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MartijnNL
Posts: 911
Joined: Sun Jan 01, 2017 11:44 am

Re: DY about to go bust?

Sat Mar 07, 2020 7:08 pm

eta unknown wrote:
DY most certainly is not a revolutionary TA player: those honours belong to Icelandair and Laker.

:thumbsup:

mattyfitzg wrote:
Think Primera should get a mention in that too, being the first with the NEOs over the pond, almost a Laker mk2

An airline with a handful of narrowbody aircraft flying transatlantic for just a few months? No mention from me.
 
FGITD
Posts: 664
Joined: Wed Jun 15, 2016 1:44 pm

Re: DY about to go bust?

Sat Mar 07, 2020 10:02 pm

MartijnNL wrote:
eta unknown wrote:
DY most certainly is not a revolutionary TA player: those honours belong to Icelandair and Laker.

:thumbsup:

mattyfitzg wrote:
Think Primera should get a mention in that too, being the first with the NEOs over the pond, almost a Laker mk2

An airline with a handful of narrowbody aircraft flying transatlantic for just a few months? No mention from me.


I know people who literally loaded and unloaded Some of the first and last Primera flights into the US who have forgotten that they ever existed. Hardly a legacy as a trailblazer.
 
SCQ83
Posts: 5597
Joined: Wed Oct 03, 2012 8:32 pm

Re: DY about to go bust?

Sun Mar 08, 2020 11:03 am

I wonder if this will be the critical week for Norwegian.

It looks like tomorrow will be another Black day for stocks around the world. With more and more travel restrictions (e.g. now Lombardy under a lock down), airlines will be particularly vulnerable. And Norwegian will be a prime candidate for a nosedive.
 
BrianDromey
Posts: 2578
Joined: Sun Dec 10, 2006 2:23 am

Re: DY about to go bust?

Sun Mar 08, 2020 11:56 am

Airlines with a lot of last-minute, or short term bookings will be the first to differ cash flow issues. That’s what pushed flyBe over the edge, in the end. Norwegian might be slight more resilient to this if they have a higher proportion of leisure or VFR traffic already booked.
Look at what many airlines have done, no refunds for already booked passengers, but no change fees for new bookings. Clearly trying to get as much cash into the businesses as possible.
 
Asiaflyer
Posts: 908
Joined: Fri May 11, 2007 11:50 am

Re: DY about to go bust?

Sun Mar 08, 2020 12:10 pm

Pontius wrote:
https://www.reuters.com/article/us-health-coronavirus-norwegian-air/norwegian-air-dives-again-on-liquidity-worries-as-coronavirus-spreads-idUSKBN20T1H5
"ABG Sundal Collier forecasts Norwegian will have a cash balance at the end of the first quarter of 1.2 billion crowns and at the end of the second quarter of 0.9 billion crowns."

.9 billion krone = about $97 million USD. I don't think that's enough to run a enterprise that turns over $9 Billion USD annual revenue. Just don't see how this is going to work out, and I say that having paid for future Norwegian travel :(

Sounds like a too positive outlook by ABG. Only about -30 million USD in cash flow in current environment. Can that be right? Or are they including an expected share issue?
 
RexBanner
Posts: 32
Joined: Sun Nov 04, 2007 11:37 am

Re: DY about to go bust?

Sun Mar 08, 2020 3:37 pm

BrianDromey wrote:
Airlines with a lot of last-minute, or short term bookings will be the first to differ cash flow issues. That’s what pushed flyBe over the edge, in the end. Norwegian might be slight more resilient to this if they have a higher proportion of leisure or VFR traffic already booked.
Look at what many airlines have done, no refunds for already booked passengers, but no change fees for new bookings. Clearly trying to get as much cash into the businesses as possible.


Flybe were always going to go in March. O’Leary called it in a Sky News interview a couple of months ago, where he’d calculated that was when the cash was going to run out. A few passengers who may have travelled but for the Coronavirus outbreak were never going to make up the shortfall.
 
N1KE
Posts: 25
Joined: Thu Mar 22, 2007 7:47 pm

Re: DY about to go bust?

Mon Mar 09, 2020 9:29 am

Share Price down another 9%+ in early trading. Could be another long week for Norwegian.
 
Arion640
Posts: 2925
Joined: Fri Mar 31, 2017 5:15 pm

Re: DY about to go bust?

Mon Mar 09, 2020 9:39 am

N1KE wrote:
Share Price down another 9%+ in early trading. Could be another long week for Norwegian.


All the same across all stock markets. London FTSE100 Index down 10%.
1973-2020
 
tphuang
Posts: 4156
Joined: Tue Mar 14, 2017 2:04 pm

Re: DY about to go bust?

Mon Mar 09, 2020 9:42 am

At some point, we have to stop using stock market to identify if an airline is going to survive. On a day where the rest of the market is crashing, airline stocks are obviously going to get hit hard. Until there are other evidence, I don't see why today would be worse than other days.

They are suffering a lot from drop in TATL demand, but it's not like they are getting killed on the short haul stuff as some other airlines are.
 
flyjay123
Posts: 115
Joined: Sun Oct 01, 2017 11:07 am

Re: DY about to go bust?

Mon Mar 09, 2020 10:12 am

tphuang wrote:
but it's not like they are getting killed on the short haul stuff as some other airlines are.


Do you have any evidence of that ?
 
minilinde
Posts: 174
Joined: Sat Dec 31, 2005 1:16 am

Re: DY about to go bust?

Mon Mar 09, 2020 10:20 am

flyjay123 wrote:
tphuang wrote:
but it's not like they are getting killed on the short haul stuff as some other airlines are.


Do you have any evidence of that ?


There is no way Norwegian is unaffected by this. It's system-wide in all of Europe.
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, CRJ2, CRJ9, ERJ190, MD80s/90, RJ100
 
dreamliner8910
Posts: 8
Joined: Sun Jun 09, 2019 8:19 pm

Re: DY about to go bust?

Mon Mar 09, 2020 10:29 am

minilinde wrote:
flyjay123 wrote:
tphuang wrote:
but it's not like they are getting killed on the short haul stuff as some other airlines are.


Do you have any evidence of that ?


There is no way Norwegian is unaffected by this. It's system-wide in all of Europe.


They will not be unaffected, but if you look at their presence in Northern Italy, which is the biggest area in Europe that is taking a hit, they only have 10 routes in summer (4x PSA (9w), 4x VCE (9w), 1xVRN (2w), 1xMXP (6w)), covering less than 4 daily flights. Ryanair, Easyjet (both notably have bases!!!) and pretty much every legacy have far more frequencies to Northern Italy. So in terms of Covid and short-haul flying in Europe, Norwegian might actually be in a slightly better place.
 
kanye
Posts: 127
Joined: Thu Jun 28, 2007 3:32 am

Re: DY about to go bust?

Mon Mar 09, 2020 10:44 am

Problem for Norwegian is they were already about to go bankrupt before Corona. They wouldn’t fly today if it wouldn’t be for three cash injections last two years. The only question now is if anyone is ready to invest more money right now, because otherwise they will go bust.
 
MIflyer12
Posts: 6925
Joined: Mon Feb 18, 2013 11:58 pm

Re: DY about to go bust?

Mon Mar 09, 2020 10:50 am

tphuang wrote:
At some point, we have to stop using stock market to identify if an airline is going to survive. On a day where the rest of the market is crashing, airline stocks are obviously going to get hit hard. Until there are other evidence, I don't see why today would be worse than other days.

They are suffering a lot from drop in TATL demand, but it's not like they are getting killed on the short haul stuff as some other airlines are.


You are, in effect, arguing that there's no intellectual value to the information that the market is pricing in. I don't think they taught you that in a Corporate Finance class.
 
AF022
Posts: 1850
Joined: Fri Dec 26, 2003 10:41 pm

Re: DY about to go bust?

Mon Mar 09, 2020 11:27 am

I think airlines that were in good financial shape before the crisis will struggle but will be able to weather the storm. the problem is airlines that were having problems before. Coronavirus may push them over the edge. It isn't just Norwegian.
 
tphuang
Posts: 4156
Joined: Tue Mar 14, 2017 2:04 pm

Re: DY about to go bust?

Mon Mar 09, 2020 11:44 am

MIflyer12 wrote:
tphuang wrote:
At some point, we have to stop using stock market to identify if an airline is going to survive. On a day where the rest of the market is crashing, airline stocks are obviously going to get hit hard. Until there are other evidence, I don't see why today would be worse than other days.

They are suffering a lot from drop in TATL demand, but it's not like they are getting killed on the short haul stuff as some other airlines are.


You are, in effect, arguing that there's no intellectual value to the information that the market is pricing in. I don't think they taught you that in a Corporate Finance class.


Or just that the people investing don't have any additional information than what we have access to. Their market value is dropping because of obvious issues facing this sector. But until we get additional info indicating that they are facing imminent demise, I don't think we can reach that conclusion based on stock price movement.
 
minilinde
Posts: 174
Joined: Sat Dec 31, 2005 1:16 am

Re: DY about to go bust?

Mon Mar 09, 2020 11:49 am

dreamliner8910 wrote:

They will not be unaffected, but if you look at their presence in Northern Italy, which is the biggest area in Europe that is taking a hit, they only have 10 routes in summer (4x PSA (9w), 4x VCE (9w), 1xVRN (2w), 1xMXP (6w)), covering less than 4 daily flights. Ryanair, Easyjet (both notably have bases!!!) and pretty much every legacy have far more frequencies to Northern Italy. So in terms of Covid and short-haul flying in Europe, Norwegian might actually be in a slightly better place.


Agreed, they will see a "less intense revenue loss effect", but all of Europe is affected, this includes e.g. UK where Norwegian is highly exposed.
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, CRJ2, CRJ9, ERJ190, MD80s/90, RJ100
 
Gingersnap
Posts: 908
Joined: Sun Aug 29, 2010 9:09 pm

Re: DY about to go bust?

Mon Mar 09, 2020 2:05 pm

The NAX share price has taken a beating today. Down 18%.

Shares now valued at 1 Euro.
Flown on: A306 A319/20/21 A332 B732/3/4/5/7/8 B742/4 B752 B762/3 B772/W B788 C152 E195 F70/100 MD-82 Q400
 
Kikko19
Posts: 643
Joined: Sat Apr 22, 2017 4:45 pm

Re: DY about to go bust?

Mon Mar 09, 2020 2:18 pm

[url][/url]
Gingersnap wrote:
The NAX share price has taken a beating today. Down 18%.

Shares now valued at 1 Euro.

every stock has taken a beating. but yeah 18% is big. when they'll be 1 euro all the company i might buy it myself.
 
arcticcruiser
Posts: 411
Joined: Tue Aug 22, 2017 2:16 pm

Re: DY about to go bust?

Mon Mar 09, 2020 7:24 pm

Kikko19 wrote:
[url][/url]
Gingersnap wrote:
The NAX share price has taken a beating today. Down 18%.

Shares now valued at 1 Euro.

every stock has taken a beating. but yeah 18% is big. when they'll be 1 euro all the company i might buy it myself.


Ready to assume the attached debt then I presume?
 
Kikko19
Posts: 643
Joined: Sat Apr 22, 2017 4:45 pm

Re: DY about to go bust?

Mon Mar 09, 2020 7:55 pm

arcticcruiser wrote:
Kikko19 wrote:
[url][/url]
Gingersnap wrote:
The NAX share price has taken a beating today. Down 18%.

Shares now valued at 1 Euro.

every stock has taken a beating. but yeah 18% is big. when they'll be 1 euro all the company i might buy it myself.


Ready to assume the attached debt then I presume?

sure, i'll find some government helping :D
 
User avatar
JetBuddy
Posts: 2535
Joined: Wed Dec 25, 2013 1:04 am

Re: DY about to go bust?

Tue Mar 10, 2020 12:18 pm

Norwegian cuts 15% capacity, cancels 3000 flights and announces layoffs.

in Norwegian (use Google translate if necessary)

https://e24.no/naeringsliv/i/4q8Wze/nor ... onaviruset
 
mcg
Posts: 1015
Joined: Tue Sep 16, 2003 11:49 am

Re: DY about to go bust?

Tue Mar 10, 2020 8:09 pm

enilria wrote:
MIflyer12 wrote:
enilria wrote:
This is why we can't have nice things


That's one way to look at it. Another way is that DY didn't offer these prospective DEN customers enough value to break their loyalty to other carriers. Every new entrant to an established market faces that. I buy Heinz ketchup. Price of the store brand is of no interest to me - I don't use enough to make ketchup expenses a factor in my household budget. Do I want to risk messing up my European vacation with a new carrier? Will they be financially stable? Do they have spare aircraft? Will I get Sun Country-d? Can they interline me if things go wrong? Have they scheduled enough frequencies so I won't be waiting three days for the next flight?

Nobody said being a new international carrier to the U.S. long-haul market would be easy.

Another way to look at it, is that UA won't allow the "value" differential to get large enough to break their loyalty. UA will make sure they are close enough to their fare to prevent that. This is how you drive out competition and jack up fares afterward to teach customers a lessen for their lack of loyalty and make back the cost of driving them out. The irony is that consumers will pay for the cost of driving out the competitor that tried to offer them lower fares. Thus, why we can't have nice things.


What's the appropriate thing for UA to do; more less match DY's fare to maintain the loyalty of their customers, perhaps forcing DY out of the market; or, not match DY and allow themselves to be forced out?
 
leghorn
Posts: 1163
Joined: Sun Jan 22, 2017 9:13 am

Re: DY about to go bust?

Tue Mar 10, 2020 8:22 pm

pprune has a screenshot of a hotel letter demanding payment in advance for crew hotel.
 
Ryga
Posts: 71
Joined: Mon Mar 07, 2016 11:26 am

Re: DY about to go bust?

Tue Mar 10, 2020 8:48 pm

URL to that letter here:

https://ibb.co/QYqBXfs
 
CALMSP
Posts: 3098
Joined: Wed Aug 13, 2003 3:18 am

Re: DY about to go bust?

Tue Mar 10, 2020 8:52 pm

not good. Wonder if that is strictly due to concern over future payments or historically late payment from DY for previous stays.
 
CrawleyBen
Posts: 175
Joined: Thu Jun 29, 2017 9:22 am

Re: DY about to go bust?

Tue Mar 10, 2020 10:25 pm

JetBuddy wrote:
Norwegian cuts 15% capacity, cancels 3000 flights and announces layoffs.

in Norwegian (use Google translate if necessary)

https://e24.no/naeringsliv/i/4q8Wze/nor ... onaviruset


Another link from from The Argus Newspaper company here in the UK (saves using Google translate)

https://www.theargus.co.uk/news/1829454 ... off-staff/

Cheers

Ben
 
IWMBH
Posts: 485
Joined: Tue Apr 17, 2018 5:01 pm

Re: DY about to go bust?

Tue Mar 10, 2020 10:53 pm

Flight global is also reporting the lay offs: https://www.flightglobal.com/networks/n ... 66.article

They’re blaming the firings on the corona virus. But, I think it just accelerates the demise of DY which was in itself inevitable.
 
Arion640
Posts: 2925
Joined: Fri Mar 31, 2017 5:15 pm

Re: DY about to go bust?

Tue Mar 10, 2020 11:09 pm

IWMBH wrote:
Flight global is also reporting the lay offs: https://www.flightglobal.com/networks/n ... 66.article

They’re blaming the firings on the corona virus. But, I think it just accelerates the demise of DY which was in itself inevitable.


Ahh yes, because coronavirus has nothing to do with what so ever...
1973-2020
 
LHUSA
Posts: 819
Joined: Wed Aug 24, 2005 10:15 am

Re: DY about to go bust?

Tue Mar 10, 2020 11:13 pm

Arion640 wrote:
IWMBH wrote:
Flight global is also reporting the lay offs: https://www.flightglobal.com/networks/n ... 66.article

They’re blaming the firings on the corona virus. But, I think it just accelerates the demise of DY which was in itself inevitable.


Ahh yes, because coronavirus has nothing to do with what so ever...


That’s not what he said
 
CALMSP
Posts: 3098
Joined: Wed Aug 13, 2003 3:18 am

Re: DY about to go bust?

Tue Mar 10, 2020 11:21 pm

Anyone have insight on which cancellations are planned?
 
Waterbomber2
Posts: 1020
Joined: Mon Feb 04, 2019 3:44 am

Re: DY about to go bust?

Wed Mar 11, 2020 12:03 am

I can see 3 scenario's.
-A hostile take over at bottom share price
-insolvency
-Norwegian government take-over

Either way, the original DY is toast.
 
Curiousflyer
Posts: 575
Joined: Sun Oct 22, 2006 3:19 am

Re: DY about to go bust?

Wed Mar 11, 2020 3:07 am

Waterbomber2 wrote:
I can see 3 scenario's.
-A hostile take over at bottom share price
-insolvency
-Norwegian government take-over

Either way, the original DY is toast.


It seems like it is the end for them. They grew too fast but the product itself was not so bad so I will miss them. Maybe a hostile takeover will happen but at the moment I would rather think that every other airline is eager to see capacity going away from the market. And no one will want their airplanes in the short term, particularly the 787s with engine problems and compromised Max’s.
 
f4f3a
Posts: 579
Joined: Thu Jul 29, 2004 4:07 am

Re: DY about to go bust?

Wed Mar 11, 2020 6:35 am

I imagine some of the divisions would be lucrative . Especially the Nordic operations.
Slots at Gatwick would be worth having . Although it is s brave airline that expands in this current climate
 
Arion640
Posts: 2925
Joined: Fri Mar 31, 2017 5:15 pm

Re: DY about to go bust?

Wed Mar 11, 2020 7:13 am

LHUSA wrote:
Arion640 wrote:
IWMBH wrote:
Flight global is also reporting the lay offs: https://www.flightglobal.com/networks/n ... 66.article

They’re blaming the firings on the corona virus. But, I think it just accelerates the demise of DY which was in itself inevitable.


Ahh yes, because coronavirus has nothing to do with what so ever...


That’s not what he said


“They’re blaming the firings on the corona virus”
1973-2020
 
User avatar
Dahlgardo
Posts: 360
Joined: Tue Sep 07, 2004 5:46 am

Re: DY about to go bust?

Wed Mar 11, 2020 7:58 am

Waterbomber2 wrote:
I can see 3 scenario's.
-A hostile take over at bottom share price
-insolvency
-Norwegian government take-over

Either way, the original DY is toast.


or the owners decides to inject more cash.
They had already started a rather effective costcutting program and a scaling down of operations.
I believe they were heading in the right direction until the corona pandemia striked.

But if it drags out more than 2-3 months still, it is hard to see them continue to operate as they are now.

I would hate to see them go, as it would just mean more and a stronger Ryanair, which nobody needs.
I really dislike the cynical way Ryanair runs their business and the way the affect the airline industry.
leave your nines at home and bring your skills to the battle
 
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scbriml
Posts: 18522
Joined: Wed Jul 02, 2003 10:37 pm

Re: DY about to go bust?

Wed Mar 11, 2020 8:05 am

Arion640 wrote:
LHUSA wrote:
Arion640 wrote:

Ahh yes, because coronavirus has nothing to do with what so ever...


That’s not what he said


“They’re blaming the firings on the corona virus”


Why only quote half of what IWMBH said?

Same as Coronavirus wasn't the sole reason for the demise of Flybe - they were a mess before the virus. Just like Norwegian.
Time flies like an arrow. Fruit flies like a banana!
There are 10 types of people in the World - those that understand binary and those that don't.
 
BrianDromey
Posts: 2578
Joined: Sun Dec 10, 2006 2:23 am

Re: DY about to go bust?

Wed Mar 11, 2020 10:37 am

Waterbomber2 wrote:
I can see 3 scenario's.
-A hostile take over at bottom share price
-insolvency
-Norwegian government take-over

Either way, the original DY is toast.


I don't see the Norwegian government taking over. Why would they, compared to the Finnish, Swedish or Danish? I accept that Norwegian provides competition to SAS on intra-scnadanvia routes. Given the way Norwegian is structured would it be possible to restructure the airline such that the airline can shrink back to viable intra-scandanavia and short-haul flying? The given wisdom is that the 787-operated long-haul flights are the source of most of the losses, can these be contained in a "Bad Norwegian" structure?
 
Bostrom
Posts: 898
Joined: Tue Feb 02, 2016 7:11 pm

Re: DY about to go bust?

Wed Mar 11, 2020 11:11 am

BrianDromey wrote:
Waterbomber2 wrote:
I can see 3 scenario's.
-A hostile take over at bottom share price
-insolvency
-Norwegian government take-over

Either way, the original DY is toast.


I don't see the Norwegian government taking over. Why would they, compared to the Finnish, Swedish or Danish? I accept that Norwegian provides competition to SAS on intra-scnadanvia routes. Given the way Norwegian is structured would it be possible to restructure the airline such that the airline can shrink back to viable intra-scandanavia and short-haul flying? The given wisdom is that the 787-operated long-haul flights are the source of most of the losses, can these be contained in a "Bad Norwegian" structure?


Neither do I. The Norwegian government sold their shares in SAS a couple of years ago so I don't think they are interested in acquiring another airline.
 
a350lover
Posts: 768
Joined: Sun Dec 24, 2017 11:21 am

Re: DY about to go bust?

Wed Mar 11, 2020 12:09 pm

BrianDromey wrote:
Given the way Norwegian is structured would it be possible to restructure the airline such that the airline can shrink back to viable intra-scandanavia and short-haul flying? The given wisdom is that the 787-operated long-haul flights are the source of most of the losses, can these be contained in a "Bad Norwegian" structure?


I posted the same idea days ago. To me it sounds like a very logical idea. However, I suspect this should have been done years ago. I am not sure Norwegian has now the time to announce such a thing to the markets and “survive” to that.
 
User avatar
enilria
Posts: 9980
Joined: Fri Feb 22, 2008 7:15 pm

Re: DY about to go bust?

Wed Mar 11, 2020 1:03 pm

mcg wrote:
enilria wrote:
MIflyer12 wrote:

That's one way to look at it. Another way is that DY didn't offer these prospective DEN customers enough value to break their loyalty to other carriers. Every new entrant to an established market faces that. I buy Heinz ketchup. Price of the store brand is of no interest to me - I don't use enough to make ketchup expenses a factor in my household budget. Do I want to risk messing up my European vacation with a new carrier? Will they be financially stable? Do they have spare aircraft? Will I get Sun Country-d? Can they interline me if things go wrong? Have they scheduled enough frequencies so I won't be waiting three days for the next flight?

Nobody said being a new international carrier to the U.S. long-haul market would be easy.

Another way to look at it, is that UA won't allow the "value" differential to get large enough to break their loyalty. UA will make sure they are close enough to their fare to prevent that. This is how you drive out competition and jack up fares afterward to teach customers a lessen for their lack of loyalty and make back the cost of driving them out. The irony is that consumers will pay for the cost of driving out the competitor that tried to offer them lower fares. Thus, why we can't have nice things.


What's the appropriate thing for UA to do; more less match DY's fare to maintain the loyalty of their customers, perhaps forcing DY out of the market; or, not match DY and allow themselves to be forced out?

That's a difficult question. The govt should not allow selling below cost. That would mean that DY could offer a fare that they could prove could be offered profitably, probably a little more than what they are now charging. It would also mean that UA could not match DY if the fare was below their cost. Essentially these are the laws now, but there isn't even a framework to enforce it, much less any attempt *AT* enforcement. When you allow loss-leading, you invite cross-subsidization which gives massive benefit to bigger companies. This effect is why we have fewer and fewer airlines, particularly coupled with bankruptcy policy which is basically "who cares about LCCs and small airlines, but legacies are too big to fail".
 
User avatar
SQ789
Posts: 892
Joined: Thu Mar 16, 2017 11:51 am

Re: DY about to go bust?

Wed Mar 11, 2020 1:05 pm

minilinde wrote:
flyjay123 wrote:
tphuang wrote:
but it's not like they are getting killed on the short haul stuff as some other airlines are.


Do you have any evidence of that ?


There is no way Norwegian is unaffected by this. It's system-wide in all of Europe.

But I found out that the whole European aviation is affected by this. So yes, DY is affected.

https://www.rte.ie/news/business/2020/0 ... -airlines/
If it's not Boeing, I'm not going!
 
moa999
Posts: 810
Joined: Tue Mar 13, 2018 6:37 am

Re: DY about to go bust?

Wed Mar 11, 2020 2:01 pm

enilria wrote:
The govt should not allow selling below cost.".


Define below cost though.

Airline margins are thin. Most profitable LCCs lose money on the flying part and make it up on the ancillary charges.

And on say an average fare of 100 you might be Breakeven at a load factor of 80, very profitable at 100, and bankrupt at 50.
 
Mikey711MN
Posts: 1251
Joined: Fri Nov 07, 2003 4:19 am

Re: DY about to go bust?

Wed Mar 11, 2020 2:17 pm

scbriml wrote:
Same as Coronavirus wasn't the sole reason for the demise of Flybe - they were a mess before the virus. Just like Norwegian.

Not unlike its effect on humans, Coronavirus will be more damaging to those with pre-existing conditions, whether it be a biological illness or a bad Balance Sheet.

This industry needs airlines like DY - and an environment that fosters risk-taking to innovate air service - but some of these symptoms do not look good right now.

-Mike
I plan on living forever. So far, so good...
 
User avatar
enilria
Posts: 9980
Joined: Fri Feb 22, 2008 7:15 pm

Re: DY about to go bust?

Wed Mar 11, 2020 2:29 pm

moa999 wrote:
enilria wrote:
The govt should not allow selling below cost.".


Define below cost though.

Airline margins are thin. Most profitable LCCs lose money on the flying part and make it up on the ancillary charges.

And on say an average fare of 100 you might be Breakeven at a load factor of 80, very profitable at 100, and bankrupt at 50.

It isn't difficult to establish a formula for establishing the cost. It just needs to be set. For example, they could take total operating cost for the flight + company wide overhead (half allocated by ASMs and half by passenger count) - average ancillary revenue (half allocated by RPMs and half by passenger count) - cargo (actual or based on a route of similar length) and divide by seats adjusted to company average load factor. Boom. They could also allow airlines to go 20% under it to allow for front cabin paying more than their own way. It's not hard to do. You just need the formula to be enshrined in a document. The problem now is that there is no standard way of doing it, so the airlines just say their cost is zero and thus can justify charging $25.
 
CobaltScar
Posts: 599
Joined: Thu Mar 23, 2017 2:30 pm

Re: DY about to go bust?

Wed Mar 11, 2020 2:30 pm

DY is doomed and anyone with eyes can see it. More and more vendors are going to start demanding payment upfront, and as payments come in later and later it will spiral quickly and be over in a blink.
 
flyjay123
Posts: 115
Joined: Sun Oct 01, 2017 11:07 am

Re: DY about to go bust?

Wed Mar 11, 2020 3:32 pm

[quote="CobaltScar"]DY is doomed and anyone with eyes can see it. More and more vendors are going to start demanding payment upfront, and as payments come in later and later it will spiral quickly and be over in a blink.[/quote]

Its happening already! Someone mentioned up thread about a crew hotel letter requesting pre-payment! Question is... is it just this hotel or others too? Is it the start...
 
tobsw
Posts: 104
Joined: Mon Jul 11, 2011 2:29 pm

Re: DY about to go bust?

Wed Mar 11, 2020 5:35 pm

enilria wrote:
moa999 wrote:
enilria wrote:
The govt should not allow selling below cost.".


Define below cost though.

Airline margins are thin. Most profitable LCCs lose money on the flying part and make it up on the ancillary charges.

And on say an average fare of 100 you might be Breakeven at a load factor of 80, very profitable at 100, and bankrupt at 50.

It isn't difficult to establish a formula for establishing the cost. It just needs to be set. For example, they could take total operating cost for the flight + company wide overhead (half allocated by ASMs and half by passenger count) - average ancillary revenue (half allocated by RPMs and half by passenger count) - cargo (actual or based on a route of similar length) and divide by seats adjusted to company average load factor. Boom. They could also allow airlines to go 20% under it to allow for front cabin paying more than their own way. It's not hard to do. You just need the formula to be enshrined in a document. The problem now is that there is no standard way of doing it, so the airlines just say their cost is zero and thus can justify charging $25.


I don't think this is a great way of "controlling" minimum prices.

What if an airline receives subsidies and could reduce 100$ for each ticket on a specific route but decides to cut prices by 20$ on many routes? What if airlines offer tickets at 20$ as a marketing tool? What if an airlines doesn't care about profits and offers 1$ flights?

At the end of the day, airlines are price takers, not price makers.
 
smartplane
Posts: 1307
Joined: Fri Aug 03, 2018 9:23 pm

Re: DY about to go bust?

Wed Mar 11, 2020 6:54 pm

flyjay123 wrote:
CobaltScar wrote:
DY is doomed and anyone with eyes can see it. More and more vendors are going to start demanding payment upfront, and as payments come in later and later it will spiral quickly and be over in a blink.


Its happening already! Someone mentioned up thread about a crew hotel letter requesting pre-payment! Question is... is it just this hotel or others too? Is it the start...

Hotels, transport companies, fuel, parts, etc around the World are reviewing credit extended to all customers, including so-called blue chip airlines. These suppliers are also trying to accelerate payments, because they need the cash flow too.

Don't read too much into what is becoming widespread. Airlines and other industry players have reduced their IATA settlement accounts to the minimum.

Airlines diverting to unscheduled airports are going to have to settle in full before they can resume flights, just like in the pre-IATA settlement era.
 
CRJ5000
Posts: 35
Joined: Thu Jan 17, 2019 3:06 pm

Re: DY about to go bust?

Thu Mar 12, 2020 1:44 am

The US-EU travel ban may be the final nail in the coffin...
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