http://www.travelweekly.co.uk/articles/ ... ut-of-cash

Another announcement not for the faint of heart by Ryanair's CEO who claims Norwegian is running out of cash fast and won't survive the winter. He also claims Monarch will have the same fate.

Wishful thinking on his part.

I am curious, do they release any figures on how their TATL routes are performing? LCC carriers in that sector haven't exactly printed money.

They do seem to be stretching themselves pretty thin. They need to make sure they don't suffer from flight crew fatigue.

Well they certainly can't be doing that good TATL. Even TAP Portugal is matching their fares and you get a free bag and meals, and honestly its easier to connect through LIS than OSL or CPH

Mortyman wrote:

Already mentioned in a different thread and just a way for MOL to get free publicity. Nothing to take seriously.

This is the one time I hope MOL is right. There is absolutely no need for the Norwegian operation existing with its shell game staffing and desire to operate at the edge of the safety envelope.

mcdu wrote:

Mortyman wrote:

Already mentioned in a different thread and just a way for MOL to get free publicity. Nothing to take seriously.

This is the one time I hope MOL is right. There is absolutely no need for the Norwegian operation existing with its shell game staffing and desire to operate at the edge of the safety envelope.

There is no indication to suggest that Norwegian is less safe than other Airlines.

The longhaul operation seems to be wiping out the core business' profits but they seem to be staying afloat on an annual basis. That could quickly go pear shaped with a lot more longhaul capacity though.

Why would a profitable airline shut down???

https://www.norwegian.com/globalassets/ ... 017-q2.pdf

Ryan Air went from possibly being a connecting partner a fewon the ago to claiming that Norwegian is going to go belly up. Maybe they hate the fact that Norwegian may grow exponentially in Ireland to the detriment of Ryanair.

DY do make me very suspicious. A seemingly small airline with a fleet of 20 737-300s went to this in less than a decade, it was always going to raise questions, where exactly has the cash come from? Are they paying in loans or ?

mcdu wrote:

Mortyman wrote:

Already mentioned in a different thread and just a way for MOL to get free publicity. Nothing to take seriously.

This is the one time I hope MOL is right. There is absolutely no need for the Norwegian operation existing with its shell game staffing and desire to operate at the edge of the safety envelope.

Evidence of safety violations?
The world is multi cultural as is US.
No one complains about all the tech employees imported here to Seattle, but somehow air crews can't be sourced world wide?

7673mech wrote:

mcdu wrote:

Mortyman wrote:

Already mentioned in a different thread and just a way for MOL to get free publicity. Nothing to take seriously.

This is the one time I hope MOL is right. There is absolutely no need for the Norwegian operation existing with its shell game staffing and desire to operate at the edge of the safety envelope.

Evidence of safety violations?
The world is multi cultural as is US.
No one complains about all the tech employees imported here to Seattle, but somehow air crews can't be sourced world wide?

The training and experience required to be an airline pilot is quite different from country to country. Some countries only require 190 hours of experience in light piston aircraft to fly an Airliner, others like the USA require 1,500 hours, an ATP along with a CTP course and a full PIC type rating.

Norwegian is using some of the lease experienced crews in the world (among the lowest paid as well, less than CRJ crews in China) to push the 737 to its absolute limits over the North Atlantic.

This winter on the NATS is going to be interesting.

Take anything MOL says with a grain of salt just like this, there is a reason RyanAir pushed him away from the PR. He is just seeing that Norwegian is becoming a decent competitor to him, so they are freaking out. Even if the long haul is not sustainable short haul is not going anywhere.

Very broad claims with nothing to back it up, I'm not the biggest Norwegian supporter but until I see some financial docs I'm going to chalk this up to MOL talking some smack.

Norwegian FO requirements for their 737s:

Non-type-rated:

EASA ATPL or CPL License (Frozen ATPL)
EASA Medical Class 1
1500 hrs. Total Time
Minimum 500 hrs jet or turboprop airline experience within the last 12 months
English, language proficiency “ICAO” level 5 or higher
No criminal record or accident
Have the legal right to live and work in the EU

Type rated:

EASA ATPL or CPL License (Frozen ATPL)
EASA Medical Class 1
1500 Hrs. Total Time -Min.500 hrs. On B737-300/800
150 hrs. Within the last 12 months
English language proficiency “ICAO” level 5 or higher
No criminal record or accident
Have the legal right to live and work in the EU

Source: https://www.webcruiter.no/WcMain/Advert ... ource_id=0 from: http://careers.norwegian.com/pilot

Their DUB based FOs require 1,000 hours:

EASA ATPL or CPL License (Frozen ATPL)
EASA Medical Class 1
-Min.1000 hrs. On B737-300/900
150 hrs. Within the last 12 months
English language proficiency “ICAO” level 5 or higher
No criminal record or accident
Have the legal right to live and work in the EU

Source: https://www.webcruiter.no/WcMain/Advert ... ource_id=0 from http://careers.norwegian.com/pilot

mcdu wrote:

Mortyman wrote:

Already mentioned in a different thread and just a way for MOL to get free publicity. Nothing to take seriously.

This is the one time I hope MOL is right. There is absolutely no need for the Norwegian operation existing with its shell game staffing and desire to operate at the edge of the safety envelope.

Is that what your legacy carrier that is matching their seat pitch and buy on board strategy is telling you? Not to mention they probably operate a newer and more modern fleet. And operating flights by subsidiaries with the intention reducing wages.

Keep digging tho.

RL777 wrote:

Very broad claims with nothing to back it up, I'm not the biggest Norwegian supporter but until I see some financial docs I'm going to chalk this up to MOL talking some smack.

The are public. Why don't you go look yourself?

Varsity1 wrote:

RL777 wrote:

Very broad claims with nothing to back it up, I'm not the biggest Norwegian supporter but until I see some financial docs I'm going to chalk this up to MOL talking some smack.

The are public. Why don't you go look yourself?

Often times the public docs don't tell the full story.

7673mech wrote:

mcdu wrote:

Evidence of safety violations?
The world is multi cultural as is US.
No one complains about all the tech employees imported here to Seattle, but somehow air crews can't be sourced world wide?

I think it's clear, however, that some cultures are more safety-conscious and detail-oriented than others. (One quick litmus test is how many drivers in a particular country wear their seat belts; is it something they do routinely, or do they forego seat belts to display "machismo"?) There is also the problem of excessively hierarchical cultures, where lower-level employees may be afraid to criticize superiors, as Malcolm Gladwell's work on KE discussed.

Note that this isn't a comment on Norwegian specifically; I have no particular insights on the airline's practices.

Whilst Michael has predicted airline demise for many carriers in the past, this is a rather specific statement and timeline.

I'm a firm believer that Norwegians growth is too scattered, tactical and without focus. If their all out approach for long haul is tremendously brave, their Argentina plans are foolhardy considering other challenges.

There is a lot of excess capacity in Europe this winter I am hearing. Let's see what happens next. Year round Hartford - Edinburgh??? Seriously?

Samrnpage wrote:

DY do make me very suspicious. A seemingly small airline with a fleet of 20 737-300s went to this in less than a decade, it was always going to raise questions, where exactly has the cash come from? Are they paying in loans or ?

They do own a telephone company and 20% of a bank but still it isn't that much so who knows?

They own a telephone company and a bank and also lease out Airbus 320neo's through their wholly owned leasing company.

They also do alot of sale and leaseback of aircraft.

Furthermore they get loans from banks

I'd be surprised if some of the new DY routes from PVD and SWF to secondary cities in Ireland and other parts of Europe fail. IDK, I could be surprised. A PVD to LON or SWF to LON will do well, I don't understand the business case for routes like PVD to ORK. Two small markets.

There is currently nothing suggesting that MOL is right on this one. Currently!

However I do see some challenges that could potentially be a serious concern to Norwegian. First of all the have a large order for A320Neo that are being delivered in order to lease out to other airlines. Problem being that these are with PW engines and none of the airlines due to receive these want to take them before PW has solved the problems. This means that Norwegian is sitting with a huge payoff every month on these aircraft with no money coming in from leases. I would expect some kind of offset of the risk from Boeing/PW but question is how much and if Norwegian is sitting with losses afterall.

Secondly as pointed out above, Norwegian's business model is highly relying on growth in order to ensure an adquate cash flow. Simply said, if they do not grow, there is no cash to pay the bills. Thus Norwegian is all over the place setting up bases to sustain growth. The second the run out of enough growth, my sense is that they would be in trouble. Following their financials, it seems that much of the so-called profit comes from slowly selling out their shares in the bank which at some point obviously no longer will be an option. Based on the financial reports available, it seems that Norwegian's airline business is nowhere as profitable - if at all - as Ryanair, EasyJet and others.

So my conclusion is that there are dark clouds on the horizon but no short term risk as they for now have assetts to sell if needed.

There are numerous problems facing Norwegian.

1: Their debt ratio is astronomical and has, since 2015, been hovering between 7 and 9. Which, in simple terms, means that for every NOK invested in the company, it owes 7 to 9 NOK. This indicates the company has been aggressive funding growth with debt, and makes earnings highly volatile
2: Their purchase of 100 A320neos, intended for leasing to other airliner, are fitted with GTFs. Potential leasing partners wish to wait until Pratt has fixed the problem, potentially leaving Norwegian with several dozen aircraft it cannot collect leasing payments from, whilst still needing to service the debt to Airbus
3: The only reason Norwegian made a 1BN NOK profit in H1, was the sale of 2BN worth of shares in Norwegian Bank. Without that, they'd face a loss of 1BN.
4: Their operating margin is negative, to the tune of around 3%

In so many words, it's the banks who are keeping Norwegian afloat. It won't take much in the way of financial crisis to turn that around, which will result in the immediate closure of Norwegian. However, even without a crisis, Norwegian is still swimming in high risk financial waters.

There are many clouds on the horizon that could shatter Norwegian quickly, a debt / financial crisis could easily trigger a fallback in demand that would poleaxe their growth and lead to a cashflow crisis for example. On the other hand they may not. Norwegian is clearly taking risks in a business plan that anticipates it can succeed, good luck to them but I too watch and wonder if they will win or lose, and if they lose then that's a lot of cash down the pan.

Super80Fan wrote:

Take anything MOL says with a grain of salt just like this, there is a reason RyanAir pushed him away from the PR. He is just seeing that Norwegian is becoming a decent competitor to him, so they are freaking out. Even if the long haul is not sustainable short haul is not going anywhere.

If longhaul is not sustainable, it'll be a noose around the neck of the shorthaul operation. The airline has 12 787s in service today, but has 24 more coming. Thirty-six widebodies bleeding money can't be swept under the rug unless they have really short leases.

enilria wrote:

Why would a profitable airline shut down???

https://www.norwegian.com/globalassets/ ... 017-q2.pdf

Negative cashflow.

I mentioned it before here, I have never seen an Airline expanding that quick with on exception: Braniff. The rest is history.

downdata wrote:

RL777 wrote:

Varsity1 wrote:

The are public. Why don't you go look yourself?

Often times the public docs don't tell the full story.

Then you are alleging the management of a publicly listed company committing fraud by withholding price sensitive information to the shareholders (read: owners) of the company? that Norwegian Air Shuttle is basically the 2nd Enron?

That's not drawing conclusions at all..

MOL is heading for a libel lawsuit if he isn't a bit more careful in what he blurbs out publicly.

36 787's makes them one of the largest European long haul airlines.

The chasing around of seasonal low hanging fruit can't continue forever.

Michael has called many failures in the past, but this is larger than most.

And still, no one has asked the question why MOL is making these statements now........

Norwegian has their challenges, but predicting they won't survive the coming winter is rather unrealistic. At best this is a PR stunt.......

I am surprised no one is considering a huge business factor such us building brand recognition and customer loyalty which is what IMHO sustains DY investment ( in business, loss=money is gone and you have not a chance for a payback while investment=short term loss higher than earnings necessary phase to build a crtical mass that eventually will lead to profit). They are positioning themselves in a fast growing market segment.

I regularly fly DY from LAX to VCE via LGW, CDG or BCN total cost including a connecting flight with Easyjet or vueling etc.. between 600 and 800 euro.
This is mine and i guess an increasing majority of the other customers perception of what we are all now keen to pay for a CA to Europe route.
No one is asking which airline is now using eco fuels or which one improved its wine list to determine what airline to fly. If I pay 600 euro, my pal wants to spend the same. Easy.

Ryanair proved 20 years ago how elastic this industry is.The lower the price the more people fly, even on routes that might seems not viable. And they make money, much more than most of the majors. Period.

DY is the first airline that is really bringing this model on long hauls. Of course they will loose money for a few years and is now an easy target for detractors, including MOL that never figured out how to expand its network on TATL. Sour grapes...

But hey, don't tell me that in 5 years from now, we will be all happily back to 1300 euro for a TATL flight. BTW, who is behind XL or flylevel tasting the waters?

As for safety concern, as long as they are allowed to fly we need to assume they meet the standard. Otherwise the problem wouldn't be DY but FAA.

Someone83 wrote:

And still, no one has asked the question why MOL is making these statements now........

Norwegian has their challenges, but predicting they won't survive the coming winter is rather unrealistic. At best this is a PR stunt.......

I think that's what it is indeed. Norwegian will still be around next year, no doubt about that.

Unless of course he means Ryanair will buy Norwegian and rebrand it into Ryanair. Then the name Norwegian will cease to exist without the airline going bankrupt.

TC957 wrote:

MOL is heading for a libel lawsuit if he isn't a bit more careful in what he blurbs out publicly.

Well that would be interesting.
If they sue him, he gets lots more free publicity (well, free if he wins, and he still gets the publicity if he loses), and no doubt all of Norwegian's financial details will get brought out on oath in open court, since his defence would be that his statement is true. The court would have to decide if they believe him or not.
Unless he is so far off-beam that Norwegian are making a healthy profit on all their flight operations as well as on their overall trading including asset sales, this would knock confidence in Norwegian and damage their brand and business, quite possibly bringing about the result he's predicting anyway.
If they don't sue him, he can imply this is because they don't dare have their financials examined in court.

Looks like a pretty good each-way bet.

Correct me if I'm wrong but I don't think Michael O'Leary has gone as far as naming specific airlines at risk of going out of business before?

http://www.avherald.com/h?article=4a1ae8c4&opt=0

The smoke and mirrors is astonishing.
G- and LN- B787s both sold under DY and flown as NAX "Nor Shuttle" callsigns on seperate registers under different rules with US flight attendants flown by Norwegian pilots or British based contactors.

Or D8 "Nortrans" with 737s in the EU complimenting DY with more 737s. It's Air Europa all over again IMHO.

[*]

LHRFlyer wrote:

Correct me if I'm wrong but I don't think Michael O'Leary has gone as far as naming specific airlines at risk of going out of business before?

He has. Alitalia and Air Berlin for example.

$400 return airfares from LAX to the UK are not sustainable without a corporate travel base spending $5k for other tickets. The cost reductions on long haul aren't as dramatic as short haul.

Norwegian 12 month share price -37%
Ryanair 12 month share price +43%
EasyJet 12 month share price +11%
IAG 12 month share price +63%

Investors aren't impressed.

LHRFlyer wrote:

Correct me if I'm wrong but I don't think Michael O'Leary has gone as far as naming specific airlines at risk of going out of business before?

It is at least the third time he claims "Norwegian will be gone soon". And he probably claims SAS will be gone a few times each year

Norwegians operational performance was very poor at H1/2017 vs H1/2016, and only one offs made numbers look acceptable. Norwegians balance sheet is very weak and companys shareholders equity is only 3500 million NOK and without one offs from Norwegian Finance at Q2/2017 it would be now about 1500 million. During H1/2017 companys "clean ebit" was about -2000 million NOK, including extra depreciation and amortization of 11 owned B737-800. Norwegian need extra capital from owners, without it they can only dream to get new finance for incoming planes.

Wasn't Monarch almost bankrupt last year?

It seems a great fit for U2: Airbus + LTN.

With the world economy (esp. the UK) cooling down, consolidations will come.

Pe@rson wrote:

Norwegian FO requirements for their 737s:

Non-type-rated:

EASA ATPL or CPL License (Frozen ATPL)
EASA Medical Class 1
1500 hrs. Total Time
Minimum 500 hrs jet or turboprop airline experience within the last 12 months
English, language proficiency “ICAO” level 5 or higher
No criminal record or accident
Have the legal right to live and work in the EU

Type rated:

EASA ATPL or CPL License (Frozen ATPL)
EASA Medical Class 1
1500 Hrs. Total Time -Min.500 hrs. On B737-300/800
150 hrs. Within the last 12 months
English language proficiency “ICAO” level 5 or higher
No criminal record or accident
Have the legal right to live and work in the EU

Source: https://www.webcruiter.no/WcMain/Advert ... ource_id=0 from: http://careers.norwegian.com/pilot

Their DUB based FOs require 1,000 hours:

EASA ATPL or CPL License (Frozen ATPL)
EASA Medical Class 1
-Min.1000 hrs. On B737-300/900
150 hrs. Within the last 12 months
English language proficiency “ICAO” level 5 or higher
No criminal record or accident
Have the legal right to live and work in the EU

Source: https://www.webcruiter.no/WcMain/Advert ... ource_id=0 from http://careers.norwegian.com/pilot

Can we have the same for the B787 with salaries.

A380MSN004 wrote:

Pe@rson wrote:

Norwegian FO requirements for their 737s:

Non-type-rated:

EASA ATPL or CPL License (Frozen ATPL)
EASA Medical Class 1
1500 hrs. Total Time
Minimum 500 hrs jet or turboprop airline experience within the last 12 months
English, language proficiency “ICAO” level 5 or higher
No criminal record or accident
Have the legal right to live and work in the EU

Type rated:

EASA ATPL or CPL License (Frozen ATPL)
EASA Medical Class 1
1500 Hrs. Total Time -Min.500 hrs. On B737-300/800
150 hrs. Within the last 12 months
English language proficiency “ICAO” level 5 or higher
No criminal record or accident
Have the legal right to live and work in the EU

Source: https://www.webcruiter.no/WcMain/Advert ... ource_id=0 from: http://careers.norwegian.com/pilot

Their DUB based FOs require 1,000 hours:

EASA ATPL or CPL License (Frozen ATPL)
EASA Medical Class 1
-Min.1000 hrs. On B737-300/900
150 hrs. Within the last 12 months
English language proficiency “ICAO” level 5 or higher
No criminal record or accident
Have the legal right to live and work in the EU

Source: https://www.webcruiter.no/WcMain/Advert ... ource_id=0 from http://careers.norwegian.com/pilot

Can we have the same for the B787 with salaries.

The 787 requirements are available via the 'from' links above. For salaries, contact Norwegian.

SurlyBonds wrote:

7673mech wrote:

mcdu wrote:

Evidence of safety violations?
The world is multi cultural as is US.
No one complains about all the tech employees imported here to Seattle, but somehow air crews can't be sourced world wide?

I think it's clear, however, that some cultures are more safety-conscious and detail-oriented than others. (One quick litmus test is how many drivers in a particular country wear their seat belts; is it something they do routinely, or do they forego seat belts to display "machismo"?) There is also the problem of excessively hierarchical cultures, where lower-level employees may be afraid to criticize superiors, as Malcolm Gladwell's work on KE discussed.

Note that this isn't a comment on Norwegian specifically; I have no particular insights on the airline's practices.

Poor choice of analogy on your part then! Norway (along with the rest of Scandanavia) is *extremely* road-safety conscious!

Table 18: Protective system use in Norway versus the average in EU
Protective systems.........................................................EU average
Daytime seat-belt wearing in cars and vans (2015):......(2015)
- 95% front......................................................................89,7% front
- no information on % driver............................................not available
- no information on % front passenger............................not available
- 87-88% rear (estimation 2013).....................................69,5% rear
- 49% child restraint use.................................................not available

https://ec.europa.eu/transport/road_saf ... way_en.pdf

TC957 wrote:

MOL is heading for a libel lawsuit if he isn't a bit more careful in what he blurbs out publicly.

Yes, he certainly could be, especially given that publically undermining a competitor would likely fall foul of regulations. It's also a strange move for someone whose airline intends to enter into a connecting partnership with the target of his vitriol. That does strike me as odd.

PanHAM wrote:

I mentioned it before here, I have never seen an Airline expanding that quick with on exception: Braniff. The rest is history.

How about Emirates? Their rate of growth this century has been breathtaking and at a larger scale than Norwegian. QR & EY have been no slouches either, and FR themselves have seen long periods of rapid growth. And then there's the Far East...

How long did it take emirates to get to 40 wide body?

Norwegian doesn't have the bank of Qatar or Abu Dhabi as a loan guarantor either.