More Norwegian Air Transatlantic Service

[buggins0402]

9 hours ago, babysteps said:

My best guess is that Buggins0402 may be referring to Hurtigruten which is based in Norway and privately held. 

Close...I’m thinking of another owned by a Norwegian billionaire,  but based in Switzerland.   For that matter there is a private Italian line on a spending spree.  

 

Some of us that remember Renaissance over expanding/leveraging into a downturn.  That didn’t end well. 

Edited December 27, 2018 by buggins0402

[babysteps]

Sorry - Wikipedia just mentioned TDR and I jumped to conclusions. 

[SelectSys]

On 12/23/2018 at 7:54 AM, Gardyloo said:

For what it's worth (from 22 December)...

 

Norwegian Air Is Facing Collapse In 9 Days If It Does Not Secure More Capital

 

The next 9 days are reportedly critical for Norwegian according to newspaper Dagens Næringsliv. The Norwegian newspaper reported on Thursday that the airline was just days away from a “full crisis” regarding its financial state. Due to large acquisitions of aircraft, the airline is currently in the midst of “heavy debt”. As such Martin Stenshall of Danske Bank believes that Norwegian’s loan terms will be violated by the new year. That means that lenders could demand immediate repayment. Mr Stenshall told DN “If the company has to report a violation of the conditions surrounding its debt, it can land in an evil spiral and the crisis will escalate.”

 

Must have been a slow news day or some money was found - perhaps from Rolls Royce as operations continue normally.  Maybe their creditors are cutting them some slack on their covenants not wanting them to fail.  Who really knows.  I am still personally optimistic and hopeful that they will survive as non of the legacy carriers appeal to me much these days. 

 

I continue to look for news one way or another.

[debnjoe1438]

On ‎1‎/‎2‎/‎2019 at 2:38 PM, SelectSys said:

 

Must have been a slow news day or some money was found - perhaps from Rolls Royce as operations continue normally.  Maybe their creditors are cutting them some slack on their covenants not wanting them to fail.  Who really knows.  I am still personally optimistic and hopeful that they will survive as non of the legacy carriers appeal to me much these days. 

 

I continue to look for news one way or another.

I'm hoping too

[SelectSys]

Coverage is starting up for the new year -

 

https://simpleflying.com/can-norwegian-survive-2019/

 

"Norwegian has really proven themselves to be dynamic and unstoppable, and we at Simple Flying think they will be solvent a little longer. This is including the Christmas disruption at Gatwick Airport due to drones a week ago,  in which Norwegian hired the HiFly A380 to help customers proves that they have the working capital to solve problems that might stump other airlines."

 

https://skift.com/2019/01/03/can-norwegian-air-survive/

 

"we suspect Norwegian Air, which is in weaker financial shape than most passengers might expect, will survive 2019. But the first quarter will be an important harbinger of things to come. It’s always a rough period for European airlines because leisure demand is slow."

 

https://www.express.co.uk/travel/articles/1066646/Norwegian-air-flash-sale-flight-deals-from-gatwick-new-york-brazil

 

"Norwegian air flash sale: Airline SLASHES long-haul fares"

 

 

 

 

[SelectSys]

New news/commentary -

https://simpleflying.com/norwegian-cost-cutting-continues/

[debnjoe1438]

5 hours ago, SelectSys said:

New news/commentary -

https://simpleflying.com/norwegian-cost-cutting-continues/

Thanks for posting the news link. I hope they keep flying, as I'm seriously thinking about them for my trip in October.

[SelectSys]

IAG/BA is walking away from Norwegian.  The stock in Norwegian had been supported by IAG's holding in the company.  I guess IAG/BA believes they can drive them into a hard shutdown.  Now things will be even more interesting.

 

https://www.bloomberg.com/news/articles/2019-01-24/british-airways-owner-iag-says-it-won-t-bid-for-norwegian-air

 

Another comment from today:

https://www.breakingviews.com/considered-view/iag-is-surprise-first-loser-in-airline-fuel-casino/

Edited January 24, 2019 by SelectSys

[Globaliser]

55 minutes ago, SelectSys said:

Now things will be even more interesting.

 

It was interesting to see RYR's recent profit warning (the second in four months): https://www.bbc.co.uk/news/business-46916389. Softness of demand in this sector could affect Norwegian as well.

[hallasm]

SelectSys and Globaliser - Thank you for sharing - indeed interesting reading!

interesting to follow those airlines in First Quarter and how it will impact airfare prices.

 

[SelectSys]

1 hour ago, hallasm said:

interesting to follow those airlines in First Quarter and how it will impact airfare prices.

 

 

My expectation is that airfares will remain low if Norwegian stays in the market.  I just looked at prices for LA-London and LA-Paris.  Round trip airfares are around $500.00.  The price spreads in Paris between Norwegian and Air France can be stunning with fare differences of more than $2000.00 

[buggins0402]

2 hours ago, SelectSys said:

 

My expectation is that airfares will remain low if Norwegian stays in the market.  I just looked at prices for LA-London and LA-Paris.  Round trip airfares are around $500.00.  The price spreads in Paris between Norwegian and Air France can be stunning with fare differences of more than $2000.00 

Might be of interest to those CAS (Casino at Sea) cruisers. 😄

[Globaliser]

14 hours ago, SelectSys said:

The price spreads in Paris between Norwegian and Air France can be stunning with fare differences of more than $2000.00

 

That may illustrate the difference between profitable pricing of one airline's product, and loss-making cash-generation-at-any-price desperation by the other.

[FlyerTalker]

7 hours ago, Globaliser said:

 

That may illustrate the difference between profitable pricing of one airline's product, and loss-making cash-generation-at-any-price desperation by the other.

 

Why do I suspect that Norwegian executives have tried to take a page from the Silicon Valley playbook....hope to survive your burn rate until you have enough market penetration to move to profitability.

 

Or, maybe they are like AA, which actually is losing money on their flying operations and only being profitable through the sale of FF miles.

 

https://viewfromthewing.boardingarea.com/2019/01/24/earnings-release-american-airlines-lost-money-flying-passengers-last-quarter/

 

[hallasm]

Looks like Norwegian Air has got some more Air under the wings, Link to Oslo Børs press release

 

The Board of Directors of Norwegian Air Shuttle ASA (the "Company") has resolved to propose that the Company carries out a capital increase through a fully underwritten rights issue with proceeds of approximately NOK 3 billion (the "Rights Issue"). The background for the proposal is a need to strengthen the Company’s balance sheet, to increase its financial flexibility and create headroom to the covenants of its outstanding bonds compared with what follows from the Company’s business plan.

[Globaliser]

What I'd noticed by myself: There's no mention of the pricing of the new shares.

 

What the FT (which knows a thing or two about this sort of event) has to say:-

 

Lossmaking Norwegian Air Shuttle announced an emergency multibillion rights issue on Tuesday as worries increased about the low-cost carrier’s finances and it said it was no longer in takeover talks.

The size of the rights issue at NKr3bn ($350m) is more than half the airline’s equity value of NKr5.6bn, highlighting the problems it faces as it struggles to stay afloat.

...

It pre-announced preliminary results for 2018 with revenues increasing by a third to NKr40.3bn but its earnings before interest, tax, depreciation and amortisation dropped to a loss of NKr2.2bn compared with a NKr59m profit a year earlier and a NKr3.1bn gain in 2016.

Cash and cash equivalents was NKr1.9bn at the end of 2018 compared with NKr4bn a year earlier.

...

[SelectSys]

On 1/29/2019 at 1:57 PM, Globaliser said:

What I'd noticed by myself: There's no mention of the pricing of the new shares.

 

What the FT (which knows a thing or two about this sort of event) has to say:-

 

 

 

 

Can't see behind the FT paywall,  but the article behind the link below suggests they will be flying through summer with more capital raises required to get through 2020

 

https://www.irishtimes.com/business/transport-and-tourism/what-has-gone-wrong-at-norwegian-air-1.3775965

 

Daniel Roeska, analyst at Bernstein, said the equity raising was almost inevitable.

“There’s no way they could have made it through Q1, and that made this not a choice but a necessity, otherwise the bonds go bust at the end of March.

“I don’t think, if you want to get until the end of 2020, this will be the last cash or equity injection they need.”

 

The good news in what I see here is that the capital raise should keep them flying through this year's cruise season and perhaps beyond.  Picking up Norway's richest man as an investor can't hurt either, even if it is n ego or patriotic play.

 

Say what you want about the viability long term, but Norwegian offers a great value right now with only a very small modicum of shut down risk. 

 

As I have stated from the outset here, I see no problem buying tickets for travel over the next several months which is furthest out I tend to book travel in any situation - other than awards.

Edited January 30, 2019 by SelectSys

[Globaliser]

 

11 hours ago, SelectSys said:

As I have stated from the outset here, I see no problem buying tickets for travel over the next several months which is furthest out I tend to book travel in any situation - other than awards.

 

Just as long as nobody is misled into thinking that Norwegian is a growing company in rude health which will displace the more established airlines in the long-haul market. There can be no doubt that Norwegian is on the ropes, and still fighting for its very survival. Its extraordinarily rapid expansion into long-haul has been the direct cause of its problems, rendering it particularly vulnerable to the shocks and uncertainties that are commonly suffered by all airlines. And all the signs - including the ruinously low fares currently on offer - are that the company is in short-term cash-generating mode rather than trying to adhere to a model for long-term profitability.

 

Surely you must now recognise that the rosy comments that you offered last year (in another thread on the airline) didn't reflect reality?

 

On 10/30/2018 at 8:56 PM, SelectSys said:

The number I cited is just one sign of many that the company is growing and becoming increasingly relevant in the transatlantic market. ...

 

On 11/1/2018 at 7:12 PM, SelectSys said:

Citing comments by Ryanair's Michael O'Leary suggesting his competitors are on the ropes isn't really all that compelling. ...

 

Again, I view Norwegian's backlog as a potential asset valuable asset and hedge.  That just gives them even more time and the flexibility to gain better terms in the capital markets.  According to this article, Norwegian believes that might even make some money due to the popularity of their aircraft order types. https://uk.reuters.com/article/uk-norwegian-air-fleet/norwegian-air-sees-possible-airbus-aircraft-sales-before-year-end-idUKKCN1LK1QA.  This all seems to suggest a savvy management team with an ability to navigate challenging times.

 

[buggins0402]

15 hours ago, SelectSys said:

 

 

https://www.irishtimes.com/business/transport-and-tourism/what-has-gone-wrong-at-norwegian-air-1.3775965

 

Daniel Roeska, analyst at Bernstein, said the equity raising was almost inevitable.

“There’s no way they could have made it through Q1, and that made this not a choice but a necessity, otherwise the bonds go bust at the end of March.

“I don’t think, if you want to get until the end of 2020, this will be the last cash or equity injection they need.”

 

Picking up Norway's richest man as an investor can't hurt either, even if it is n ego or patriotic play.

 

 

Google the name mentioned (Fredriksen) and one of his companies...Seadrill.

[Globaliser]

1 hour ago, buggins0402 said:

Google the name mentioned (Fredriksen) and one of his companies...Seadrill.

 

Tee hee! Does that mean that his involvement in Norwegian is part of a personal hedging strategy? 😄

 

[SelectSys]

7 hours ago, Globaliser said:

 

 

Just as long as nobody is misled into thinking that Norwegian is a growing company in rude health which will displace the more established airlines in the long-haul market. There can be no doubt that Norwegian is on the ropes, and still fighting for its very survival. Its extraordinarily rapid expansion into long-haul has been the direct cause of its problems, rendering it particularly vulnerable to the shocks and uncertainties that are commonly suffered by all airlines. And all the signs - including the ruinously low fares currently on offer - are that the company is in short-term cash-generating mode rather than trying to adhere to a model for long-term profitability.

 

Surely you must now recognise that the rosy comments that you offered last year (in another thread on the airline) didn't reflect reality?

 

 

 

 

My comments have all along been that Norwegian is currently a viable travel option for passengers.  It was a viable option when I first made these comments and it most likely remains true through the end of 2019.  Nothing rosy in that. 

 

The key point is whether Norwegian survives as currently structured over the long term doesn't really matter for travel plans in 2019.  The article I cited suggested 2019 would likely be OK for them from a financial perspective. 

 

Remember,  the maximum booking period for any airline is about 11 months and I personally don't buy tickets before 2-3 months before my planned travel date.  My only exceptions to this rule are for travel on Volaris (an ultra-discount Mexican carrier that has a base in Tijuana) and for award travel.

 

Finally I still haven't counted them out in the long term.  Thanks to the US shale production, oil prices will continue to be moderated and take away most of that risk.  Norwegian's  name recognition continues to grow in my local market and others.  More and more people that I know are using them personally as an alternative to legacy carriers.   I also understand that Lufthansa might be interested as a way of attacking IAG via Norwegian's Gatwick presence.  Will all this be enough? I don't know.  Am I investing more in Norwegian other than a premium class ticket for spring time travel? Of course not.

 

 

2 hours ago, Globaliser said:

 

Tee hee! Does that mean that his involvement in Norwegian is part of a personal hedging strategy? 😄

 

 

https://en.wikipedia.org/wiki/John_Fredriksen

 

Looking at Fredrisken's wikipedia page suggests he has been on a losing streak with his wealth peaking at over $11 billion in 2013 and now estimated at $7.1 billion by Forbes.  

 

I am sure he is a personal friend of Kors and the investment is more than just about money:

https://finance.yahoo.com/news/norwegian-air-raise-353-million-072706940.html

 

I always remember Bob Crandall's famous statement about never investing in the airline business:

 

"I've never invested in any airline. I'm an airline manager. I don't invest in airlines. And I always said to the employees of American, 'This is not an appropriate investment. It's a great place to work and it's a great company that does important work. But airlines are not an investment."

 

We'll see if Bob is still right!

 

Finally a new story from Forbes:

https://www.forbes.com/sites/heatherfarmbrough/2019/01/31/throttling-back-norwegian-changes-course/#3161d8296ade

 

BTW Globaliser - glad to see you back after a holiday? break.  I always find your posts entertaining which is what this whole site is about.

[cruising cockroach]

You can add Warren Buffet's airlines anonymous quip, and the old adage about becoming a millionaire in the airline business.

 

RIghts offerings are not  popular with investors as it basically forces you to subscribe to the offering otherwise your stake is diluted (best to sell the rights, if there is a market for them).  That's why the share price dropped 5% when it was announced.

[Globaliser]

5 hours ago, cruising cockroach said:

RIghts offerings are not popular with investors as it basically forces you to subscribe to the offering otherwise your stake is diluted (best to sell the rights, if there is a market for them).  That's why the share price dropped 5% when it was announced.

 

Indeed: IAG's original 4.61% stake had already been diluted to 3.93% - see Flight's report. And the immediate market reaction to the announcement of this rights issue was actually a 30% drop (following the 20% drop the day before when IAG said it was selling and would not be making another bid), although the shares recovered to close 14% down.

 

13 hours ago, SelectSys said:

Globaliser - glad to see you back after a holiday? break.

 

Thanks! It's good to be back, although not so good to not be on holiday any more ...

[SelectSys]

Today's story: Brexit to blame for no sale being consummated between IAG and Norwegian last December?

http://www.cityam.com/272583/sale-airline-norwegian-fell-through-because-brexit-chairman

 

For those looking at flights, Norwegian made it much easier to search for low cost premium seats on their web site.  It used to be that only economy seat prices were available in the monthly fare view and now premium seats are visible as well.  Good move by Norwegian to help those budget conscious travelers  looking for premium economy style seats.

 

Check it out: https://www.norwegian.com/us/offers/new-year/