Airlines in a Crisis

In Norway we have several examples on this. Norwegian was/is hq'd at Fornebyu that haven't been an airport for over 20 years. Flyr was hq'd in the overexpensive Oslo city center. And Norse hq'd in Arendal, a town without an airport and even further from Oslo airport than Oslo itself. The train connections from hq to airport might be frequent and only take halve to an hour but its not the same as a 10 minute walk to oversee where your real operations happens. The place where your customers experience your service and most of your critical costs are spent. But also the costs most easily squeezable. Closenes let you reduce the costs before they occur rather than just financially overseeing the bills in accounts after they have happened. That makes a difference when it comes to reducing costs through strict control.  And low costs are the most important for being able to underprise your competitors. Something all the beforementioned airlines tried and tries because they see...

Of course not. Flyr could have been saved at many stages trough its short life. By getting in top management that new what to concentrate on and what was not important during startup. And who had experience in which functions are needed and how many are needed in each function at each stage of fleet expansion. The main blame lies with the Chairman who got in the wrong people to lead the company. People without any experience from the startup and/or growth of a profitable airline. Even though they are few and far between in Norway. First a spender that let themselves be blended by the role, went for to many fripperies and lured into to rapid sudden expansion and associated expences when there where at that stage not enough passengers to pay for it.  Then replacing that ceo with a person that had been there and had influence on the process the whole time and think that would make a difference. A person that stuck to the plan that hadn't worked so far, just with a few added token savi...

The cleanup after Flyr has brought to the front a number of ways the airline wasted its investors money. A number of staff had fancifull titles whcih point to an overflow of staff that wasn't completely necessary for a small startup company. Lots of VP's under the Chief level. Maybe some of the urge to comit to more planes was due to an overhiring of well titled staff that needed someone to manage which could only be justified by becoming a larger airline.  Where the ex-Norwegian managmenet building the backoffice of the new airline Flyr based on what the much larger airline Norwegian had. An airline that also went under unable to manage its debt or comitments, before being resurrected. A plane needs sa certain amount of pilots and cabinstaff to fly a certain schedule. It is the backoffice saving are to be had. Just as many staff in the back as flying staff seems excessive. Specially when one knows large parts of its ground handling and maintenance were outsourced A lot of effo...

The extra cash burn to prepare for the leases did indeed end Flyr. Instead of doing what they could to make money immediately they put theit hope in a deal that was to bring income in a summer they never reached. The 250 million nkr they got in in new finances last autumn should have been seen as a possible last gasp for the company. Specially since its founder and chairman Braathen said that that was the last 10 million he would bring to the table. That was a signal the company should have known would make future planned founding rounds difficult. Instead of seeing it as a last chance and doing something radically different they continued as before with an internal promotion to CEO that gave none whatsoever rise in share price. A bit of saving where negated by extra spending months before any potential wet lease income would appear in the accounts. A desperate ploy to sell futures to the market that did not appease shareolders for the shareprice to go above the crucial 1 norwegian øre...

Flyr has had extra costs over the winter to prepare for possible wet leases of halve it's fleet of 12 aircrafts. They where desperate for these as they tought the news of them would bring the share price over 1 norwegian øre (0.001 Euro) so they could get some more financing according to a desperate plan. However the deal inclided paying for preparation cost up front. Money Flyr didn't have the finances for. They should relly not have gone for any wet leasing that didn't include at least a 10% payment up front and the rest of the money for each flight paid at least 1 week before it took place. After all the charter companies customers pays it all up front. Another tell tale sign of poor management is that none of the 12 planes actually have any flights scheduled for tomorrow Tuesday 31/1-2023. So we are now awaiting whether they will still be in the skies on Wednesday. A poor sign is also that on the Oslo - Trondheim route, that has a total air-passenger trafic comparable w...

Instead of building a solid own brand they are going for many different quick fixes.  First it was increassing its distribution by adding third parties ticket sellers to their sales channel. The latest is an increased concentration on wet leases to charter companies.  Flyr only have 12 planes and this reduces their ability to get own upfront sales and add additional sales like car hire and accomodation.  It's all about getting the money in early. With own sales you can get the money in months sin advance. With third parties and wet leases you most likely get the payment after the fact. Meaning you will have upfront costs instead of upfront payments and Flyr is not in a financial position to take on that. While wet leases to charter companies can seem like a predictable income stream, they also comes with potential for great risks. There have been a number of charter companies getting into financial trouble in the later years. And quite a few have gone under leaving a lot ...

They should have made 8 trips a day and 30 days times 8 186 seat planes at average 80% fill gives 286k passengers or 36k per plane. Even just 4 planes flying 4 legs a day gives 71k passengers. 52k passengers gives about 12 legs per day for the whole fleet. What Flyr have manged is moving barely enough passengeers to justify a 2 shift working day. Remember the longest they are flying should be covered for even a return trip in 1 pilot shift with time to spare. Yield per passenger kilometer for Flyr might be up but now it is for the most parts relatively long distances like Norway to the Med. And that means they missed out on most of the domesting christmas traffic in Norway and also within Scandinavia. We also can calculate that even though yield is up per passenger km, it is only with 15-20%. And that from a state where Flyr was only taking in halve as much as they where using. We also now know that most domestic flights in the entire norwegian domestic markets where sold out the 2 wee...

How can an airline that claims to be international decide not to sell seats to parts of their market based on the nationality of the potential customer phone number. Flyr have made it extra difficult for people to register for their app or on their website. I am sick of telling them which pictures have dolphins or confirming I'm a human just to come to a page where they want to send a code to my phone number. And even though Ireland shows up in the list no code ever arrives. One wonders how many other countries in Europe or indeed the world this is the case for. Flyr is very friendly with Vipps, a Norwegian payment service, and Vipps is an upshot of the norwegian bank DNB. I have been in contact with DNB and they confirm they don't send such messages to Ireland and one is therefore inclined to think Flyr uses their service for this.  One thing is to list countries where you don't actually provide the service. Something else entirely is that the only alternative is to regist...

Pandemic started norwegian airline Flyr had a quick change of CEO yesterday as original CEO Tonje Wikstrøm Frislid surprisingly quit and was replaced by another ex-Norwegian Brede Huser previously CFO of Flyr. Flyr has had a torrid time financially this autumn after commiting to more planes and brand new ones to that, last January. Planes they haven't been able to fill or wetlease out this winter, and no summer profit to boot. They are down to only flying 6 of the 12 planes in the fleet, laying off a number of pilots and other staff.. A failed recapitalisation replaced by a speculative investor lead one, with billions of shares at share price 0.01 nkr, didn't help. Share price has fallen to a fraction of even that leaving litle hope of success for future planned capital repairs. Management mostly consisting of ex-Norwegian leaders laid of during the pandemic and reconstruction of that airline. Speculation is they won't be able to handle a nkr 100 million CO2 tax due to the ...

SAS should as soon as Omicron rumours started to spread been back to seeing how Cargo could save the winter.  But as usual it is all about passengers in their presentations. In the last reported quarter their cargo income rose more than their charter income went down. That is significant. But since they are not highlighting it in their presentations one would assume its not either on top of the mind of their top brass.  Cargo operations is where SAS has a competitive advantage over their Scandinavian, mainly Norwegian, competitors like Norwegian and Flyr. Either of those have any.  Question is did SAS hire a CEO with the right background to get them through a pandemic that could be severe for as long as the post war econmics. Specially combined with litle abaiting environmental pressure, where any suggestion of governmental supports for the sector immediately meat strong opposition from parties that call themselves green. Or did they go for the avaiable CEO that was most ...

Norse Atlantic Airways is the new transatalantic then true intercontinental airline where the founder of Norwegian Kjos and his partner Kise are involved.  It might be targeting Low Fares and according to its founder they have learnt the lesson that that have to be combined with Low Cost. Maybe and maybe not. They are going for ex Norwegian 787's wih the same seat configuration. That might save on leasing cost, what they are planning of fundraising do not equal to outright plane purchases, but it is 2 cabin classes again and that is not true Low Cost.  Add in the freight, which have proven crucial and resilient but is still a distraction but you migth as well since 30min turnarounds are out the window, and a new Low Cost concept needs to be invented. With usual pain for first movers, maybe a bit less for what will now be a second mover. Norway might be where this airline will be founded and somewhat hq'd but if they have learnt their lessons from the adventures with Norwegian ...