Airlines in a Crisis

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

The main Low Fares encumbents ( = they with the Lowest Costs) in the European landscape are taking wildly different approaches to the first full winter of the CoVid19 pandemic.  Wizz is seeking opportunities where they appear and quickly moving into markets where the (semi) incumbent is in trouble. Sample in Norway where they have announced and quickly started their first domestic routes and announced even more to come when Norwegian went to the courts for protection. By the time any other seeking opportunities come looking post vaccine, Wizz will already have operated on the routes for more than 6 months. Ryanair on the other hand has spent the CoVid19 crying about different governments actions, and their response to pandemic changes is to kick the toys out of the pram and abandon routes and airports. Exactly as they used to do when an airport tried to introduce new charges. You haven't seen them really anounce an entry into any really new market, just adjusting frequencies in tho

  If the Wizz air chief is right in that CoVid19 will lead to a permanently reduced airline passenger market combined with more direct flights and much less hub and spoke, then the LoCo's are going for the wrong aircraft with their demand for more and more seats per aircraft. More direct routes and less demand should mean a market of planes with less seats each to avoid the booking confusion of trice weekly flights instead of daily. After all sample Ryanair made their lo-co start with 130 seat planes, then 186 seat and soon they will be up to 200 and then 220 with an extra cabincrew. Larger planes and still just 2 pilots in them might lower costs per seat but if they have to keep fire-selling the seats could it decrease profit per planeload.

Looks like Wizz is fighting Ryanair over the use of the name Buzz for its Ryanair Sun operations claiming Buzz is to similar to Wizz. I doubt this similarity is conincidental but it is really Wzz that is on the backfoot. 2003 was a busy year in the Low Fares business. In the beginning months of that year Ryanair purchased a 4 year old airline called Buzz from its previous owner KLM. In the autumn of that same year Wizz was incorporated. So an ailine with the name Buzz existed long before Wizz started. Doubt that Wizz's name choice was that coincidental and there is proably merit in that they think the names are alike. They probably came up with Wizz exactly because it sounded like the already established airline Buzz. That Ryanair after continuing flying under the name Buzz before they concentrated on the name Ryanair and later rested the name for a few years is not that relevant. They always sat on the rights for the opportune moment. It is simply a case of what goes around

Never mind what Ryanair states in their annual presentations about the cost and price differences of the market. These umbers are usually adjusted for a purpose and often do not reflect all of neither revenue streams nor costs. A quick calculation of the 2019 numbers gives: (All numbers in Euros and per passenger) Company  -  Costs  -  Average Ticket Price Ryanair:  -  51.5  -  59.4 Wizz:  -  60.5  -  69.0 easyJet:  -  70.0  -  74.0 Norwegian:  118.5  -  116.0 So even though Ryanair's comparisons have the right order they do understate what is their average price for a ticket. And the difference between that and Wizz's cost are not that much. If the last grew to what Stelios says is the ideal size of 200 planes they could very possibly fight very competitively with Ryanair on a cost basis, as long as they stick with the concept. Ryanair is upping there's with constantly adding additional paid for service that increases the true cost of flying with them Norwegi

The Ryanair costbase have in the later years been steadily creeping upwards as they have added frills and abandoned smaller airports for more mainstream ones only sometimes closer to city centers. Yes they have charged extra for the extras but it have let an airline like Wizz creep up under its radar and end up with a lower costs per passenger, according to Ryanair's own presentations. Is a perceived segment of potential customers, the business traveller, worth going after so much you'd give up the single most important competitive advantage you have had within the industry for years. The one that let you gain market share and dominance by your most important marketing tool, lower prices than everybody else. Wizz abandoned Frankfurt when the initial discounted deal on airport fees ran out. Ryanair have moved their flights from nearby Hahn and have stayed put even when costs went up. Maybe the need for deeply discounted prices to entice people back into the air will require