Airlines in a Crisis

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 cou

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

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

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 one as the Norwegian party Senterpartiet (Centrist) suggested had given the airline Norwegian 20 billion nkr, the future for the company would have been less rosy than one would think. As opposite to the future of the many who would have filled their pockets. Management would have rewarded themselves well with some exuberant, for Norway to be, bonuses for saving the company. As Gustafson of SAS did after persuading staff to so deep cuts in their terms and renumerations some years ago. The lease- and bondholders would see to that all past and future rents and payments would be paid well in advance, as the big shareholders they are. All the unions would then come in and fight hard to see to that their members got their share of the cake and more, plus lay paid to any demands for performance improvements. Nobody would fight for neither future profits or any streamlining of the company into something that would be anything else than a future drain and per passeenger loss busines. None o

Even i a downturn, or a crisis, airlines need to keep looking and preparing for opportunities. An old saying is saving until bust, meaning keeps on saving and shrinking until there is nothing left. In these time airlines like Norwegian should instead of going into complete hibernation mode be constantly looking for opportunities. If pairs of countries open up for travelers from 14 days in the future they should schedule flights between these pairs today and sell them from tomorrow. Specially since all new(ish) routes need to be advertised and sold beforehand to build up a certain load factor even on opening day. Airlines should start by looking at all historical pairings they flew. Even if you home primary country is still restrictive don't mean that other scandinavian, european or world contries are. One should also be looking at expanding and capturing new marketshares from airlines that are more slow movers. Every crisis bring opportunities for they with the wherewithal and