Norwegian Air Shuttle News

[SelectSys]

Some of you know that I am a big fan of Norwegian Air Shuttle and I am cheering for its success.  Here are some recent stories:

 

Norwegian's order book of the most popular aircraft types may turn into a profit center if the demand for air travel continues to stay strong.  See this story:

https://www.ttgmedia.com/news/news/norwegian-air-finds-partner-to-take-surplus-aircraft-16921

 

More investment in the UK - this time looking for airline management talent:

https://www.bloomberg.com/news/articles/2019-02-06/norwegian-air-shifts-long-haul-hq-to-london-in-search-for-talent

 

Order deferrals to reflect new realities of growth:

https://www.rte.ie/news/business/2019/0206/1027813-norwegian-air-numbers/

I like the fact that they only delayed the A321LR orders one year.  I think this aircraft will end up being a huge winner for its operators - including Norwegian.

 

One more link suggesting that Ryanair and EasyJet are trying to keep the pressure on to cause more defaults:

https://www.thisismoney.co.uk/money/markets/article-6679529/Crisis-airline-industry-deepens-Norwegian-Thomas-Cook-Flybe-hit-fresh-turbulence.html

 

 

Edited February 8, 2019 by SelectSys

[Globaliser]

1 hour ago, SelectSys said:

Here are some recent stories:

 

If you're going to keep spinning on behalf of the Norwegian PR office by planting "good news" stories, how about some sort of reference to the biggest Norwegian news story of the past week?

 

Norwegian aims for cost cuts after heavy losses

Scandinavian budget carrier Norwegian is to concentrate on cost-reduction efforts, optimising its route structure and divesting aircraft as part of measures to reinforce its financial position.

Norwegian emphasised its strategy after turning in a full-year net loss of NKr1.45 billion ($170 million), including a NKr3 billion net loss in the fourth quarter.

This fourth-quarter loss – four times deeper than the previous figure of NKr713 million – included losses of NKr1.8 billion on its hedge positions.

...

[Zach1213]

5 hours ago, Globaliser said:

 

If you're going to keep spinning on behalf of the Norwegian PR office by planting "good news" stories, how about some sort of reference to the biggest Norwegian news story of the past week?

 

 

 

Shhhh, your propaganda isn’t allowed here. /s

[SelectSys]

5 hours ago, Globaliser said:

 

If you're going to keep spinning on behalf of the Norwegian PR office by planting "good news" stories, how about some sort of reference to the biggest Norwegian news story of the past week?

 

 

 

Don't see the "spin" in these stories.  Creating a leasing arm, hiring people and selling aircraft seem like prudent strategies to me.   A business can't survive without reacting to their operating climate.

 

The story you cite was "old news" and I take it as another sign that the company is taking its survival seriously.  The cost cutting measures are well known and ongoing.  

[Globaliser]

4 hours ago, SelectSys said:

Don't see the "spin" in these stories.

 

The way that you repeatedly post these stories, you're spreading the impression that Norwegian's a healthy and thriving company trying out innovative business measures.

 

The reality is that it's an airline that:-

1. is on the ropes financially, through hubris and overreach;
2. is seeing market demand fall well short of its projections, leaving it with seriously under-occupied aircraft at the worst time of the year for operations;
3. has been watching others in its category drop like flies over the last couple of years;
4. has seen surviving airlines in its category announce poor results, including at market leaders like Ryanair;
5. has been faced with financial cliff-edges in December 2018 and March 2019, at either of which points it could have gone under itself if it had not taken emergency financial measures;
6. has been taking emergency measures to try to (a) save and (b) generate cash to stave off foreseeable bankruptcy, including fare sales at prices that are perhaps unprecedentedly low;
7. refused to allow itself to be taken over at a price that was on offer several months ago, and then found that it could no longer sell itself at that price to the company that had made the offer;
8. therefore had to resort to an emergency fund-raising exercise through a rights issue that had to be announced when the plan was not wholly complete, when the price had not been set, and when its effect on existing equity is still unknown.

Norwegian may or may not survive; that question is one of the biggest in the industry at the moment. But your "cheering for its success" - in a new thread you started that hides the existing discussion about all of these problems at the company - rather disguises the fact that Norwegian is an airline that's on the ropes, fighting for its very existence.

 

Spin? That's almost the definition of it.

 

4 hours ago, SelectSys said:

The story you cite was "old news" ...

 

The numbers were announced on 7 February 2019. Yes, the broad thrust of some of the bad news in the results was known in advance, but that was only because Norwegian had already been forced to announce it to the stock market in profit warnings and through that incomplete news about a rights issue.

[Markanddonna]

We have had only positive experiences flying on Norwegian within Europe and then from Europe to FLL on the Dreamliner.  That noted, the recent news about dropping flights to Martinique and Guadeloupe and also from NJ to Paris makes me wonder about the French connection to this decision, which is what all three have in common: French regulations and protests.

 

We were on a ship stopping at Guadeloupe this past week and the taxi protests prevented any bus or shuttle excursions from leaving the port areas.  MSC arranged for its excursions to be shuttled by ferries across the bay to awaiting buses.  Mein Schiff canceled all of their excursions because of the protests. The problems turned our 4-hour excursion into a 7.5 hour one complicated by a bus driver who got our bus wedged into a bad situation: no reverse on the transmission, and he blocked the entire road to all traffic for a while.

 

This situation was of course not in the media, but about 7,000 -8,000 people saw the problems with French control. These problems must somehow also affect the decisions on providing flights to these places. Too bad since both islands are lovely and there is so much unemployment.

 

Maybe Norwegian stopping these flights was not just about their finances.  Why fly to a place that puts passengers in jeopardy?

[Globaliser]

11 minutes ago, Markanddonna said:

Maybe Norwegian stopping these flights was not just about their finances.  Why fly to a place that puts passengers in jeopardy?

 

I doubt it very much. What sort of jeopardy were you in? Or anyone else?

[Zach1213]

3 hours ago, Markanddonna said:

 the French connection to this decision

 

 

Now now, what does Gene Hackman have to do with this?

[fbgd]

3 hours ago, Markanddonna said:

Maybe Norwegian stopping these flights was not just about their finances.  Why fly to a place that puts passengers in jeopardy?

 

Haha, you must be joking or are unaware about how the French love a good protest.

 

If there was any truth to your theory then CDG and ORY would spend more time closed than open!

[6rugrats]

Having dealt with trying to get a refund from an airline that went under, I don't want to do it again.  I wouldn't purchase tickets on Norwegian.  To each his own.

[Markanddonna]

I was in France in May and experienced a smoke bomb protest near the Eiffel Tower. I'm not new to French or May Day protests.  I also got barricaded from my hotel in Barcelona during their May day protest.  

 

Can't say I'm a fan of anything French, but that is just my humble opinion to which I'm entitled through experience.

[Globaliser]

The emergency rights issue has been approved. It was 2 new shares for every existing share, priced at NOK 33 (vs a market price of about NOK 97 pre-pricing announcement). Kjos and Kise have each sold an unspecified portion of their rights at a 30% discount, so their continuing holdings in the company will be diluted; they deny that this reflects any lack of confidence on their part in the company's future, and it has been said that the cash raised them by selling their rights will go towards financing their take-up of the remaining rights.

 

Some details here: https://www.reuters.com/article/us-norwegian-air-shareissue/norwegian-air-sets-big-discount-for-share-sale-idUSKCN1Q719U

[debnjoe1438]

On 2/20/2019 at 1:04 PM, Globaliser said:

The emergency rights issue has been approved. It was 2 new shares for every existing share, priced at NOK 33 (vs a market price of about NOK 97 pre-pricing announcement). Kjos and Kise have each sold an unspecified portion of their rights at a 30% discount, so their continuing holdings in the company will be diluted; they deny that this reflects any lack of confidence on their part in the company's future, and it has been said that the cash raised them by selling their rights will go towards financing their take-up of the remaining rights.

 

Some details here: https://www.reuters.com/article/us-norwegian-air-shareissue/norwegian-air-sets-big-discount-for-share-sale-idUSKCN1Q719U

So, I am NOT financially savvy. Is this somewhat good or promising news?

[Globaliser]

16 hours ago, debnjoe1438 said:

So, I am NOT financially savvy. Is this somewhat good or promising news?

 

I think it means that it's now confirmed that Norwegian won't go bust in the next six weeks. If you regard that as good or promising news, then it is.

[debnjoe1438]

8 minutes ago, Globaliser said:

 

I think it means that it's now confirmed that Norwegian won't go bust in the next six weeks. If you regard that as good or promising news, then it is.

Thanks I'm hoping they don't go bust in the next 8 to 9 months. Going to Copenhagen in October, and Norwegian has a really great price. Haven't booked yet, just kind of waiting.

[Globaliser]

18 hours ago, debnjoe1438 said:

Going to Copenhagen in October, and Norwegian has a really great price. Haven't booked yet, just kind of waiting.

 

Presumably, by "really great" you mean "really low".

 

My personal - and totally non-expert - view is that if Norwegian is offering really low prices, it could be because it's in the kind of survival mode desperation that its need to generate cash, by any means and as quickly as possible, outweighs any kind of discipline about charging fares at profitable levels.

 

To take a highly simplified example using highly simplified numbers:-

 

If you offer all of your seats for $200 now, you might sell all of them in the next two weeks and get $200 per seat in the bank now.

 

In contrast, if you offer all of your seats at $1,000, it may be that nobody buys any of them now, and it may also be that the high price means that you will eventually only sell 25% of them with the aircraft operating three-quarters empty. Because many customers may have booked with other airlines who were cheaper at the time that they booked, those $1,000 seats may only be booked in the last couple of weeks or so before travel, by those who are by then desperate to travel at any price. However, you're then yielding $250 per seat on average, which is 25% more per seat than if you sell them at a really low fare now - but you have to wait for your money.

 

(This also illustrates how airlines can sometimes make more money on a flight that is deliberately not full. Any fool can fill an aircraft; the clever ones are those who can make a profit.)

 

The real world is, of course, much more complex, nuanced and dynamic than this. But these are concepts that underlie modern revenue management techniques. So if the company is in desperate need of cash to avoid going bust in the short term, it might choose to take the first approach rather than the latter, even though the latter would have been more profitable. I suspect that this may be a reason behind any really low prices that you see at the moment.

[debnjoe1438]

1 hour ago, Globaliser said:

 

Presumably, by "really great" you mean "really low".

 

My personal - and totally non-expert - view is that if Norwegian is offering really low prices, it could be because it's in the kind of survival mode desperation that its need to generate cash, by any means and as quickly as possible, outweighs any kind of discipline about charging fares at profitable levels.

 

To take a highly simplified example using highly simplified numbers:-

 

If you offer all of your seats for $200 now, you might sell all of them in the next two weeks and get $200 per seat in the bank now.

 

In contrast, if you offer all of your seats at $1,000, it may be that nobody buys any of them now, and it may also be that the high price means that you will eventually only sell 25% of them with the aircraft operating three-quarters empty. Because many customers may have booked with other airlines who were cheaper at the time that they booked, those $1,000 seats may only be booked in the last couple of weeks or so before travel, by those who are by then desperate to travel at any price. However, you're then yielding $250 per seat on average, which is 25% more per seat than if you sell them at a really low fare now - but you have to wait for your money.

 

(This also illustrates how airlines can sometimes make more money on a flight that is deliberately not full. Any fool can fill an aircraft; the clever ones are those who can make a profit.)

 

The real world is, of course, much more complex, nuanced and dynamic than this. But these are concepts that underlie modern revenue management techniques. So if the company is in desperate need of cash to avoid going bust in the short term, it might choose to take the first approach rather than the latter, even though the latter would have been more profitable. I suspect that this may be a reason behind any really low prices that you see at the moment.

Thanks for the input. Yes, really. I wish $200.00, I'd take the gamble at that price? Thomas Cook and Condor also have low prices, however you are limited to only one piece of luggage.  I haven't figured out how to travel "light" yet. :)

 

 

[Globaliser]

At least Norwegian has had one piece of unequivocally good news this week: it's got its AOG aircraft back from Shiraz. See http://avherald.com/h?article=4c18fbc9&opt=0, for example.

[Globaliser]

And in an illustration of how this is an industry in which things can go badly awry through absolutely no fault of the company's, there was an accident in Ethiopia last week to a Boeing 737 MAX 8 (http://avherald.com/h?article=4c534c4a&opt=0).

 

This is the second MAX accident within 5 months, and superficially there appear to be enough similarities between them that aviation authorities are beginning to order that MAXs be grounded. While nothing has yet been established about this latest accident, there is renewed concern about whether a contributor was a control system that was grafted onto the MAX, about which pilots have received little training, and which appears to be capable of driving the aircraft into an irrecoverable nose-down attitude when the system malfunctions.

 

Norwegian currently has about 18 MAXs, I think (including the one that was AOG in Shiraz), but much of the company's plan is built around taking a lot of MAXs. It's anyone's guess what might happen if the MAX is grounded worldwide (like the 787 was) for a significant period. Other airlines may have more financial resilience to withstand shocks, but we know that Norwegian doesn't.

[Globaliser]

Update: Norwegian has now grounded its MAXs: https://media.uk.norwegian.com/pressreleases/norwegian-temporarily-suspends-flights-with-the-boeing-737-max-following-recommendations-by-european-aviation-authorities-2846623. It's about 18 aircraft out of about 130 737s.

[dogs4fun]

On 3/11/2019 at 5:16 AM, Globaliser said:

This is the second MAX accident within 5 months, and superficially there appear to be enough similarities between them that aviation authorities are beginning to order that MAXs be grounded. While nothing has yet been established about this latest accident, there is renewed concern about whether a contributor was a control system that was grafted onto the MAX, about which pilots have received little training, and which appears to be capable of driving the aircraft into an irrecoverable nose-down attitude when the system malfunctions.

Hijack alert!

The MAX is still operational in the US. AA, United & Southwest have not grounded these planes - I won't be flying with any of the aforementioned airlines until they address the problem. 

Edited March 12, 2019 by dogs4fun

[Globaliser]

15 minutes ago, dogs4fun said:

The MAX is still operational in the US. AA, United & Southwest have not grounded these planes - I won't be flying with any of the aforementioned airlines until they address the problem.

 

It will be interesting to see what the FAA does over the next 24 hours. Prohibitions have now been imposed by Australia, China, all of Europe, India, Indonesia, Turkey and others, in addition to the individual airlines of other countries that have chosen voluntarily to ground their aircraft.