeah... sure. If a department within a network airline (that was Level BCN when it was launched, and for the most part of it, continues to be just a department within IB) with just 2 330-200 configured for high density Y and Y+ based in BCN with no feed has managed to drive down the Norwegian multi-airline group... I can't only say... WOW!!!!.

    -Level from BCN offered just 4 destinations LAX, SFO (OAK?), EZE and PUJ and only two of them could be legally operated by Norwegian as they fell outside the EU-US open skies agreement.
    -Level from ORY (Level France) is just the change of name of openskies with little more (any?) success. And im not sure how opensk...errrr, Level competes with Norwegian in the French market.
    -Level from VIE (and later AMS) is a doubtful shorthaul operation who feeds no one and maybe... is rumoured to be aimed at replacing Vueling at EU (non-ES) bases...
 
ei146
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 6:29 am

For my own understanding I compiled this little table of the different Norwegian branches. Data comes from Wikipedia, so it may not be 100% correct. But I guess it is enough to get an idea:

                                                   B738   B38M   B788   B789
Norwegian Air Shuttle (Norway)            DY   NAX   47      8      
Norwegian Long Haul (Norway)              DU   NLH                  8     13
Norwegian Air Norway                      DH   NAN            
Norwegian Air International (Ireland)     D8   IBK   58      9            7
Norwegian Air Sweden                      LE   NSW           3            3
Norwegian Air UK                          DI   NRS                        13
Norwegian Air Argentina                   DN   NAA   3         
   Sum                                             108      20      8      36


Is it known, where the losses are coming from? Do some of the Norwegian branches still make money? E.g. could flying in Scandinavia still be profitable while the long haul or the European LCC burns money?
Maybe LH, IAG or other investors are not interested in the whole group, but want to have only a piece of the cake.
 
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seahawk
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 6:37 am

It is time they go away. the market needs the consolidation and the over capacity removed.
 
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millionsofmiles
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 6:46 am

Stick a fork in it.

It’s fhe same story every year.
 
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DL747400
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 6:49 am

enilria wrote:
If it weren’t for Level and the MAX debacle, Norwegian would be doing fine. IAG’s strategy for shafting Norwegian has worked.


Wrong. Norwegian was struggling before Level’s first flight took to the skies.

IAG’s strategy is called competition. If you don’t like free market competition, there are a number of Socialist / Communist countries who might let you in.
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SCQ83
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 6:59 am

DWC wrote:
The EU should veto IAG, the LH group or FR from getting their hands on Norwegian, they already have oligopolistic power on the markets served.
Which leaves remote possibilities : EasyJet, Wow, AF-KLM & SAS, the latter two having other priorities at this time.
Perhaps QR can inject some money to make their one-time losses with Meridiana / Air Italy more palatable.


I think you are overestimating how big Norwegian is intra-European. They have closed pretty much all non-Scandinavian, non-LGW routes. Today inside Europe Norwegian resembles more SAS (in terms of routes) than easyJet or Ryanair.

In any case, at this point, I don't know what will Norwegian offer. LGW slots? A good share market in Scandinavia?
 
juliuswong
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 7:24 am

They have bite off more than what they can chew. They should have established a solid, consistent short haul market, before thinking of venturing into long haul market. With every other premium carrier throwing out promo fares every other days with shocking price tag, coupled with bonds and debt to be paid off, not forgetting lease payment for almost all their fleet, to say they are in dire straits is an understatement.

AirAsia was once in this position when their long haul operation bleed money continuously, they responded by dropping routes which were in red, sold off and lease back A320 and A330 fleet, and cancelling pending A330ceo on order. Thank goodness they survived.
- Life is a journey, travel it well -
 
N1KE
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 7:33 am

IAG/LH looked to buy Norwegian and they managed to stop that and raised more cash to survive last year and now this year the same stories arise and they are looking to offer parts of airline as collateral to help delay payment of the bonds. All fine until you start to run out of collateral and have nothing left to offer anyone. Not saying it will happen this time, but how much more have they got to offer when trying to raise money?
 
ei146
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 7:47 am

juliuswong wrote:
They should have established a solid, consistent short haul market, before thinking of venturing into long haul market


Except this is what they did. Starting in 1993 in Norway they slowly expanded their marketshare in Norway. They started flying to other scandinavian countries and added flights to other European destinations. In 2003 they went public. It took 20 years until they started long haul with three 787-8 in 2013. Even that might be considererd part of a sustainable organic growth.

But in reality in 2012 and 2013 was the time when they became to big for their boots with the massive order of 108 MAX 8, the quick opening of bases outside of Scandinavia and the massive expansion of their long haul network.
 
leghorn
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 7:53 am

They are getting close to a FlyBE type situation where the credit card companies will retain the ticket income to cover themselves and then be catapulted in to bankruptcy or buyout on very unfavourable terms.
 
aircatalonia
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 8:28 am

Near 0% interest credit will always lead to bubbles in every industry.
 
VSMUT
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 8:45 am

Aisak wrote:
enilria wrote:
IAG created Level just to drive Norwegian out of business. If it weren’t for Level and the MAX debacle, Norwegian would be doing fine. IAG’s strategy for shafting Norwegian has worked. The end result will be a further increase in the 80%+ market domination of the 2 ATI JVs. Congrats.


Yeah... sure. If a department within a network airline (that was Level BCN when it was launched, and for the most part of it, continues to be just a department within IB) with just 2 330-200 configured for high density Y and Y+ based in BCN with no feed has managed to drive down the Norwegian multi-airline group... I can't only say... WOW!!!!.

    -Level from BCN offered just 4 destinations LAX, SFO (OAK?), EZE and PUJ and only two of them could be legally operated by Norwegian as they fell outside the EU-US open skies agreement.
    -Level from ORY (Level France) is just the change of name of openskies with little more (any?) success. And im not sure how opensk...errrr, Level competes with Norwegian in the French market.
    -Level from VIE (and later AMS) is a doubtful shorthaul operation who feeds no one and maybe... is rumoured to be aimed at replacing Vueling at EU (non-ES) bases...


It's probably a bit too much to say that Level did it, but they probably contributed. Eurowings, FrenchBee, high-density BA 777s flying out of Gatwick, Transavia and price competition from the likes of Lufthansa, Austrian, Air France and KLM themselves, as well as defunct players like Primera and WOW, probably did it in combination.
 
VolvoBus
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 9:01 am

leghorn wrote:
They are getting close to a FlyBE type situation where the credit card companies will retain the ticket income to cover themselves and then be catapulted in to bankruptcy or buyout on very unfavourable terms.


According to the linked article, they are already there. 'Payment delays' from credit card companies reduced working capital by US$ 439 mill in 2Q 2019 over 2Q 2018. Compared to the US$ 380 mill in repayments due in December 2019 and August 2020, things are not quite as bad as some portray, although far from wonderful.
 
ei146
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 9:30 am

A quote from the article:
...and is putting up its lucrative landing slots at London's second busiest airport as collateral.

Are the slots so lucrative in the current situation? I'd consider any investment into UK slots risky right now. So probably they are not worth as much anymore as they once were.
 
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RyanairGuru
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 11:32 am

VolvoBus wrote:
'Payment delays' from credit card companies reduced working capital by US$ 439 mill in 2Q 2019 over 2Q 2018. Compared to the US$ 380 mill in repayments due in December 2019 and August 2020


So the funds quarantined by credit card companies would more than cover their upcoming debt payments? If so then that pretty much explains this latest attempt to restructure their debt. They were almost certainly relying on short-term cash flow to finance their debts.
Worked Hard, Flew Right
 
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enilria
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 11:43 am

LHUSA wrote:
enilria wrote:
Palumboism wrote:
Norwegian Air fights for survival. Bondholders will determine its fate

By Hanna Ziady, CNN Business

Norwegian Air, Europe's third-largest low-cost carrier, is seeking a lifeline from bondholders as it grapples with a cash crunch.
It has asked for two more years to repay its largest outstanding bonds, worth $380 million, and is putting up its lucrative landing slots at London's second busiest airport as collateral.
"They are managing the crisis as best they can but they are on the verge of a cliff edge," Bernstein analyst Daniel Roeska told CNN Business.
Norwegian Air has grown rapidly. In 2012, as it prepared to take on the big players in the transatlantic market, it placed an order for 222 aircraft, the biggest in European aviation history. But this aggressive expansion left it with high levels of debt, which means it has little room to move if things go wrong.

https://www.cnn.com/2019/09/02/business/norwegian-air-debt-restructure/index.html


It seems like Norwegian has taken way more financial risks with debt than were needed. According to the article IAG and Lufthansa have both made offers to buy Norwegian and it that might be in Norwegians future. Thoughts?

IAG created Level just to drive Norwegian out of business. If it weren’t for Level and the MAX debacle, Norwegian would be doing fine. IAG’s strategy for shafting Norwegian has worked. The end result will be a further increase in the 80%+ market domination of the 2 ATI JVs. Congrats.


I think you're giving Level way too much credit - their footprint is relatively minimal and only overlaps with a limited amount of Norwegian's routes. Norwegian's financials were abysmal long before Level was introduced. Also, many on here would agree the MAX grounding actually helped by allowing Norwegian to cut what were more than likely loss-making routes. If one, brand-new competitor can drive Norwegian out of business, they didn't have a very good business plan.

They ran Norwegian out of FLL and OAK, and are still pressuring them elsewhere. Also, for all the hand-wringing from supporters of the Big Alliance about Norwegian margins, imagine what Level margins are flying the same routes with a much higher cost structure? But that’s all fine because they are able to hide the losses by cross-subsidizing them across a much larger network? It’s a perversion of anti-monopoly laws. For all the EU’s furor against tech monopolies, they are spineless in air transportation, just like the DOT/DOJ.
 
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enilria
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 11:44 am

RyanairGuru wrote:
VolvoBus wrote:
'Payment delays' from credit card companies reduced working capital by US$ 439 mill in 2Q 2019 over 2Q 2018. Compared to the US$ 380 mill in repayments due in December 2019 and August 2020


So the funds quarantined by credit card companies would more than cover their upcoming debt payments? If so then that pretty much explains this latest attempt to restructure their debt. They were almost certainly relying on short-term cash flow to finance their debts.

No doubt they saw their holdback increase. This is a very bad sign.
 
Natflyer
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Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 12:14 pm

enilria wrote:
RyanairGuru wrote:
VolvoBus wrote:
'Payment delays' from credit card companies reduced working capital by US$ 439 mill in 2Q 2019 over 2Q 2018. Compared to the US$ 380 mill in repayments due in December 2019 and August 2020


So the funds quarantined by credit card companies would more than cover their upcoming debt payments? If so then that pretty much explains this latest attempt to restructure their debt. They were almost certainly relying on short-term cash flow to finance their debts.

No doubt they saw their holdback increase. This is a very bad sign.


All this sounds pretty much like WOW air´s demise unfolded.
 
Boeing74741R
Posts: 1189
Joined: Tue Apr 17, 2007 5:44 am

Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 12:30 pm

ei146 wrote:
A quote from the article:
...and is putting up its lucrative landing slots at London's second busiest airport as collateral.

Are the slots so lucrative in the current situation? I'd consider any investment into UK slots risky right now. So probably they are not worth as much anymore as they once were.


People will still want to travel from/to London if/when Brexit becomes a reality. It would require a significant downturn in travel for slots at places such as LHR and LGW to lose their value. By significant, I mean slots becoming available and then spare slots still available after airlines already in the queue for slots have taken what they need.

enilria wrote:
LHUSA wrote:
enilria wrote:
IAG created Level just to drive Norwegian out of business. If it weren’t for Level and the MAX debacle, Norwegian would be doing fine. IAG’s strategy for shafting Norwegian has worked. The end result will be a further increase in the 80%+ market domination of the 2 ATI JVs. Congrats.


I think you're giving Level way too much credit - their footprint is relatively minimal and only overlaps with a limited amount of Norwegian's routes. Norwegian's financials were abysmal long before Level was introduced. Also, many on here would agree the MAX grounding actually helped by allowing Norwegian to cut what were more than likely loss-making routes. If one, brand-new competitor can drive Norwegian out of business, they didn't have a very good business plan.

They ran Norwegian out of FLL and OAK, and are still pressuring them elsewhere. Also, for all the hand-wringing from supporters of the Big Alliance about Norwegian margins, imagine what Level margins are flying the same routes with a much higher cost structure? But that’s all fine because they are able to hide the losses by cross-subsidizing them across a much larger network? It’s a perversion of anti-monopoly laws. For all the EU’s furor against tech monopolies, they are spineless in air transportation, just like the DOT/DOJ.


Didn't BA's flights from LGW to FLL and OAK have an impact too, as well as BA re-launching LGW-JFK and LGW-LAS?
 
ei146
Posts: 261
Joined: Sat Jan 09, 2010 9:54 pm

Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 1:28 pm

Boeing74741R wrote:
People will still want to travel from/to London if/when Brexit becomes a reality. It would require a significant downturn in travel for slots at places such as LHR and LGW to lose their value. By significant, I mean slots becoming available and then spare slots still available after airlines already in the queue for slots have taken what they need.


We will see what happens, when some slots are really on the market and traded. Or how much value Norwegian's creditors really give them.
 
BrianDromey
Posts: 2448
Joined: Sun Dec 10, 2006 2:23 am

Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 1:28 pm

IAG reckon that the High Density BA 777 operation has lower costs than Norwegians 787s. BA have made huge efforts to reduce costs. They no longer self-handle at LGW (after the contractor went bust it’s now an IAG company), the cabin crew are paid market rates and the aircraft are paid-off. Sounds plausible.

Norwegian have been very unfortunate that both the MAX and 787 have had issues, maybe Boeing’s compensation was a lifeline, who knows. Europe is a tough market right now. Fares are low, there is a lot of capacity, the EU3 along with Ryanair, Wizz and easyJet make competition extremely stiff. Their transatlantic routes get a lot of attention, but they have a sizeable short haul 737 operation too.
 
Cointrin330
Posts: 1245
Joined: Sat Jul 16, 2016 12:23 pm

Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 1:39 pm

Good luck. They'll need it. Disruptor yes. Innovative, perhaps. Logical business model? Absolutely not. Those shiny new 787s will end up in the hands of IAG and potentially, at a bargain basement price.
 
LHUSA
Posts: 787
Joined: Wed Aug 24, 2005 10:15 am

Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 1:44 pm

To be fair, many of us have been predicting their immediate demise for over 2 years now. Are these latest reports the worst things have ever been for Norwegian? When will their Q2 results come out? I don't believe I've seen those.
 
minilinde
Posts: 127
Joined: Sat Dec 31, 2005 1:16 am

Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 1:50 pm

LHUSA wrote:
To be fair, many of us have been predicting their immediate demise for over 2 years now. Are these latest reports the worst things have ever been for Norwegian? When will their Q2 results come out? I don't believe I've seen those.

They third quarter will come out on October 24th.
https://www.norwegian.com/dk/om-os/virksomhed/investor-relations/financial-calendar/
 
Bongodog49
Posts: 99
Joined: Fri Feb 08, 2019 11:35 am

Re: Norwegian Air Fights for Survival

Tue Sep 03, 2019 2:26 pm

enilria wrote:
Palumboism wrote:
Norwegian Air fights for survival. Bondholders will determine its fate

By Hanna Ziady, CNN Business

Norwegian Air, Europe's third-largest low-cost carrier, is seeking a lifeline from bondholders as it grapples with a cash crunch.
It has asked for two more years to repay its largest outstanding bonds, worth $380 million, and is putting up its lucrative landing slots at London's second busiest airport as collateral.
"They are managing the crisis as best they can but they are on the verge of a cliff edge," Bernstein analyst Daniel Roeska told CNN Business.
Norwegian Air has grown rapidly. In 2012, as it prepared to take on the big players in the transatlantic market, it placed an order for 222 aircraft, the biggest in European aviation history. But this aggressive expansion left it with high levels of debt, which means it has little room to move if things go wrong.

https://www.cnn.com/2019/09/02/business/norwegian-air-debt-restructure/index.html


It seems like Norwegian has taken way more financial risks with debt than were needed. According to the article IAG and Lufthansa have both made offers to buy Norwegian and it that might be in Norwegians future. Thoughts?

IAG created Level just to drive Norwegian out of business. If it weren’t for Level and the MAX debacle, Norwegian would be doing fine. IAG’s strategy for shafting Norwegian has worked. The end result will be a further increase in the 80%+ market domination of the 2 ATI JVs. Congrats.


There is no conceivable way that an airline with 11 aircraft based across a number of countries can have a major financial influence on a nother airline with in excess of 170 planes in its fleet.

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