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Mortyman
Posts: 5855
Joined: Sat Aug 12, 2006 8:26 pm

Re: DY Financial Discussion - 2020

Thu Mar 26, 2020 9:21 pm

Kiwirob wrote:
Mortyman wrote:
Norwegian Boeing 787's and Boeing 737's taking a rest at an airport in Norway. Soon they will be joined by SAS aircraft.

Image

Image

Photos by Aftenbladet and Helitrans


SVG isn’t it? I’ve Ben there a few times this year and have never landed in this runway, is it still active?


The area is reserved for the airforce
 
SoEWR
Posts: 22
Joined: Sun Jul 07, 2019 5:39 am

Re: DY Financial Discussion - 2020

Thu Mar 26, 2020 10:46 pm

Does anybody know if Norwegian owns any of their planes, or are all of their planes leased?
 
K37a8
Posts: 4
Joined: Thu Oct 17, 2019 10:12 am

Re: DY Financial Discussion - 2020

Fri Mar 27, 2020 6:31 am

SoEWR wrote:
Does anybody know if Norwegian owns any of their planes, or are all of their planes leased?

Yes, they own a lot of their planes.
 
airsmiles
Posts: 111
Joined: Mon Sep 14, 2009 9:14 pm

Re: DY Financial Discussion - 2020

Fri Mar 27, 2020 6:55 am

I’m not sure ‘own a lot of their planes’ tells the whole story though. Okay they’re not leased but they could still be repossessed by the banks at any time. Luckily the banks have no desire to repossess anything at the moment, which must really strengthen Norwegian’s hand in negotiating a deal of some sort.
 
BealineV953
Posts: 186
Joined: Fri Jul 26, 2019 10:00 am

Re: DY about to go bust?

Thu Apr 02, 2020 4:57 pm

enilria wrote:
I think there is a fundamental misunderstanding of market dynamics involved in this post, or a purposeful bias toward ignoring them?
BealineV953 wrote:
In longhaul markets, to compete with Norwegian, other carriers have in general aimed to maintain their margins by reducing costs. We’ve seen BA reduce cost per seat by going to 10 abreast on the 777, IAG create Level and Eurowings replace airlines in the Lufthansa group on some services.

You clearly are aware that other carriers added routes on top of Norwegian (I'm looking at you IAG/DLH) to suffocate Norwegian.
BealineV953 wrote:
What can be said is that Norwegian is not profitable. See the financial results for 2019:

How can you make money when IAG adds flights on top of you on LGW-FLL/OAK that frankly make ZERO business sense for IAG other than to kill Norwegian? IAG even explicitly tried to buy Norwegian to shut them down. I mean, do they have to take out billboards saying "WE WANT TO KILL NORWEGIAN" for some people to get that clearly?
BealineV953 wrote:
Competition is ‘fair’ when you sell a good product at a profit.

Do you think for a hot second that Level or Eurowings is profitable? LH has already reshuffled Eurowings like 5 times (and said it is not doing well repeatedly) and Level definitely does worse than Norwegian does. Look at the publicly available data on LF and fare. And the costs are only lower in terms of more dense seating. All the other costs are comparable. The economics for IAG on Level are this, and Eurowings is similar.
Option 1
1) Forego $X in profits per year competing with Norwegian forever (and they will grow making X bigger each year)
2) Lose 5X per year for a few years making sure they die, then shut down Level and raise prices back where they were or even higher to make up the loss
BealineV953 wrote:
However, a struggling business may weaken its competitors. Where a company sells below cost, it forces its competitors to sell at sub-optimal prices, reducing their profitability and so their ability to invest in their own future

Completely agree, except it's not Norwegian that is irrational competitor, it is IAG using cross-subsidization and predatory competitive tactics to foist their money losing business into markets designed to hurt Norwegian.

LF


The posts from three or four weeks ago have been very much over-taken by events. A month is a long time in the airline business. However, I’ll respond to a number of points an earlier post.

Yes, I am fully aware that other carriers added routes to compete with Norwegian.
I do not accept that this was done to “suffocate” Norwegian. That is simply your subjective view.
If other airlines had based half a dozen widebodies at OSL, CPH, STO and HEL and gone head to head with Norwegian to NYC, BKK and DXB then that would be a clear indication that they wanted to “suffocate” Norwegian. Taking action to defend their position in their own home markets (eg LON) does not suggest this.

Successful businesses make money by offering a compelling product at a price that covers costs.
I do not accept that IAG want to “kill” Norwegian or that IAG wanted to buy Norwegian to “shut them down”. Again, this is simply a subjective view.
Buying a loss-making business, taking on its debt, and then shutting it down is a very expensive way of competing.

Level started flying in 2017 so is a relatively new carrier.
New businesses rarely make money in their first few years. Typically a business becomes profitable as it achieves economies of scale and begins to mature.
I don’t know enough about Eurowings to comment.
Norwegian was created in 1993, and began longhaul services in, IIRC, 2014. It is a mature business, and should by now have found a profitable place in the market.
If Norwegian goes out of business, IAG shuts down Level and then BA, Iberia and Aer Lingus raise prices, new competitors will enter the market. Count on it.

In your post you show a fundamental misunderstanding of the way IAG is structured.
IAG is organized in a way that absolutely does NOT allow for cross-subsidisation. IAG requires each business to stand on its own two feet.
Even within IAG companies, parts of the business must deliver a return. For example; BA ex-Gatwick shorthaul services, ex-Gatwick longhaul services and so on.
Where a part of the business does not make a satisfactory return, IAG will look for ways of turning that round. That may mean reducing the costs of existing businesses, for example optimising 777 configurations for high volume, low yield services. It may mean creating new businesses that are better able to compete, for example Level. It may mean substituting one airline with another, for example Level replacing Iberia in some markets.

Existing operators are perfectly entitled to compete vigorously with new entrants. In fact their shareholders demand it. BA, IB, EI, AA, VS, DL, UA and others are not obliged to simply give in. They cannot sit and watch their yields, revenue and market share decline. They are obliged to find ways to defend their position.
Ever since childhood, when I lived within sight of London Airport, I have seldom seen a plane go by and not wished I was on it.”
With apologies to Paul Theroux - ‘The Great Railway Bazaar’
 
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enilria
Posts: 10247
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Re: DY about to go bust?

Thu Apr 02, 2020 6:54 pm

BealineV953 wrote:
I do not accept that this was done to “suffocate” Norwegian. That is simply your subjective view.
I do not accept that IAG want to “kill” Norwegian or that IAG wanted to buy Norwegian to “shut them down”. Again, this is simply a subjective view.

It's a subjective view held by every airline executive I know outside IAG, the trade press, and the vast majority of all airline analysts and consultants.
BealineV953 wrote:
Successful businesses make money by offering a compelling product at a price that covers costs.

Unfortunately, successful businesses in less competitive industries frequently loss-lead to eliminate competitors through cross-subsidization and make up the losses by increasing margins even above prior levels once the competition is eliminated. This is common in numerous industries. There are numerous documented examples stretching over a hundred years into the past.
BealineV953 wrote:
Buying a loss-making business, taking on its debt, and then shutting it down is a very expensive way of competing.

Again, there are numerous examples of where that has been done in the airlines business. Usually the wind-down takes a few years rather than an immediate shutdown. For example, Southwest essentially shut down Air Tran. It has retained very little of what was AirTran. The goal was to eliminate their low prices from East Coast routes. That was achieved.
BealineV953 wrote:
In your post you show a fundamental misunderstanding of the way IAG is structured.
IAG is organized in a way that absolutely does NOT allow for cross-subsidisation. IAG requires each business to stand on its own two feet.

In order to prove that statement as anything other than a subjective view, you would need to show Level's financial results. Can you provide a link? If you cannot, then you have zero basis for that statement.
Additionally, you can cross-subsidize inside a single airline even more easily, and that is EXTREMELY common. For example, BA demonstrably lost tons of money flying to OAK, but cross-subsidized the losses from other BA markets.
BealineV953 wrote:
BA, IB, EI, AA, VS, DL, UA and others are not obliged to simply give in.

When the regulatory powers allow more and more consolidations, they give the existing carriers greater and greater power to cross-subsidize. A start-up, by definition, can't cross-subsidize as they have no other operations yet. If that situation is allowed and mergers are allowed to continue, eventually you have one airline, or the prior phase (which is already full in effect) you must allow foreign companies to behave as national airlines by elimination of rules like cabotage. That is only a way-stop, however, as eventually even those carriers will merge as we are already seeing with a proliferation of cross-border investments and control regimens.
 
factsonly
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Re: DY Financial Discussion - 2020

Mon Apr 06, 2020 12:52 pm

DY Traffic Report - March 2020:

TRAFFIC MARCH - Mar-20 versus Mar-19:
- ASK (million) 3,865 vs 8,207 -53 %
- RPK (million) 2,769 vs 7,007 -60 %
- Load factor 71.6% vs 85.4% -13.8 p.p.
- Passengers 1,153,283 vs 2,961,840 -61 %

TRAFFIC - 12-month rolling Mar-20 versus Mar-19
- ASK (million) 91,800 vs 102,682 -11 %
- RPK (million) 79,627 vs 87,232 -9 %
- Load factor 86.7% vs 85.0% 1.7 p.p.
- Passengers 33,160,811 vs 37,982,165 -13 %

REVENUE - March Mar-20 versus Mar-19
- Yield (NOK) 0.40 versus 0.33 +20 %
- Unit revenue (NOK) 0.28 versus 0.28 +1 %

https://media.uk.norwegian.com/document ... 2020-95415
 
danni
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Re: DY Financial Discussion - 2020

Wed Apr 08, 2020 1:48 pm

Norwegian Air is seeking debt restructuring to stay in business.

Source: https://www.reuters.com/article/health- ... SL8N2BW560

https://media.uk.norwegian.com/pressrel ... ng-2990031
 
a350lover
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Re: DY Financial Discussion - 2020

Wed Apr 08, 2020 2:40 pm

Certainly Scandinavia is likely to be one of the least-affected regions of Europe post COVID-19.

Despite that, I am not sure how likely is Norwegian can find a way to convert all that huge debt to equity. Interestingly, the link to the Media Norwegian site talks about something called "New Norwegian". I wonder if that is what the organization is trying to restructurate in order to maintain in business; "We have already started working on building the future «New Norwegian» and that work will continue with full force the coming weeks,“ said Schram.
 
BealineV953
Posts: 186
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Re: DY about to go bust?

Thu Apr 09, 2020 9:21 am

enilria wrote:
BealineV953 wrote:
I do not accept that this was done to “suffocate” Norwegian. That is simply your subjective view.
I do not accept that IAG want to “kill” Norwegian or that IAG wanted to buy Norwegian to “shut them down”. Again, this is simply a subjective view.

It's a subjective view held by every airline executive I know outside IAG, the trade press, and the vast majority of all airline analysts and consultants.
BealineV953 wrote:
Successful businesses make money by offering a compelling product at a price that covers costs.

Unfortunately, successful businesses in less competitive industries frequently loss-lead to eliminate competitors through cross-subsidization and make up the losses by increasing margins even above prior levels once the competition is eliminated. This is common in numerous industries. There are numerous documented examples stretching over a hundred years into the past.
BealineV953 wrote:
Buying a loss-making business, taking on its debt, and then shutting it down is a very expensive way of competing.

Again, there are numerous examples of where that has been done in the airlines business. Usually the wind-down takes a few years rather than an immediate shutdown. For example, Southwest essentially shut down Air Tran. It has retained very little of what was AirTran. The goal was to eliminate their low prices from East Coast routes. That was achieved.
BealineV953 wrote:
In your post you show a fundamental misunderstanding of the way IAG is structured.
IAG is organized in a way that absolutely does NOT allow for cross-subsidisation. IAG requires each business to stand on its own two feet.

In order to prove that statement as anything other than a subjective view, you would need to show Level's financial results. Can you provide a link? If you cannot, then you have zero basis for that statement.
Additionally, you can cross-subsidize inside a single airline even more easily, and that is EXTREMELY common. For example, BA demonstrably lost tons of money flying to OAK, but cross-subsidized the losses from other BA markets.
BealineV953 wrote:
BA, IB, EI, AA, VS, DL, UA and others are not obliged to simply give in.

When the regulatory powers allow more and more consolidations, they give the existing carriers greater and greater power to cross-subsidize. A start-up, by definition, can't cross-subsidize as they have no other operations yet. If that situation is allowed and mergers are allowed to continue, eventually you have one airline, or the prior phase (which is already full in effect) you must allow foreign companies to behave as national airlines by elimination of rules like cabotage. That is only a way-stop, however, as eventually even those carriers will merge as we are already seeing with a proliferation of cross-border investments and control regimens.


As I said, if IAG had based half a dozen widebodies at OSL, CPH, STO and HEL and gone head to head with Norwegian to NYC, BKK and DXB offering ‘bait and switch’ and below costs fares then that would have been a clear indication that IAG wanted to “suffocate” Norwegian.
However, BA operating from Gatwick to FLL and OAK and Level from BCN to JFK, BOS, SFO, BUE and SCL was simply IAG putting down a marker to say that in its home markets it was going to compete with Norwegian. These defensive actions were never going to “suffocate” or “kill” Norwegian.

I am in regular contact with airline executives, analysts and consultants and have never heard any of them express the view, subjective or otherwise, that IAG, BA or Iberia wants to “kill” Norwegian.

Arguably we’ve seen Norwegian loss-lead in an attempt to eliminate competitors. However, in a number of markets (eg Warsaw) Norwegian found its competitors to be more resilient than they anticipated and Norwegian gave up before the other airlines did.

From your comments it is clear that you do not understand how IAG is structured and how it works.
I recently retired after 37 years in the airline business. The last 32 years was in commercial roles, of which 27 years was at senior level at a number of Europe and US based airlines. I now do some airline commercial consultancy. I have worked very closely with IAG.
As I said, IAG requires each business to stand on its own two feet. Where a loss-making business unit cannot be moved into profitability it is closed down. At route level, where a route does not make money, action is taken to improve revenue, reduce costs or both. Unprofitable routes are not ‘cross-subsidised’ by profitable routes. Where a loss-making route cannot be moved into profitability it is terminated.

The EU is pro-consumer and pro-competition. EU competition law seeks to maintain competition and to protect consumers from anti-competitive behaviour. In the EU rules on acquisition it says: “…the entry of new competitors may be regarded as a competitive constraint which is sufficient to prevent or thwart the potential anti-competitive effects of the concentration.”
To enable competition, EU regulators have made their approval of an airline acquisition, merger or joint venture conditional on the removal of barriers to entry (those things that a prospective market entrant does not have control over, for example landing slots at slot-restricted airports).
EU approval of the BA acquisition of bmi was, amongst others things, conditional on BA releasing slots at Heathrow to enable other airlines to offer UK domestic services. See:

https://ec.europa.eu/commission/pressco ... /IP_12_338

On that webpage you will find links to more detailed information.

Re your suggestion that eventually we will have one airline; economic theory says that if a company makes excess profits ("profit over and above what provides its owners with a normal [market equilibrium] return to capital") competitors will enter the market. That is, excess profits are unsustainable because they stimulate new supply, which forces down prices and eliminates the excess profit. In other words, if an airline is able to eliminate competitors, put up prices and make excess profits, then other airlines will see an opportunity to enter the market.

PS.
I don’t comment on something I don’t know a lot about, so I wouldn’t normally comment on Southwest and AirTran.
However, your claim about the Southwest acquisition of AirTran made me think of the “What did the Romans ever do for us” scene in ‘The Life of Brian’.
As in, ‘what does Southwest have to show for its acquisition of AirTran’.
How about: the AirTran customer database, the AirTran gates, the AirTran landing slots, the AirTran employees, the many routes that AirTran flew that Southwest did not (eg to / from and within Florida), the AirTran fleet of B737-700s, the AirTran B717s now making money on lease to Delta…..
Or, maybe Southwest did acquire AirTran to shut it down.
Ever since childhood, when I lived within sight of London Airport, I have seldom seen a plane go by and not wished I was on it.”
With apologies to Paul Theroux - ‘The Great Railway Bazaar’
 
AF022
Posts: 1860
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Re: DY Financial Discussion - 2020

Tue Apr 14, 2020 11:17 am

DY shares are down sharply today. Is there something going on?
https://www.bloomberg.com/quote/NAS:NO
went down to just NOK 3.10 per share at one point this morning.
 
olle
Posts: 2244
Joined: Tue Feb 06, 2007 3:38 am

Re: DY Financial Discussion - 2020

Tue Apr 14, 2020 11:23 am

danni wrote:
Norwegian Air is seeking debt restructuring to stay in business.

Source: https://www.reuters.com/article/health- ... SL8N2BW560

https://media.uk.norwegian.com/pressrel ... ng-2990031


It is down because of the reconstruction.
 
Bostrom
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Re: DY Financial Discussion - 2020

Tue Apr 14, 2020 11:24 am

AF022 wrote:
DY shares are down sharply today. Is there something going on?
https://www.bloomberg.com/quote/NAS:NO
went down to just NOK 3.10 per share at one point this morning.


A reaction to the proposed debt restructuring?
 
minilinde
Posts: 198
Joined: Sat Dec 31, 2005 1:16 am

Re: DY Financial Discussion - 2020

Tue Apr 14, 2020 2:23 pm

Bostrom wrote:
AF022 wrote:
DY shares are down sharply today. Is there something going on?
https://www.bloomberg.com/quote/NAS:NO
went down to just NOK 3.10 per share at one point this morning.


A reaction to the proposed debt restructuring?


Yes. Bernstein said that the stock is now worthless. New target of 0 NOK. Several banks has a new target of 1 NOK.
Types flown: A318, A319, A320, A321, A32N, A333, A343, A359, A380, AT42, AT72, B717, B733, B735, B736, B737, B738, B739, B744, B748, B763, B772, B773, B788, B789, C550, CRJ2, CRJ9, DH4D, F50, ERJ190, MD80s/90, RJ100
 
Lgw787
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Re: DY Financial Discussion - 2020

Tue Apr 14, 2020 5:12 pm

LGW based crews just been told they will not be paid for flying done in March as Norwegian have failed to pay OSM aviation and OSM don’t have enough money in the bank. Not a good sign
 
LJ
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Re: DY Financial Discussion - 2020

Tue Apr 14, 2020 5:43 pm

Lgw787 wrote:
LGW based crews just been told they will not be paid for flying done in March as Norwegian have failed to pay OSM aviation and OSM don’t have enough money in the bank. Not a good sign


Usually the beginning of the end. Moreover, I don't think the Norwegian government intends to pay to keep Norwegian's subsidiaries alive, they just want to save Norwegian Air Shuttle. We'll see if they move some aircraft around in order to have the assets in the entity whch will survive.
 
LupineChemist
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Re: DY Financial Discussion - 2020

Wed Apr 15, 2020 12:00 am

LJ wrote:
Lgw787 wrote:
LGW based crews just been told they will not be paid for flying done in March as Norwegian have failed to pay OSM aviation and OSM don’t have enough money in the bank. Not a good sign


Usually the beginning of the end. Moreover, I don't think the Norwegian government intends to pay to keep Norwegian's subsidiaries alive, they just want to save Norwegian Air Shuttle. We'll see if they move some aircraft around in order to have the assets in the entity whch will survive.


My understanding was that the debt is all so intertwined that it will be impossible to keep just DY operating as an independent airline.
 
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PepeTheFrog
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Re: DY Financial Discussion - 2020

Thu Apr 16, 2020 8:02 am

Norwegian may survive but might have to axe long haul operations:

Roeska believes there are two likely outcomes for the airline: “Either the bondholders agree a conversion price for their debt into equity, or they do not. If they agree, the firm continues to operate, but shareholders will be severely diluted. If they do not, then we expect operations to cease, bankruptcy proceedings to start, and shareholders to get nothing.”

If the first option comes to fruition, the airline will be able to access state aid and continue with its restructuring. However, it might take a much smaller form in the future and its long-haul operation could be axed, Roeska suggests.


“If it continues, will the airline admit that the long-haul, low-cost experiment has failed and retreat back to its Nordic core?


​Norwegian share price plummets on debt conversion plan

That's a lot of 787 aircraft that might become available on the market.
Good moaning!
 
FluidFlow
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Re: DY Financial Discussion - 2020

Thu Apr 16, 2020 9:36 am

PepeTheFrog wrote:
Norwegian may survive but might have to axe long haul operations:

Roeska believes there are two likely outcomes for the airline: “Either the bondholders agree a conversion price for their debt into equity, or they do not. If they agree, the firm continues to operate, but shareholders will be severely diluted. If they do not, then we expect operations to cease, bankruptcy proceedings to start, and shareholders to get nothing.”

If the first option comes to fruition, the airline will be able to access state aid and continue with its restructuring. However, it might take a much smaller form in the future and its long-haul operation could be axed, Roeska suggests.


“If it continues, will the airline admit that the long-haul, low-cost experiment has failed and retreat back to its Nordic core?


​Norwegian share price plummets on debt conversion plan

That's a lot of 787 aircraft that might become available on the market.


Also almost 100 MAX on order. If they have to shrink a lot they might cancel them and pick up some -800s for the time being. Same for the A321LR. They might be cancelled as well. Even if they cancel all MAX on order and the Airbuses, that leaves them still with over 80 -800/-8s for now what is a way healthier fleet size across all the entities.
 
a350lover
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Re: DY Financial Discussion - 2020

Thu Apr 16, 2020 1:11 pm

My question is: is there any realistic way that DY can get cash via its current fleet and the situation of the industry worldwide?
 
olle
Posts: 2244
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Re: DY Financial Discussion - 2020

Thu Apr 16, 2020 4:38 pm

EU will have closed borders to rest of the world at least until end summer 2020.

Norway is locked down and will bd in lockdown another month.

I think the hope for some cash during summer 2020 might be sweden to spain.

Spain will see herd immunity coming.

In sweden there is similar talks special stockholm region.

Very much defining things will be what happens when norway opens up. If there is an invasion of norwegian shoppers to sweden it might be closed borders to sweden against norway.

The problem here is that Norwegiam do not get support from notwegian government ti the extent that salaries for worked hours os not paid.

It might be complicated to recover from that.
 
okobjorn
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Re: DY Financial Discussion - 2020

Mon Apr 20, 2020 11:26 am

According to Danish tabloid Ekstra Bladet (https://ekstrabladet.dk/nyheder/erhverv ... ge/8095393), four Norwegian pilot and crew recruitment companies are bankrupt.
Is that a "clever" way of getting out of severance pay?
 
MIflyer12
Posts: 8034
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Re: DY Financial Discussion - 2020

Mon Apr 20, 2020 11:36 am

Reuters also cites bankruptcy filings:

OSLO (Reuters) - Four Swedish and Danish subsidiaries of Norwegian Air (NWC.OL) have filed for bankruptcy due to the ongoing coronavirus crisis which has grounded most of the company’s fleet, the budget carrier said on Monday.

The four companies are staffing units, employing 4,700 pilots and cabin crew members, while about 700 pilots and 1,300 cabin crew based in Norway, France and Italy were unaffected by the decision, Norwegian said.


That will lead to an odd restructuring in administration if they do this in pieces.

https://www.reuters.com/article/us-heal ... 221I1?il=0
 
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qf789
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Re: DY Financial Discussion - 2020

Mon Apr 20, 2020 11:40 am

Norwegian press release regarding filing for bankruptcy of 4 subsidiaries of Norwegian

https://media.uk.norwegian.com/pressrel ... cy-2992418
Forum Moderator
 
LJ
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Re: DY Financial Discussion - 2020

Mon Apr 20, 2020 11:48 am

MIflyer12 wrote:
That will lead to an odd restructuring in administration if they do this in pieces.


I would assume that they get rid off their staff outside Norway. By letting those companies go bankrupt they can save the Norwegian subsidiaries and the planes attached to the subsidiary.Thus the assets are saved whilst you don't need crew if you don't fly the plane (you can always rehire them when needed). Moreover, it helps their case to get funding from the Norwegian government (provided that no staff from Norway is affected) as it helps them off a liability. It also puts pressure on your lenders as they now know that they've an asset against an entity which isn't going to fly soon. Thus maybe they'll be more tempted to do a debt conversion or take a huge haircut. If that doesn't help you can always try to move some assets around and let some subsidiaries go bankrupt. Not a nice thing to do (and it will damage your image), but depending on how much you care about your lenders, it's an option.
 
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dutchflyboi
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Re: DY Financial Discussion - 2020

Mon Apr 20, 2020 12:10 pm

The bankrupty also includes the canceling of the agreement with OSM Aviation, affecting crews based in Spain, UK, Finland, Sweden and the US
https://www.airlive.net/breaking-norweg ... ankruptcy/
 
a350lover
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Re: DY Financial Discussion - 2020

Mon Apr 20, 2020 12:38 pm

Considering most of the Norwegian operation is flown with crews from the countries where the subsidiaries are now filled for bankrupt, we could assume at least, temporarily, none flights from those bases will be operated unless flown via DY crews from Norway. That pretty much leaves countries like Spain, the UK, the US, Denmark, Sweden and Finland with no operations.
 
arcticcruiser
Posts: 453
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Re: DY Financial Discussion - 2020

Mon Apr 20, 2020 12:48 pm

So the unravelling of this pyramid scheme has begun...

But this action only comes about due to immediate shortage of cash, i.e. they cannot afford to pay salaries at the end of april. This however does nothing to alleviate the dept situation of the Norwegian group.
 
a350lover
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Re: DY Financial Discussion - 2020

Mon Apr 20, 2020 1:24 pm

arcticcruiser wrote:
So the unravelling of this pyramid scheme has begun...

But this action only comes about due to immediate shortage of cash, i.e. they cannot afford to pay salaries at the end of april. This however does nothing to alleviate the dept situation of the Norwegian group.


Agree. Salaries of all these people are pretty much "nothing" compared to the amount of funds needed for the rest of the operational costs.
 
olle
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Re: DY Financial Discussion - 2020

Mon Apr 20, 2020 1:48 pm

Norwegian owned companies in 4 countries files for bankruptcy inkluding sweden and denmark.


https://www.dn.se/ekonomi/norwegian-ans ... tterbolag/


Norwegian airline applies for bankruptcy for the pilot and cabin companies in Sweden and Denmark. Thousands of employees are affected - including 250 pilots in the Swedish company.

"This is the worst crisis ever for the aviation industry," says Norwegian CEO Jacob Schram about the corona pandemic.

The sharp reduction in travel as a result of Covid-19 has reaped a new victim in the travel industry. The previously pressed airline Norwegian is now bankrupting four subsidiaries.

- We have done everything we can to avoid what is happening now with our subsidiaries in Sweden and Denmark, says Norwegian CEO Jacob Schram in a press release

The companies employ 1,571 pilots and 3,134 cabin employees. About 250 pilots work for the Swedish pilot company that goes bankrupt, according to TT.

- We work around the clock to get through this crisis and to get back into the air again, Jacob Schram continues.

The CEO places part of the blame for the situation on non-state aid in Sweden and Denmark:

- The first formal application to the Swedish authorities was sent a month ago, but no concrete proposals for liquidity measures have yet been made. We do not have time to wait as the company is in acute crisis.

At the same time, the Norwegian part of the company, where 700 pilots and 1,300 cabin employees work, is saved by the lay-off rules that apply in Norway but are lacking in Sweden and Denmark.

It has been several weeks without Norwegian having had air traffic in Sweden and Denmark. In Norway, only a few domestic lines have been operated.

The companies involved are Pilot Services Sweden AB, Norwegian Pilot Services Denmark ApS, Norwegian Cabin Services Denmark ApS and Norwegian Air Resources Denmark LH ApS.

- We stand there with large staff costs without having to work, says the company's communications manager Charlotte Holmbergh Jacobsson.

The plan is to come back as a stronger company, which will allow operations outside Norway to be resumed.

"The goal is that we will be able to hire as many pilots and cabin crew again," says Charlotte Holmbergh Jacobsson.

The current uncertainty has contributed to the decision.

- We do not really know when the restrictions will be eased, nor what interest there will be in traveling. There are so many uncertain factors that make it difficult to plan and know, says Charlotte Holmbergh Jacobsson.
 
MIflyer12
Posts: 8034
Joined: Mon Feb 18, 2013 11:58 pm

Re: DY Financial Discussion - 2020

Mon Apr 20, 2020 2:31 pm

a350lover wrote:
arcticcruiser wrote:
So the unravelling of this pyramid scheme has begun...

But this action only comes about due to immediate shortage of cash, i.e. they cannot afford to pay salaries at the end of april. This however does nothing to alleviate the dept situation of the Norwegian group.


Agree. Salaries of all these people are pretty much "nothing" compared to the amount of funds needed for the rest of the operational costs.


After fuel (and they're not burning fuel if they're not flying), wages are the largest category of expense shown in the latest Annual Report.
 
mcdu
Posts: 1625
Joined: Thu Apr 28, 2005 5:23 am

Re: DY Financial Discussion - 2020

Mon Apr 20, 2020 6:12 pm

dutchflyboi wrote:
The bankrupty also includes the canceling of the agreement with OSM Aviation, affecting crews based in Spain, UK, Finland, Sweden and the US
https://www.airlive.net/breaking-norweg ... ankruptcy/


I wonder if those crews are all happy with offshoring of their contracts now? I hate to see anyone lose their jobs but when it comes to the employees at Norwegian they took a job with a carrier that had a uncertain future and had some poor employee practices. If anyone there is surprised at how this turned out then they are very naive.
 
jonas12345
Posts: 20
Joined: Thu Jul 16, 2015 11:34 am

Re: DY Financial Discussion - 2020

Mon Apr 27, 2020 10:49 am

DY have released their plans for restructuring:

https://www.norwegian.com/globalassets/documents/other/norwegian-air-shuttle-asa_presentation-to-bondholders_27-april-2020.pdf

It looks brutal...holding lessors hostage
 
leghorn
Posts: 1297
Joined: Sun Jan 22, 2017 9:13 am

Re: DY Financial Discussion - 2020

Mon Apr 27, 2020 11:01 am

Competitor airlines can just entice the lessors away in a very targeted manner and collapse the.airline because no other lessor will do business with them.
If airplane EI-XXX is the plane that operates on a route which is undermining your yield on a certain overlapping route then just offer the lessor a lease for it and they'll happily take it.
 
jhz94
Posts: 24
Joined: Fri Aug 11, 2006 2:59 am

Re: DY Financial Discussion - 2020

Mon Apr 27, 2020 11:13 am

Why would a lessor want to end up owning an airline with severe cash flow issues? I have a hard time seeing the red nose succeed with this.
Did you know that you can run diesel cars on Jet A1?
 
FluidFlow
Posts: 698
Joined: Wed Apr 10, 2019 6:39 am

Re: DY Financial Discussion - 2020

Mon Apr 27, 2020 11:22 am

leghorn wrote:
Competitor airlines can just entice the lessors away in a very targeted manner and collapse the.airline because no other lessor will do business with them.
If airplane EI-XXX is the plane that operates on a route which is undermining your yield on a certain overlapping route then just offer the lessor a lease for it and they'll happily take it.


Norwegian would love that, easy shrink with no strings attached. But who in his right mind would take aircraft right now. I bet if Norwegian could, they would end them leasing contracts but one sided it will cost money Norwegian does not have. If leasing would be that easy to terminate, every single airline would have terminated all of them 4 weeks ago. So if Norwegian finds someone to take over, they would give you the key to the aircraft on a (fake) golden platter.
 
LJ
Posts: 5333
Joined: Wed Nov 17, 1999 8:28 pm

Re: DY Financial Discussion - 2020

Mon Apr 27, 2020 11:25 am

jhz94 wrote:
Why would a lessor want to end up owning an airline with severe cash flow issues? I have a hard time seeing the red nose succeed with this.


Even worse, the acknowledge that they need more money in 2021 as they don't think that the current bail out is enough.

Anyway, AF/KL will be pleased to learn that DY isn't going to fly long haul much from CDG and AMS. We also know they don't pay their lessors and that they'll reduce their fleet by approx 50 aircraft. Moreover, they don't plan any aircraft delivery until 2Q 2021, thus those finisished MAXes will remain in the US for a year from now.
 
leghorn
Posts: 1297
Joined: Sun Jan 22, 2017 9:13 am

Re: DY Financial Discussion - 2020

Mon Apr 27, 2020 11:47 am

FluidFlow wrote:
leghorn wrote:
Competitor airlines can just entice the lessors away in a very targeted manner and collapse the.airline because no other lessor will do business with them.
If airplane EI-XXX is the plane that operates on a route which is undermining your yield on a certain overlapping route then just offer the lessor a lease for it and they'll happily take it.


Norwegian would love that, easy shrink with no strings attached. But who in his right mind would take aircraft right now. I bet if Norwegian could, they would end them leasing contracts but one sided it will cost money Norwegian does not have. If leasing would be that easy to terminate, every single airline would have terminated all of them 4 weeks ago. So if Norwegian finds someone to take over, they would give you the key to the aircraft on a (fake) golden platter.

I don't see Norwegian would love not being able to fly the routes which generate cashflow due to a lack of airframes.
If a lessor can make a break for the door early and secure cashflow for the next few years then they shoudl do it.
The pitch would go something like this: "Hey, we have this airframe which operates on this route which overlaps with your route. We could lease it to you, you can move on one of your older planes and when everything is netted out you will be making more money on the route when no longer being undercut by Norwegian. Perhaps draw down a bit of that no questions asked credit that your Government is offering you seeing as you have already drawn some down already".

It isn't old Q400s or other undesirable stuff that they are leasing out.
It is every man for himself now and you don't want to be left standing without a seat when the music stops.
 
smartplane
Posts: 1507
Joined: Fri Aug 03, 2018 9:23 pm

Re: DY Financial Discussion - 2020

Mon Apr 27, 2020 11:54 am

jonas12345 wrote:
DY have released their plans for restructuring:

https://www.norwegian.com/globalassets/documents/other/norwegian-air-shuttle-asa_presentation-to-bondholders_27-april-2020.pdf

It looks brutal...holding lessors hostage

Do you think these discussions are unique? Virtually every OEM, airline, airport, lessor, creditor and bank with exposure to the civil aviation industry, is attempting a financial re-structure in some form.

Everyone has options, including lessors. Power by the hour deals (some cash better than no cash and storage fees), something Airbus is already conversant with on used aircraft are in vogue, including on new aircraft.

Lets see how those with real dollars in the game respond in the next 6 days.
 
jonas12345
Posts: 20
Joined: Thu Jul 16, 2015 11:34 am

Re: DY Financial Discussion - 2020

Mon Apr 27, 2020 11:57 am

smartplane wrote:
jonas12345 wrote:
DY have released their plans for restructuring:

https://www.norwegian.com/globalassets/documents/other/norwegian-air-shuttle-asa_presentation-to-bondholders_27-april-2020.pdf

It looks brutal...holding lessors hostage

Do you think these discussions are unique? Virtually every OEM, airline, airport, lessor, creditor and bank with exposure to the civil aviation industry, is attempting a financial re-structure in some form.

Everyone has options, including lessors. Power by the hour deals (some cash better than no cash and storage fees), something Airbus is already conversant with on used aircraft are in vogue, including on new aircraft.

Lets see how those with real dollars in the game respond in the next 6 days.


yes i do think they are unique. I'm sure most airlines are asking for rent deferals etc. but not forcing lessors to take big haircuts and taking equity rather than cash, with the alternative being handing the aircraft back with no return penalties. It feels like they are opening themselves up to all sorts of lawsuits if they do make it through the next year or so
 
MIflyer12
Posts: 8034
Joined: Mon Feb 18, 2013 11:58 pm

Re: DY Financial Discussion - 2020

Mon Apr 27, 2020 12:03 pm

jhz94 wrote:
Why would a lessor want to end up owning an airline with severe cash flow issues? I have a hard time seeing the red nose succeed with this.


Why? Because they thinks that's a better return than what they would get in liquidation.
 
FluidFlow
Posts: 698
Joined: Wed Apr 10, 2019 6:39 am

Re: DY Financial Discussion - 2020

Mon Apr 27, 2020 12:04 pm

leghorn wrote:
FluidFlow wrote:
leghorn wrote:
Competitor airlines can just entice the lessors away in a very targeted manner and collapse the.airline because no other lessor will do business with them.
If airplane EI-XXX is the plane that operates on a route which is undermining your yield on a certain overlapping route then just offer the lessor a lease for it and they'll happily take it.


Norwegian would love that, easy shrink with no strings attached. But who in his right mind would take aircraft right now. I bet if Norwegian could, they would end them leasing contracts but one sided it will cost money Norwegian does not have. If leasing would be that easy to terminate, every single airline would have terminated all of them 4 weeks ago. So if Norwegian finds someone to take over, they would give you the key to the aircraft on a (fake) golden platter.

I don't see Norwegian would love not being able to fly the routes which generate cashflow due to a lack of airframes.
If a lessor can make a break for the door early and secure cashflow for the next few years then they shoudl do it.
The pitch would go something like this: "Hey, we have this airframe which operates on this route which overlaps with your route. We could lease it to you, you can move on one of your older planes and when everything is netted out you will be making more money on the route when no longer being undercut by Norwegian. Perhaps draw down a bit of that no questions asked credit that your Government is offering you seeing as you have already drawn some down already".

It isn't old Q400s or other undesirable stuff that they are leasing out.
It is every man for himself now and you don't want to be left standing without a seat when the music stops.


They do own aircraft. So fly the owned ones on the most profitable routes and give back the leased ones (for free with your idea). Who would not do that trade in the current environment?
 
leghorn
Posts: 1297
Joined: Sun Jan 22, 2017 9:13 am

Re: DY Financial Discussion - 2020

Mon Apr 27, 2020 12:09 pm

Who other than the Insolvency specialists is going to get re-imbursed after they stop trading? The massive compensation you expect is predicated upon something being left.
If you believe in such fanciful things then there is a place waiting for you in Norwegian's Management Team. You'll also have to take a leap of faith and hope that your salary will be waiting for you in the bank at the end of each month...in spite of evidence to the contrary for other Norwegian employees.
It is a sinking ship.
 
Ryga
Posts: 91
Joined: Mon Mar 07, 2016 11:26 am

Re: DY Financial Discussion - 2020

Sat May 02, 2020 5:14 pm

Norwegian Air bondholders reject debt plan -

https://pendect.com/categories/business ... y-mid-may#


Don’t know the truth in it, posted 10 Hours ago on Twitter and a couple of other news agencies online posting the same thing?
AA AM BA BM BY DP DY EK MH PG RJ TK U2 VS Y2 ZB Z2 5J 9W

738 752 762ER/3ER 77W 788/9
A319/20/21 A332/3
E190
ATR 72-600
Jetstream 32
CRJ200ER
 
Bostrom
Posts: 974
Joined: Tue Feb 02, 2016 7:11 pm

Re: DY Financial Discussion - 2020

Sat May 02, 2020 5:56 pm

Ryga wrote:
Norwegian Air bondholders reject debt plan -

https://pendect.com/categories/business ... y-mid-may#


Don’t know the truth in it, posted 10 Hours ago on Twitter and a couple of other news agencies online posting the same thing?


It's true. It was very close though so Norwegian is still negotiating with them to get the last ones to accept the plan.
 
RexBanner
Posts: 46
Joined: Sun Nov 04, 2007 11:37 am

Re: DY Financial Discussion - 2020

Sat May 02, 2020 7:54 pm

It’s not quite as close as you assume here, can still go either way. The Bondholders that did vote for did it on the condition that it went through overnight, they’re not now necessarily going to vote the same way as they’re no longer bound by that agreement. The lessors voted for on the condition that the bondholders voted in majority, which they didn't. In short it’s a mess still and will require some quite intensive talks.
 
Bostrom
Posts: 974
Joined: Tue Feb 02, 2016 7:11 pm

Re: DY Financial Discussion - 2020

Sat May 02, 2020 8:50 pm

RexBanner wrote:
It’s not quite as close as you assume here, can still go either way. The Bondholders that did vote for did it on the condition that it went through overnight, they’re not now necessarily going to vote the same way as they’re no longer bound by that agreement. The lessors voted for on the condition that the bondholders voted in majority, which they didn't. In short it’s a mess still and will require some quite intensive talks.


Very close as in just a few percentage points in one of the bonds. If it had been 25% or so it would have been a lot worse. But it is certainly a mess and I'm glad it's not my job to solve it.
 
User avatar
Dahlgardo
Posts: 466
Joined: Tue Sep 07, 2004 5:46 am

Re: DY Financial Discussion - 2020

Sun May 03, 2020 12:53 pm

Bostrom wrote:
Very close as in just a few percentage points in one of the bonds. If it had been 25% or so it would have been a lot worse. But it is certainly a mess and I'm glad it's not my job to solve it.


It is now reported, that Norwegian has reached an agreement with it's creditors about converting debt to equity.

In danish
https://ekstrabladet.dk/nyheder/erhvervsnyheder/norwegian-faar-groent-lys-til-redningsplan/8109321

Norwegian has had a rescue plan approved by all four of its bondholders, the company in difficulty said in a stock exchange announcement.

The four bondholders are all entitled to corporate bonds in Norwegian. A bond is a form of loan.

The rescue plan is approved after several weeks of Norwegian efforts to raise enough equity to receive state support from Norway.

A crucial part of the rescue plan has been to get the bondholders to accept that parts of the loan in the company be converted into shares.
leave your nines at home and bring your skills to the battle
 
Someone83
Posts: 4858
Joined: Sun Sep 17, 2006 5:47 pm

Re: DY Financial Discussion - 2020

Mon May 04, 2020 8:15 am

After an agreement with the bondholders was reached during the weekend, they got approval from the leasing companies early this morning, and today the shareholders have voted yes for both the debt to equity transfer and the issues of new share. Thus Norwegian then should be approved to get the planned bank guarantees from the government. In addition they have significantly reduced their debt and interest and amortization payment the next year
 
User avatar
Dahlgardo
Posts: 466
Joined: Tue Sep 07, 2004 5:46 am

Re: DY Financial Discussion - 2020

Mon May 04, 2020 8:47 am

Someone83 wrote:
After an agreement with the bondholders was reached during the weekend, they got approval from the leasing companies early this morning, and today the shareholders have voted yes for both the debt to equity transfer and the issues of new share. Thus Norwegian then should be approved to get the planned bank guarantees from the government. In addition they have significantly reduced their debt and interest and amortization payment the next year


Good news.

It will be interesting to see what the future will bring for DY.
Much now depends on the lift of travel restrictions and timing and availability of a vaccine for covid-19.

I hope they will get out of long haul flying all together and forcus on intra-european routes with fewer hubs.

Are they now going to be a single AOC airline?
I guess they now have to renegotiate their outstanding orders for 737MAX, 787 and A321NEO.
leave your nines at home and bring your skills to the battle

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