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...

Latest they accounted as income nearly 500 million nkr worth of unused and expired bonus points they had booked as expenses when customers earned them before the pandemic and before old Norwegian went bust. This comes in addition to the couple of billion nkr of future discounts Boeing gave them as repatriation for earlier problems old Norwegian had with the Boeing planes. New Norwegian also booked this in as income for 2022. In quarter 4 with twice as much income as the year before they managed to only loose about the same as the year before. Is that good, bad, nah or neither. It does point to that they still have problem with growing in a profitable way. Then we come to the the 7,8 billion nkr they say they have in cash. How much of this is unearned payments from future customers. The current CEO Karlsen used to count that as cash when he was just chief of finance in old Norwegian. That went bad in 2020 when they couldn't fly those customers, they all wanted refunds and no new mon...

Norwegian is stacking up with even more planes for the summer months taking on Flyr's 6 737-ExMax that will probably be parked again for next winter.  Last September Norwegian flew 1.9 million passengers with their planes. In January they flew 1.1 million with the same fleet and with a fill of nearly the ssame as in September. That means they winter parked about 40% of their fleet and/or possibly some of the left over capacity was used for flying longer routes. And now they are taking on even more planes that most likely also will be parked when winter again arrives. The litle drip Norwegian get of passengers from the demise of Flyr will be almost unnoticable. Not either helped by that 3/4 of the Flyr fleet was parked anyway. 186 seat planes are to large for high frequency trafic in and around Norway for 80% of the year. And if you have less than 100 planes you should not park more than max 10% of them during low-season.. Lets hope that Norwegian drop some of their older 737-800 wh...

Not only do the norwegian state demand 400 million in penalties for lack of CO2 quotas handed over for 2020. They are also demanding the handing over of an estimated 300 million worth of CO2 quotas. That is a nkr 700 million demand against only 15 million set off in the accounts of  the airline Norwegian to cover it. With such a large disputed demand against the airline, disputed because the airline itself thought this demand disappeared in the financial reconstruction of the airline 2 years ago, it is strange based on a very thin result they would commit to so much expansion. And even stranger that leasing companies would agree to such an increased risk based on the history of the airline. Not only is it a substantial financial risk but it will also tie up mangement in court and indecision at a time when they should be operationally rebuilding the airline. That is not the time to plan for a rapid 50% expansion which is bound not to only take massive resources. That many new routes...

The CEO of Norwegian announced that they will take on an extra 30 planes closing in on 100 planes in the coming year. In addition to the planes they commited to after the restitution deal with Boeing, which one could have hoped would be used for aircraft replacements rather than even more expansion. The company is taking high risks based on only 1 summer season and 1 autumn season of positive results. 2 seasons where their Scandinavian competitors where in trouble and therefore unable to compete much. SAS with their strikes and Chaper 11 and Flyr running out of cash to such an extent that their winter program runs only 4 out of the 12 planes they are paying leases for.  That is a weak base for saying the market is so good that one should increase ones fleet with 50% in the short term. Growth costs and they'll be trying to find extra markets at a time when both SAS and Flyr could be doing the same.That do not bode well for a continued positive result for Norwegian. Question is can t...

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 ...

Gei Karlsen, the CEO of Norwegian, learnt his airline craft during a wild expansion and is now looking to recreate that. Just before he announce a 17 mill euro profit for the summer season 2021, he announce 17 more planes for the fleet. At least he didn't pay extra to get the ExMax, for now but did say that that was an option for the future. He is also going to park a large part of the fleet during the winter months and is negotiating hard with the unions for some solution on what to do with the flying crews during that period. Will it be a long vacation or will it be halve the hours for everybody. The need to keep pilots current may play in here. But he didn't stop there. They day after the results he is hinting to that he want to expand further and think Norwegian can handle a fleet of 80 aircraft with the administrative staff they already have on board today. The parking will be helped financiall by some power by the hour deals for the winter season but maintenance will stil...

Or rather can he survive without giving up his 11 million bonus. Or should the question be, will he, since it could take him 2 years to make it back. Question is how much does he want to be CEO or is it just the money that drives him. There is surely another company he could rescue from the brink through financial wizardry. Schram, the former CEO of Norwegian lasted 18 months. More because ofthe support of a weak board with litle shareholder backing but at the same time without any shareholder unity or even a strong such. And a chairman without much airline background that maybe of that reason picked a CEO without any at all. As soon as kind of new strong shareholders came in and the chairman that picked him for the CEO role was out, so was he. But is Karlsen what Norwegian needs now. When he came in as CFO he either had any airline background but was a part of the Fredriksen sphere. Fredriksen is again a large shareholder in Norwegian but the time for finanzial wizardry might be vanin...

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 ...

All airlines should should take charge of their own destiny now and do their utmost to maximise income now instead of hibernating the pandemic and hope for better times. Arilines have massive set costs in the form of either massive leases or fleets of owned assets that rots fast without regular maintence and use. Always remember airline seats spoils as fast as soft fruit. Todays potential income can't be earned in tomorrow instead. And if you can't fly people there is plenty of other stuff that needs transporting.  A christmas present sent from Irleand to Norway in mid November arrived yesterday the 24'th of February. That is over 3 months in the post. Another one sent the same day from Ireland to Greece came back today after the airline contunously refusing to freight it. That is a complete let down by most airlines of their previous commitments to bring post around contributing to a worldwide organized and fast postal service. Every time I bing Cargo up in diverse forums ...

We are now a year into the pandemic and its time to better organise the loading of freight into the cabins of passenger aircraft. There needs to be developed a container that can get in through the passenger door, or the emergency exit door opposite. Preferably in a bit less than 1/2 cabin width size, leaving space for passage down the middle. After all every airport have the equipment to load such containers, daily in use to load the wheeled carts that contains food, drink and duty free to be consumed and sold onboard. In practice they could be seen as small containers. One could also do with a track system that would be fastened to the mounting points normally used for seats, to easily move around and lock in place the cargo.  Maximum weight would be 5 passengers at 70kg each plus the weight of the seat lets say 50 kg wich give a maximum weight for each container of 400 kg. for a 3+4+3 seat width plane and 2 container wide. sample a 787 or A330. That should leave at least 350 kg ...

With Norwegian gone from the Scandinavian long haul market, including its transatlantic connectivity through Gatwick, there should be growth opportunities for SAS. One will assume long haul will come strongly back if not end of 2021 so at least in 2022. And at least in the northern hemisphere markets will be full back by summer 2022. This gives opportunities for they who early prepares after the permanent exit of some airlines from long haul during the pandemic. SAS should now prepare for what it will do when this market returns. Now is when cheap(ish) deals for long haul aircraft can be made for they with a plan, and guts. Insted of going for a strategy of highest prices retrievable with the short term lowering of capacity, one should seriously consider if more profit can't be obtained by increasing ones own capcity, therebye lowering prices slightly. For a payback in the form of increase in demand. In addition to avoid letting potential passengers leak to competitors stuffed with...

Virgin Atlantic got going with it already in March 2020 managing 4000 cargo only flights in the year.. And with the panemic continuing into 2021 they are regularising the service offering 33 flights per week. Why haven't Norwegian managed do even 1, instead parking the whole fleet of 787 's resulting in its complete demise. Did they fall foul of internal resources with an all is difficult attitude. That didn't see how the new cargo market differentiated from that of previous.  Why haven't SAS managed to take advantage of the booming cargo only flight market due to the lack of passenger flights to send cargo with. They do have a sizeable cargo division with a precense in many locations and all the wide body containerised capcity that was needed. Even planes that was being retired/scrapped where seats could have been stripped for extra capacity and nobody would care about some extra cosmetic damage. All they lacked was vision, fantasy and a can-do mentality. Both airlines...

Accepting the plan for the future Norwegian maangment announced today 14/1-2021 is something creditors and leaseowners should think more than twice about. The key is in the details and the plan for 50 planes now but a rapid expansion to 70 already in 2022 is akin to a landgrab by management and a an asembled consortium of larger new shareholders. Meaning they under-size now before the vaccines has nullified the pandemic and then expand rapidly with significantly better lease deals as the markets recover. Another key sign is that only a very small amount of new shares are available to existing shareholders. If it awas all above board wouldn't they be given a fare share. The difference now is that its not up for another shareowner vote so in reality its a free for all for managment and whoever they are mixed in with. Next year, if profitable, and I can't see why covering maybe a 80% market with a 50% fleetsize, its time for big bonuses to top management and a rapid rice for the s...

It's a Norwegian trait that if you say you are going to do something that is the plan until you hear something different.  In sample Ireland a plan has to be reconfirmed and preferably every day until it happens or else everone assumes its cancelled. Back last spring Norwegian said they where hibernating their longhaul until March 2021. One would think that after such a long hibernation an official declaration would be made if this was still the plan 9 months later. But not Norwegian. They have started selling longhaul seats both out of London Gatwick and Paris and probably other permutations if you want to check:  Norwegian destinations from Gatwick   However there is no rumour about them having started retraining their 787 pilots at neither London Gatwick nor in Paris. They proably have kept some 787 hopefully training pilots current to do ferry flights. Some of the Dreamliners have gone to Shannon and back to leasers to go to new customers. But its not a good sign if s...

There is the overambitious expansion and desire to play in the big league with big orders for brand new planes, of several different types no less. But others have gone big and succeeded, but maybe not so much in the airline industry that is plagued with protection from your creditors and financial rescues. The transition from the enthusiastic well liked entrepenour to the next CEO is important for most companies. It usually happens because the founder have got out of his depth, or simple become to old. In Norwegian Kjos flew a bit too close to the sun . There is also that the airline was built on a belief of continually better market conditions and no savings for a rainy day. So did they choose an individual with a lot of airline experience and a lot of usefull contacts that could come in with own ideas and change things around from day 1. Not at all. They chose somebody that first spent 3 months learning before he took the reins. And then speculated for another 3 months on how he cou...

The rescue plan leeks seem to be pretty consistant on that the future of Norwegian will contain shorthaul within  and to/from the Scandinavian market. Question is what about 787 LH. Norwegian seem to historically have used a small profit margin created from its original and core business of the domestic and Scandinavian plus sun hollidays for same market, to subsidise an expansion into transcontinental including transatlantic flights. Without the latter beeing documented as anything else than a loss making business. Resulting in the whole company using a lot of red ink for its accounts. There is a possibility for LH low fares business but one have to have the discipline for low cost operations that must go with it. The 787 proved a problematic choice for the company and maybe now one of the never narrowbody planes with la larger range would be a better option. Partially because the Scandinavian to sample US market is very small even from the capital cities, and most routes gain by ...

Norwegian have today presented a new plan for how they dream the company can be rescued.  Lets talk about the positives first. They are planning to do a reverse share split by a factor of 100 from over 3 billion to round 30 million. There have been comments that sees shares only worth some norwegian øre (100'th of a Norwegian Krone (nkr)) as signs of a company in distress and leading to a share price easily manipulated = penny stocks. For any hope for the future they need to be able to have shares with an exchange worth of whole nkr's. Theis leads us to the question wether there are enough small investors in Norway, and maybe other Scandinavian countries with enough cash to waste to swallow up a new issue of 4 billion nkr of even more new shares whose value could be lost nearly before they are isued. After all they say straight out that they hope the shareholders will continue to support them for even further future recapitalizations. If there are that many willing to throw eve...

Soon the Boeing 737 ExMax will be approved for transporting passengers also in Europe, the plane will have got the necessary updates and the airlines will trained their crew. Then comes the question on how to get it back in the air without upsetting to many customers.  Airlines like Ryanair that have high frequency routes like Dublin-London or Norwegian's Oslo-Trondheim can put 1 into a roster of 3-4 aircrafts on the routes and offer anyone nervous to change to a later departure free of charge. Potentially put off by a long queue and without knowing exactly when that departure is some will change their mind. Others will after changing not think its worth the hassle the next time, or the next after that. To minimise agro this should be offered by a single customer service agent at every Max departure so the customer see its available there and then and don't have to return to sample departure hall and do security again. The added bonus is that when people change flight by person...

 And with taking on I don't mean competing against them but rather swallowing the juicy parts of it. What do Norwegian have that could be attractive to Ryanair:  It has a loyal following in Norway and parts of Scandinavia . A following that want Low Fares but loats Ryanair. It has a well established net of routes within Scandinavia and domestically within Norway that Ryanair would have a problem copying without diluting its own union stance and cost base. It is positioned at the more premium part of Low Fares with a less agitating policy against customers. This could be expanded upon incorporating some more Low Cost basics for profitability. And without messing up the Ryanair image anc cost base like its own Always Getting Better efforts have done to the bottom line lately. It has a Transatlantic/Transcontinental fleet and a worked up net of routes and we all know how O'Leary have long wanted to somehow do Transatlantic Low Cost. A part that could be split out from Norwegian S...