Norwegian consists of so many different companies. Some are more profitable than others. I think it would be smart to sell off some of them to make sure the others survive. But the whole company structure is so messy, I don't even know which ones do what anymore.

BrianDromey wrote:

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.

Paid-off aircraft might be the key thing here. I suspect that IAG went after Norwegian primarily for the fleeting, but to also get shareholding issues resolved for Brexit if existing Norwegian shareholders were to be issued new shares in IAG.

Boeing74741R wrote:

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?

Sure, plus DL is now adding LGW next year too. This airline isn't dying because its business model is poor, it is dying because the legacy alliances led by IAG ganged up to suffocate it to death with capacity. Is this new in this industry? Sadly no. But for people to say that Norwegian deserved this because there was no way their model would work is a lie. It worked so well that it was a threat to the legacy alliances which set out to make sure it didn't prosper and ultimately cut into their margins.

WW added DFW-KEF. FI added DFW-KEF. AA added DFW-KEF. WW dropped DFW-KEF. FI dropped DFW-KEF. AA dropped DFW-KEF. These things aren't coincidence my friends.

Bongodog49 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.

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.

You are talking about Level? Norwegian only had 30 something airplanes in longhaul. 11 on top of that is extremely significant. It's enough to change the profit margin from breakeven to -25%.

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.

Wrong (again). You know full well just as everyone else knows that Norwegian was in trouble long before the first LEVEL flight ever took to the skies. And Norwegian would be in trouble today even without the 737 MAX grounding.

Trk1 wrote:

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

Do you mean British Airways that offers return tickets from Stockholm via London Heathrow to San Francisco for € 250,00? They can’t be making money on that.

enilria wrote:

Bongodog49 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.

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.

You are talking about Level? Norwegian only had 30 something airplanes in longhaul. 11 on top of that is extremely significant. It's enough to change the profit margin from breakeven to -25%.

Level has 6 longhaul aircraft compared to 37 at Norwegian. Not exactly a formidable threat to Norwegian and certainly not the main reason for their troubles. Take a look inward to find out why they are now in the financial position they are in.

Let the airline die. No profit no airline

enilria wrote:

Boeing74741R wrote:

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?

Sure, plus DL is now adding LGW next year too. This airline isn't dying because its business model is poor, it is dying because the legacy alliances led by IAG ganged up to suffocate it to death with capacity. Is this new in this industry? Sadly no. But for people to say that Norwegian deserved this because there was no way their model would work is a lie. It worked so well that it was a threat to the legacy alliances which set out to make sure it didn't prosper and ultimately cut into their margins.

WW added DFW-KEF. FI added DFW-KEF. AA added DFW-KEF. WW dropped DFW-KEF. FI dropped DFW-KEF. AA dropped DFW-KEF. These things aren't coincidence my friends.

This is exactly the problem these low cost carriers need to enter markets where they can't be suffocated where they can dictate what the price of tickets will be. Where DY went wrong is they should have been operating 2 and 3 times weekly flights from London to places like CLE and PIT with their narrowbodies instead of places like SWF and PVD where the market decided what the price of tickets would be and with over capacity they had no pricing power.

One of the biggest bondholders is "very spectic" to the proposed pushback.
Source in Norwegian (the language, not the airline):
https://finansavisen.no/nyheter/luftfart/2019/09/04/6953095/norwegian-ber-kreditorene-om-utsettelse-av-gjeldsforfall.-sissener-er-meget-skeptisk

klm617 wrote:

Where DY went wrong is they should have been operating 2 and 3 times weekly flights from London to places like CLE and PIT with their narrowbodies instead of places like SWF and PVD where the market decided what the price of tickets would be and with over capacity they had no pricing power.

Yeh, because Londoners want to vacation in CLE and PIT. I expect DY's point of sale leans heavily towards Europe, not the U.S. If there was big money to be made gouging PIT and CLE travelers with non-stops, DL/AA/UA would be doing it. (Instead we see just how selectively they do it, with DL from secondary U.S. origins, and AA from hubs to tertiary European destinations.)

minilinde wrote:

One of the biggest bondholders is "very spectic" to the proposed pushback.
Source in Norwegian (the language, not the airline):
https://finansavisen.no/nyheter/luftfart/2019/09/04/6953095/norwegian-ber-kreditorene-om-utsettelse-av-gjeldsforfall.-sissener-er-meget-skeptisk

Thank you for the link. According to the article, one of the unsecured bondholders is balking at the use of London Gatwick landing rights to secure the bond delay and will basically tell Norwegian no. They have other ideas to infuse capital...

DL747400 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.

Wrong (again). You know full well just as everyone else knows that Norwegian was in trouble long before the first LEVEL flight ever took to the skies. And Norwegian would be in trouble today even without the 737 MAX grounding.

I don't know that. Provide any proof they were "in trouble" prior to Level starting? Are you saying their earnings declined when they started expanding? Well, duh. That's not in trouble. Username checks out.

LHUSA wrote:

enilria wrote:

Bongodog49 wrote:

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.

You are talking about Level? Norwegian only had 30 something airplanes in longhaul. 11 on top of that is extremely significant. It's enough to change the profit margin from breakeven to -25%.

Level has 6 longhaul aircraft compared to 37 at Norwegian. Not exactly a formidable threat to Norwegian and certainly not the main reason for their troubles. Take a look inward to find out why they are now in the financial position they are in.

What's the 11 in the quote I responded to?

klm617 wrote:

enilria wrote:

Boeing74741R wrote:

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?

Sure, plus DL is now adding LGW next year too. This airline isn't dying because its business model is poor, it is dying because the legacy alliances led by IAG ganged up to suffocate it to death with capacity. Is this new in this industry? Sadly no. But for people to say that Norwegian deserved this because there was no way their model would work is a lie. It worked so well that it was a threat to the legacy alliances which set out to make sure it didn't prosper and ultimately cut into their margins.

WW added DFW-KEF. FI added DFW-KEF. AA added DFW-KEF. WW dropped DFW-KEF. FI dropped DFW-KEF. AA dropped DFW-KEF. These things aren't coincidence my friends.

This is exactly the problem these low cost carriers need to enter markets where they can't be suffocated where they can dictate what the price of tickets will be. Where DY went wrong is they should have been operating 2 and 3 times weekly flights from London to places like CLE and PIT with their narrowbodies instead of places like SWF and PVD where the market decided what the price of tickets would be and with over capacity they had no pricing power.

An airline can be suffocated anywhere by a competitor. Just depends how much they are willing to spend. DFW-KEF wasn't daily. Most of the Norwegian routes aren't daily.

enilria wrote:

Boeing74741R wrote:

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?

Sure, plus DL is now adding LGW next year too. This airline isn't dying because its business model is poor, it is dying because the legacy alliances led by IAG ganged up to suffocate it to death with capacity. Is this new in this industry? Sadly no. But for people to say that Norwegian deserved this because there was no way their model would work is a lie. It worked so well that it was a threat to the legacy alliances which set out to make sure it didn't prosper and ultimately cut into their margins.

WW added DFW-KEF. FI added DFW-KEF. AA added DFW-KEF. WW dropped DFW-KEF. FI dropped DFW-KEF. AA dropped DFW-KEF. These things aren't coincidence my friends.

I'm struggling to see your point here. It's a free market, yes? Airlines, as businesses, are free, depending upon their traffic rights of course, to respond to competitors' threats, perceived and real - by which I mean even if the threat is not on a route they currently serve. Are you suggesting DY should be exempted from market forces by banning other airlines from taking action in response to DY opening a new route?

I am not certain IAG "ganged up" with anyone, outside of planning capacity and route structure with their immunised JV partners. Collusion is illegal, after all, and BA have been heavily fined (£270 million I think) for this very practice in the past. Do you have any evidence to support your claim, or is this just your opinion?

Are there any parts of Norwegian that are worth having . Ie that make money ? What bits would a potential buyer want ?

airlineaddict wrote:

minilinde wrote:

One of the biggest bondholders is "very spectic" to the proposed pushback.
Source in Norwegian (the language, not the airline):
https://finansavisen.no/nyheter/luftfart/2019/09/04/6953095/norwegian-ber-kreditorene-om-utsettelse-av-gjeldsforfall.-sissener-er-meget-skeptisk

Thank you for the link. According to the article, one of the unsecured bondholders is balking at the use of London Gatwick landing rights to secure the bond delay and will basically tell Norwegian no. They have other ideas to infuse capital...

That article is troublesome for Norwegian. They just sold last stocks on Norwegian bank to get 1B NOK. They have money to pay this bond holder but i doubt other bond holders would accept it. Norwegian YOY numbers don't seem to improve and load factor is already high (93%). So it looks like they are making heavy looses for this year. Now the winter looks terrible. Their stock price has drop in a year from 32 USD to 3,40 USD and today over 5%. What are their assets they can turn to liquidity in a short time? Still some planes sale and leaseback to survive? Without heavy changes they will run out of cash this winter.

MIflyer12 wrote:

klm617 wrote:

Where DY went wrong is they should have been operating 2 and 3 times weekly flights from London to places like CLE and PIT with their narrowbodies instead of places like SWF and PVD where the market decided what the price of tickets would be and with over capacity they had no pricing power.

Yeh, because Londoners want to vacation in CLE and PIT. I expect DY's point of sale leans heavily towards Europe, not the U.S. If there was big money to be made gouging PIT and CLE travelers with non-stops, DL/AA/UA would be doing it. (Instead we see just how selectively they do it, with DL from secondary U.S. origins, and AA from hubs to tertiary European destinations.)

And that's the flawed logic right there because London originating passengers already have plenty of choice to the major markets in the US at low prices. Norwegian needs to target the US based passengers that need affordable options from the USA to Europe that are un served. While it may be very nice to say you serve Chicago, Boston and New York if it doesn't make you money what good is that.

Trk1 wrote:

Let the airline die. No profit no airline

Using that logic, then the sole US airline would now be WN, since all the others had to be bailed out by the government after 9/11.

MIflyer12 wrote:

klm617 wrote:

Where DY went wrong is they should have been operating 2 and 3 times weekly flights from London to places like CLE and PIT with their narrowbodies instead of places like SWF and PVD where the market decided what the price of tickets would be and with over capacity they had no pricing power.

Yeh, because Londoners want to vacation in CLE and PIT. I expect DY's point of sale leans heavily towards Europe, not the U.S. If there was big money to be made gouging PIT and CLE travelers with non-stops, DL/AA/UA would be doing it. (Instead we see just how selectively they do it, with DL from secondary U.S. origins, and AA from hubs to tertiary European destinations.)

You are absolutely correct the is no market between PIT, CLE and London for UA/AA and DL and their $1500 round trip airfares but there is a market for say 2 or 3 weekly at around $600 to $800 round trip and then these carriers wouldn't have to compete by offering $198 round trips from BOS or NYC and they could get 3 and for times the return on investment than they can in the big markets.

enilria wrote:

DL747400 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.

Wrong (again). You know full well just as everyone else knows that Norwegian was in trouble long before the first LEVEL flight ever took to the skies. And Norwegian would be in trouble today even without the 737 MAX grounding.

I don't know that. Provide any proof they were "in trouble" prior to Level starting? Are you saying their earnings declined when they started expanding? Well, duh. That's not in trouble. Username checks out.

LHUSA wrote:

enilria wrote:

You are talking about Level? Norwegian only had 30 something airplanes in longhaul. 11 on top of that is extremely significant. It's enough to change the profit margin from breakeven to -25%.

Level has 6 longhaul aircraft compared to 37 at Norwegian. Not exactly a formidable threat to Norwegian and certainly not the main reason for their troubles. Take a look inward to find out why they are now in the financial position they are in.

What's the 11 in the quote I responded to?

klm617 wrote:

enilria wrote:

Sure, plus DL is now adding LGW next year too. This airline isn't dying because its business model is poor, it is dying because the legacy alliances led by IAG ganged up to suffocate it to death with capacity. Is this new in this industry? Sadly no. But for people to say that Norwegian deserved this because there was no way their model would work is a lie. It worked so well that it was a threat to the legacy alliances which set out to make sure it didn't prosper and ultimately cut into their margins.

WW added DFW-KEF. FI added DFW-KEF. AA added DFW-KEF. WW dropped DFW-KEF. FI dropped DFW-KEF. AA dropped DFW-KEF. These things aren't coincidence my friends.

This is exactly the problem these low cost carriers need to enter markets where they can't be suffocated where they can dictate what the price of tickets will be. Where DY went wrong is they should have been operating 2 and 3 times weekly flights from London to places like CLE and PIT with their narrowbodies instead of places like SWF and PVD where the market decided what the price of tickets would be and with over capacity they had no pricing power.

An airline can be suffocated anywhere by a competitor. Just depends how much they are willing to spend. DFW-KEF wasn't daily. Most of the Norwegian routes aren't daily.

No one is trying to suffocate FI off in Kansas City.

Fast summary of Norwegian' situation

1) Argentina - flights sold in Peso all international expenses in USD
2) Hard Brexit - The Pound Sterling to fall in value
3) New open skies agreement between US - UK
4) B7MAX ? grounded and those there will be delivered ?
5) Bonds to be paid ?
6) B787 some out of production this winter
7) Airbus order - what happens ? PW1100GTF ?
8) The economy will slow down ?
9) Over capacity in the market over the winter ?
10 ) No market for second hand B737-800 ?

Who will come with a clue ?

vhtje wrote:

enilria wrote:

Boeing74741R wrote:

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?

Sure, plus DL is now adding LGW next year too. This airline isn't dying because its business model is poor, it is dying because the legacy alliances led by IAG ganged up to suffocate it to death with capacity. Is this new in this industry? Sadly no. But for people to say that Norwegian deserved this because there was no way their model would work is a lie. It worked so well that it was a threat to the legacy alliances which set out to make sure it didn't prosper and ultimately cut into their margins.

WW added DFW-KEF. FI added DFW-KEF. AA added DFW-KEF. WW dropped DFW-KEF. FI dropped DFW-KEF. AA dropped DFW-KEF. These things aren't coincidence my friends.

I'm struggling to see your point here. It's a free market, yes? Airlines, as businesses, are free, depending upon their traffic rights of course, to respond to competitors' threats, perceived and real - by which I mean even if the threat is not on a route they currently serve. Are you suggesting DY should be exempted from market forces by banning other airlines from taking action in response to DY opening a new route?

I am not certain IAG "ganged up" with anyone, outside of planning capacity and route structure with their immunised JV partners. Collusion is illegal, after all, and BA have been heavily fined (£270 million I think) for this very practice in the past. Do you have any evidence to support your claim, or is this just your opinion?

The problem is cross-subsidization. A start-up can't cross-subsidize. Cross-subsidization is supposed to be illegal. You aren't supposed to be able to charge consumers in MARKET B an extra 20% in order to subsidize losses in MARKET A where there is a competitor and then raise prices in MARKET A when the competitor is dead. If you do not draw a reasonable line on this new entrant competition will cease to exist. I would argue that has happened in a number of industries for the same seasons.

Capitalism is supposed to be survival of the fittest, not a bunch of old deer with a group bazooka killing the newborns. Collusion is illegal, but it does not take a phone call to pile on. If IAG (which is a gang of airlines already, BA/EI/IB/Level all added capacity against Norwegian) decides to take on Norwegian, Delta can see it and join in. They don't need a phone call to have it explained to them what is going on.

klm617 wrote:

enilria wrote:

DL747400 wrote:

Wrong (again). You know full well just as everyone else knows that Norwegian was in trouble long before the first LEVEL flight ever took to the skies. And Norwegian would be in trouble today even without the 737 MAX grounding.

I don't know that. Provide any proof they were "in trouble" prior to Level starting? Are you saying their earnings declined when they started expanding? Well, duh. That's not in trouble. Username checks out.

LHUSA wrote:

Level has 6 longhaul aircraft compared to 37 at Norwegian. Not exactly a formidable threat to Norwegian and certainly not the main reason for their troubles. Take a look inward to find out why they are now in the financial position they are in.

What's the 11 in the quote I responded to?

klm617 wrote:

This is exactly the problem these low cost carriers need to enter markets where they can't be suffocated where they can dictate what the price of tickets will be. Where DY went wrong is they should have been operating 2 and 3 times weekly flights from London to places like CLE and PIT with their narrowbodies instead of places like SWF and PVD where the market decided what the price of tickets would be and with over capacity they had no pricing power.

An airline can be suffocated anywhere by a competitor. Just depends how much they are willing to spend. DFW-KEF wasn't daily. Most of the Norwegian routes aren't daily.

No one is trying to suffocate FI off in Kansas City.

MCI is a market weak enough so that there is not much interest in it, but that also means they are likely struggling. CLE is similar and is suspended. If there is a hint of success like in PIT or AUS the legacies will show up to suffocate the market with capacity, no worries.

911 was a far different situation than the profitless airline from Norway

jfklganyc wrote:

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

Gives them access

JFK would probably be the biggest benefit to such an idea.
However, most of Norwegian's flights are coming in after 8pm - into Terminal 1. Fat chance of making it over to T5 to get on anything lucrative.

So many haters here trying to sound impartial and analytical, but it’s obvious that for whatever reason, they just hate Norwegian. Whatever have they done to piss so many people off?

enilria wrote:

klm617 wrote:

enilria wrote:

I don't know that. Provide any proof they were "in trouble" prior to Level starting? Are you saying their earnings declined when they started expanding? Well, duh. That's not in trouble. Username checks out.

What's the 11 in the quote I responded to?

An airline can be suffocated anywhere by a competitor. Just depends how much they are willing to spend. DFW-KEF wasn't daily. Most of the Norwegian routes aren't daily.

No one is trying to suffocate FI off in Kansas City.

MCI is a market weak enough so that there is not much interest in it, but that also means they are likely struggling. CLE is similar and is suspended. If there is a hint of success like in PIT or AUS the legacies will show up to suffocate the market with capacity, no worries.

You are my most respected person on here as far as unbiased comments so I'd like to ask you this.

Would DY not be able to fair better operating the MAX8 say 2 Weekly LGW-CLE 2 Weekly LGW-PIT and 3 weekly LGW-BWI rather than operating daily LGW-BOS under stiff competition and pricing pressure where they can only charge what the market will bare. Even is AUS why go there when BA is there already are you not asking to lose money by doing that.

Norwegian has no strategy.

Just "more airplanes, more routes"

Lead by their former senile CEO

It seems quite likely that the long-haul flying is making a sizeable loss for much of the year - maybe it just about covers cost in July/August and late December
The 787 is a new plane with healthy demand around the world. I know it's a somewhat blunt strategy but why does Norwegian not just try to sell any 787s they own to other carriers or pay a break clause with lessors to terminate the 787 leases ? There has to be some point at which it's worth paying the negotiated penalty fee in return for Norwegian continuing to survive. The long haul thing is like a dead-weight and is bringing Norwegian ever further into the danger zone.

Has Norwegian become to "toxic" to buy, like WOW air proved to be for Indigo Partners and Icelandair?

The US$439M cash flow gap in Q2 because credit card companies don't want to bankroll them anymore must hurt really really bad....

The funds, needed for everyday operations, will come once eventually flown, yet compare this gap with the $350M raised for new shares in Q1 and $225M for sale of assets in H1 to maintain liquidity.

Seems like a movie I have seen before...

http://amp.cnn.com/cnn/2019/09/02/busin ... index.html

http://www.skift.com/2019/04/28/norwegi ... venue/amp/

klm617 wrote:

enilria wrote:

klm617 wrote:

No one is trying to suffocate FI off in Kansas City.

MCI is a market weak enough so that there is not much interest in it, but that also means they are likely struggling. CLE is similar and is suspended. If there is a hint of success like in PIT or AUS the legacies will show up to suffocate the market with capacity, no worries.

You are my most respected person on here as far as unbiased comments so I'd like to ask you this.

Would DY not be able to fair better operating the MAX8 say 2 Weekly LGW-CLE 2 Weekly LGW-PIT and 3 weekly LGW-BWI rather than operating daily LGW-BOS under stiff competition and pricing pressure where they can only charge what the market will bare. Even is AUS why go there when BA is there already are you not asking to lose money by doing that.

Thanks!

I think the answer lies in point of sale. Norwegian is a European airline and people tend to prefer their own airlines, because of loyalty and brand presence. Rough numbers from MIDT, but Euro carriers have roughly twice as many European resident travelers per flight as U.S. carriers have and the reverse shift is about equal among U.S. travelers. A carrier like Norwegian also does not meaningfully code share with U.S. carriers which makes them probably even more weighted toward Euro travelers.

So, Norwegian is going to skew heavily toward European travelers all things being equal. European travelers don't want to go to CLE/PIT in much volume. AUS has crossed that point where it can attract European travelers, bolstered by among other things the F1 race. So in these weaker U.S. markets Norwegian has to get U.S. travelers to go to Europe. That doesn't sound hard, but to break the loyalty to the US3 and establish any sort of market visibility they have to be rock bottom cheap (e.g. WOW prices) in order to attract American travelers, whereas in Europe where they have an established brand they do not have to be as cheap to get people to their website plus they can market their whole network there and cross-promote from their existing customer list.

So, bottom line, they can attract European origin travelers at a higher price than U.S. travelers. If they fly to Boston they can skew toward the higher price travelers because they might be able to generate 75% Euro point of sale in a market like that. BWI is a complicated one. In theory it should be a WAS surrogate, but the lack of Euro service and the huge subsidy BA gets tells me that nobody has been able to convince Euro travelers to use BWI in much volume.

Where is our friend Mortimann these days? He has given us a lot of Norwegian news in recent years, granted mostly when they were positive. It would be interesting to hear more of what Norwegian media says.

Natflyer wrote:

Where is our friend Mortimann these days? He has given us a lot of Norwegian news in recent years, granted mostly when they were positive. It would be interesting to hear more of what Norwegian media says.

Haha, that has crossed my mind as well.. In other Norwegian related news, DY7110 (LAX-BCN) diverted today to Dublin due to a engine surge.. They really haven't been lucky with those RR engines..

AirPacific747 wrote:

So many haters here trying to sound impartial and analytical, but it’s obvious that for whatever reason, they just hate Norwegian. Whatever have they done to piss so many people off?

They've created a corporate structure of multiple companies each tailored to circumvent tax laws, employment laws and freedom of travel laws.

The result is very little taxes paid, and employees on poor salaries from other markets than what they actually operate in.

The whole business has become a Gordian Knot of entanglements that nobody has a clear picture of. Not even the investors and shareholders. One example is the hedge fund Sissner Canopus. They just want their money back, they can't accept slots at Gatwick as bond. It's too difficult to monetize.

So the solution might be to follow Alexander the Great's example, and just slice it.

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.

Pardon my ignorance but how can the credit card companies do this? This is Norwegian´s money after all. Firstly, many (although still a minority by a wide margin) of the payments will be from passengers who travel the same or next day so the service has already been performed. Also, many people use a debit card so there is no cost involved for the card companies/banks of a cash outlay between the payment and them receiving the monthly payment of the credit card users. How far are they typically contractually allowed to withhold transfer of the funds to the airlines? Also, since the card companies owe the airline money rather than the other way around, what is their rationale/motivation for withholding the payment? They will not be affected in any major way if the airline goes bankrupt.

MartijnNL wrote:

Trk1 wrote:

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

Do you mean British Airways that offers return tickets from Stockholm via London Heathrow to San Francisco for € 250,00? They can’t be making money on that.

Love that. Thank you.

I like how everything that Norwegian does (the 'scumbags' they call the pilots on this forum, right?!) is "IMMORAL", illegal, undercutting the competition and detrimental to traffic, whilst all the poor besieged legacies will do in return is of course fair play....

Never so much angst and resentment was had by so many on this forum against this one single entity - and for what reason? Lowering fares? Going against the established status quo (mostly the US3) in the North-Atlantic. If DY had stayed in other markets -say the med, the mid-east, or even Asia- no one would have given a toss.... but boy oh boy, all those DL and AA fans needed to let their wrath loose was poor DY to open a secondary base in 'forgotten-by-all-godforsaken' Stewart....

kameleonten wrote:

enilria wrote:

RyanairGuru wrote:

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.

Pardon my ignorance but how can the credit card companies do this? This is Norwegian´s money after all. Firstly, many (although still a minority by a wide margin) of the payments will be from passengers who travel the same or next day so the service has already been performed. Also, many people use a debit card so there is no cost involved for the card companies/banks of a cash outlay between the payment and them receiving the monthly payment of the credit card users. How far are they typically contractually allowed to withhold transfer of the funds to the airlines? Also, since the card companies owe the airline money rather than the other way around, what is their rationale/motivation for withholding the payment? They will not be affected in any major way if the airline goes bankrupt.

The concept of a credit card holdback is well established. Arguably it is not their money until they provide the service paid for. In other industries it is common to not bill the credit card till the product ships for example. The holdback only applies to services not yet rendered, but airlines sell probably 40-50% of their revenue prior to 30 days out and if we are talking long-haul it is more like 70+%. So the credit card company has the right to hold the funds until the service is rendered. The only thing keeping them from a 100% holdback is the competitive aspect of another bank offering a more liberal holdback. An airline like BA might only have a 5-10% holdback because when they were at 15% a bank offered to make it 10% to take their business. Once the water starts rushing the other way it is often unstoppable. We are in September. If they are increasing the holdback now it will be almost certainly be increased again during the Winter if they don't increase their cash position through a transaction of some sort. Each one of those holdback reductions makes it harder and harder to make payroll. WW was probably at 80-100% holdback when they died.

Something that the Norwegian fans/supporters have been able/willing to answer:

How are LCCs able to sufficiently reduce their cost structure viz-a-viz legacy carriers on long haul routes?

The genesis of LCCs on short haul routes was their ability to lower their cost structure through elements of single fleeting, reduced turnarounds, secondary airports, no overnighting of crews, high fleet utilization, etc etc. This allowed them to sell tickets, profitably, at much lower prices than legacy carriers and simultaneously grow the aggregate market. Over the years, we've seen several attempts at long haul LCCs, but they fail, fundamentally, because they're not able to lower their cost structures sufficiently in order to sustain the lower ticket prices. The same cost saving opportunities are simply not available in the long haul market, or not sufficiently large enough, to sustain the model. Furthermore, given the large front of cabin price/yield premium available to legacy carriers on long haul flights, they're also able to more aggressively segment their cabins to price discriminate more effectively.

Basically, on long haul segments, there just isn't as much distance between LCCs and legacies and Norwegian have found out the hard way. Unless someone can point out how they can substantially reduce their cost structure viz-a-viz the legacies I'll continue to be concerned about the sustainability of long haul LCCs.

Nobody think DY's assets should vanish off the earth. A bankruptcy merger would be the most logical solution. LH group or IAG are the most likely suitors. If FR was feeling bold, it would be a heck of a slingshot into high-major status overnight.


Nobody in Europe has the risk tolerance right now. The market is flooded and we are headed towards a downturn in the business cycle.

evanb wrote:

Something that the Norwegian fans/supporters have been able/willing to answer:

How are LCCs able to sufficiently reduce their cost structure viz-a-viz legacy carriers on long haul routes?

The genesis of LCCs on short haul routes was their ability to lower their cost structure through elements of single fleeting, reduced turnarounds, secondary airports, no overnighting of crews, high fleet utilization, etc etc. This allowed them to sell tickets, profitably, at much lower prices than legacy carriers and simultaneously grow the aggregate market. Over the years, we've seen several attempts at long haul LCCs, but they fail, fundamentally, because they're not able to lower their cost structures sufficiently in order to sustain the lower ticket prices. The same cost saving opportunities are simply not available in the long haul market, or not sufficiently large enough, to sustain the model. Furthermore, given the large front of cabin price/yield premium available to legacy carriers on long haul flights, they're also able to more aggressively segment their cabins to price discriminate more effectively.

Basically, on long haul segments, there just isn't as much distance between LCCs and legacies and Norwegian have found out the hard way. Unless someone can point out how they can substantially reduce their cost structure viz-a-viz the legacies I'll continue to be concerned about the sustainability of long haul LCCs.

Use lower cost crew/pilots by structuring the ownership in various countries that allow lower pay/benefits; Use the 787 which is more efficient and less costly to fly (at the time) than the competition's aircraft. Fly to secondary airports that are cheaper to operate from.That was the plan anyway. Doesn't seem to have worked however. Some reasons for failure: extreme criticism over their employment policies; major delays with delivery of the 787 (and now the 737MAX); realizing that yields are higher from major airports, especially on international flights.

ricq wrote:

Use lower cost crew/pilots by structuring the ownership in various countries that allow lower pay/benefits

How substantial is this? Furthermore, is this a function of the LCC model viz-a-viz legacies?

ricq wrote:

Use the 787 which is more efficient and less costly to fly (at the time) than the competition's aircraft.

Legacies also use the B787. And when legacies are not using B787 they're using fully paid for and depreciated aircraft. The total cost of ownership/use of a BA B777 is not substantially different than from a new B787. It's why BA keep those 25 year old B777s or why DL keep those 30 year old B767s and are doing well. One might argue that the fact that DJ uses only new B787s that they're suffering from much higher ownership costs than legacies, cancelling out the lower fuel costs. But again, how is this an advantage to LCCs which are not available to legacies?

ricq wrote:

Fly to secondary airports that are cheaper to operate from.That was the plan anyway. Doesn't seem to have worked however.

The majority of DJ flights don't fly to secondary airports, and the secondary airports in the US are not particularly lower cost. Just look how many flights they fly into JFK, and from where? AMS, LGW, MAD, OSL, ATH, CPH and ARN. They're the same airport pairs as legacies. They have tried OAK versus SFO for a bit, but the savings here are marginal compared to what you can achieve on shorthaul, and as was seen with OAK probably a lesser saving than the yield loss from OAK versus SFO.

ricq wrote:

realizing that yields are higher from major airports, especially on international flights.

Exactly the point that I'm making. The model isn't as obvious in long haul.

evanb wrote:

Something that the Norwegian fans/supporters have been able/willing to answer:

How are LCCs able to sufficiently reduce their cost structure viz-a-viz legacy carriers on long haul routes?

There is one thing that very few people on a.net seem to understand about LCCs. If you are a legacy your business model is to charge local passengers as much as possible because you have the only non-stop and they fill up 30-50% of the plane (e.g. local fare $1400 rt transatlantic). The connect traffic is VERY competitive because everybody has a connect so the pricing is much lower (e.g. $1100 rt). Then you are using two planes to get the passenger from A to B (e.g. $1100 rt split over a long-haul and a short-haul probably means $700 or so to the long flight and $400 to the short flight, rough numbers). So now you have a long-haul plane 50-70% filled with connect passengers .paying only $700rt for that flight plus the remainder at $1400rt. The average of the two might be $900 rt on a legacy. If a ULCC was able to lower the local fare to $900 rt and get enough passengers to full the entire plane without connects then they are getting the exact same revenue as the legacy, but the fares are 30-40% lower.

AAR wrote:

Fast summary of Norwegian' situation

1) Argentina - flights sold in Peso all international expenses in USD
2) Hard Brexit - The Pound Sterling to fall in value
3) New open skies agreement between US - UK
4) B7MAX ? grounded and those there will be delivered ?
5) Bonds to be paid ?
6) B787 some out of production this winter
7) Airbus order - what happens ? PW1100GTF ?
8) The economy will slow down ?
9) Over capacity in the market over the winter ?
10 ) No market for second hand B737-800 ?

Who will come with a clue ?

It's more basic than this.

When you continue to operate over several years with a CASK that is higher than RASK, you can not sustain your operations, except:

Keep adding a lot of new future destinations and make PAX pay for them in advance to be able to pay your current costs. (sorry for my poor English)

enilria wrote:

The concept of a credit card holdback is well established. Arguably it is not their money until they provide the service paid for. In other industries it is common to not bill the credit card till the product ships for example. The holdback only applies to services not yet rendered, but airlines sell probably 40-50% of their revenue prior to 30 days out and if we are talking long-haul it is more like 70+%. So the credit card company has the right to hold the funds until the service is rendered. The only thing keeping them from a 100% holdback is the competitive aspect of another bank offering a more liberal holdback. An airline like BA might only have a 5-10% holdback because when they were at 15% a bank offered to make it 10% to take their business. Once the water starts rushing the other way it is often unstoppable. We are in September. If they are increasing the holdback now it will be almost certainly be increased again during the Winter if they don't increase their cash position through a transaction of some sort. Each one of those holdback reductions makes it harder and harder to make payroll. WW was probably at 80-100% holdback when they died.

Thank you. Fascinating. I work in an e-commerce business and our holdback is maximum 48 hours, while the goods are delivered 7-14 days after order (we sell large, bulky items requiring road transport). We would never accept a holdback until delivery, the airline industry is as so often a crazy world...

kameleonten wrote:

enilria wrote:

The concept of a credit card holdback is well established. Arguably it is not their money until they provide the service paid for. In other industries it is common to not bill the credit card till the product ships for example. The holdback only applies to services not yet rendered, but airlines sell probably 40-50% of their revenue prior to 30 days out and if we are talking long-haul it is more like 70+%. So the credit card company has the right to hold the funds until the service is rendered. The only thing keeping them from a 100% holdback is the competitive aspect of another bank offering a more liberal holdback. An airline like BA might only have a 5-10% holdback because when they were at 15% a bank offered to make it 10% to take their business. Once the water starts rushing the other way it is often unstoppable. We are in September. If they are increasing the holdback now it will be almost certainly be increased again during the Winter if they don't increase their cash position through a transaction of some sort. Each one of those holdback reductions makes it harder and harder to make payroll. WW was probably at 80-100% holdback when they died.

Thank you. Fascinating. I work in an e-commerce business and our holdback is maximum 48 hours, while the goods are delivered 7-14 days after order (we sell large, bulky items requiring road transport). We would never accept a holdback until delivery, the airline industry is as so often a crazy world...

I know Newegg for example doesn't bill the card until the item ships. With that philosophy they probably have 0 holdback unless there is a fraud holdback, but I don't know how they handle fraud rates.

enilria wrote:

There is one thing that very few people on a.net seem to understand about LCCs. If you are a legacy your business model is to charge local passengers as much as possible because you have the only non-stop and they fill up 30-50% of the plane (e.g. local fare $1400 rt transatlantic). The connect traffic is VERY competitive because everybody has a connect so the pricing is much lower (e.g. $1100 rt). Then you are using two planes to get the passenger from A to B (e.g. $1100 rt split over a long-haul and a short-haul probably means $700 or so to the long flight and $400 to the short flight, rough numbers). So now you have a long-haul plane 50-70% filled with connect passengers .paying only $700rt for that flight plus the remainder at $1400rt. The average of the two might be $900 rt on a legacy. If a ULCC was able to lower the local fare to $900 rt and get enough passengers to full the entire plane without connects then they are getting the exact same revenue as the legacy, but the fares are 30-40% lower.

I respectfully disagree. All airlines are long term profit maximizers (at least those that are run with a profit motive). In order to do that they all want to get the highest prices. Legacy/incumbent carriers have developed a cost structure over time, sometimes deliberately based on their business model (influenced by amongst others their reliance on O&D vs. connecting traffic). A significant portion of this isn't able to be affected in the short term (e.g. labor contracts, aircraft leasing/financing, etc). New entrants come into the market based on a number of factors, particularly a perceived ability to lower the cost structure which will allow them to have the same or larger margins than incumbents while attracting traffic through lower prices. Now in the short haul market, the most successful LCCs have done that through innovations like single fleeting, use of lower cost airports, removing bells and whistles, shorter turnaround times, higher fleet utilization, crew not over nighting, etc. This is what leads Ryanair to having a unit cost dramatically lower than BA, and even significantly lower than easyJet. This allows them to be very profitable, even on much lower revenues that are required to attract passengers given the perceived "inferior" product. The challenge is that to do this on long haul, one needs these cost reducing innovations, which are few are far between. For example, you simply cannot not have your crew stay overnight at outstations on long haul flights like you can do on shorthaul; long haul aircraft utilization is already high and one cannot increase much further on transatlantic routes; etc. So again, what are the innovation to actually reduce the cost structure?

Furthermore, your example regarding O&D vs. connecting is moot since Norwegian are using an awful amount of connecting traffic on the long haul flights ...

JetBuddy wrote:

AirPacific747 wrote:

So many haters here trying to sound impartial and analytical, but it’s obvious that for whatever reason, they just hate Norwegian. Whatever have they done to piss so many people off?

They've created a corporate structure of multiple companies each tailored to circumvent tax laws, employment laws and freedom of travel laws.

The result is very little taxes paid, and employees on poor salaries from other markets than what they actually operate in.

The whole business has become a Gordian Knot of entanglements that nobody has a clear picture of. Not even the investors and shareholders. One example is the hedge fund Sissner Canopus. They just want their money back, they can't accept slots at Gatwick as bond. It's too difficult to monetize.

So the solution might be to follow Alexander the Great's example, and just slice it.

Salaries for us pilots in the company are competitive in my opinion. Cabin crew are of course paid less but still better than in most other low cost airlines. But yeah, maybe closing UK ops would be a good idea. Sell the slots and reduce the fleet of 787s a bit to avoid the worst engine problems by selling the most used engines first.

Also, Norwegian didn’t invent this way of tax avoidance. The whole industry is doing it including flag carriers like Alitalia and SAS. Thank the EU for making it possible.

enilria wrote:

There is one thing that very few people on a.net seem to understand about LCCs. If you are a legacy your business model is to charge local passengers as much as possible because you have the only non-stop and they fill up 30-50% of the plane (e.g. local fare $1400 rt transatlantic). The connect traffic is VERY competitive because everybody has a connect so the pricing is much lower (e.g. $1100 rt). Then you are using two planes to get the passenger from A to B (e.g. $1100 rt split over a long-haul and a short-haul probably means $700 or so to the long flight and $400 to the short flight, rough numbers). So now you have a long-haul plane 50-70% filled with connect passengers .paying only $700rt for that flight plus the remainder at $1400rt. The average of the two might be $900 rt on a legacy. If a ULCC was able to lower the local fare to $900 rt and get enough passengers to full the entire plane without connects then they are getting the exact same revenue as the legacy, but the fares are 30-40% lower.

Enilria you have made a compelling argument over the course of this entire thread.

Even if DY is granted the two additional years they are requesting how will they get in front of their debt crisis? The MAX grounding, the RR engine crisis are all a part of the cost of doing business. Those crisis have effect a lot of airlines so I have little to no pity on DY just because they are a LCC who happens to be effected by two crisis at the same time its the nature of the beast.
While your arguments have been on point and eye opening we have to face the facts which are JV's aren't going anywhere, the MAX grounding will probably continue until next year and the RR engine issues on the 787 are ongoing. Other facts we have to face are One World, Sky Team and Star Alliance are here to stay, these ATI JV's whether we agree with them or not are here to stay.

How does DY chart a path forward to profitability while facing the MAX and RR issues and facing stiff competition on both sides of the Atlantic from both European and US carriers? This life line if granted doesn't get DY out of their troubles the truth is they are going to have to make some really tough decisions to ensure their survival.