Airlines in a Crisis

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

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

Most startups place their HQ at or near their main airport to keep a close eye on operations. It can also give combined advantages. Sample the DUB based flight crews used to meet up at the Ryanair hq and transport in a van directly to the planes, needing no extra office space within the terminal. Ryanair management used to walk or drive up to the airport complex frequently and many of their top management where known to be very hands on. Sample during the baggage handler strike of 98 they where all handling suitcases. In fact every male employee in the White House (nick name for then Ryanair HQ) was. And most of hq staff had airport airside passes hither and tither. Even after the move to larger premises the DUB airport main terminal is less than a 5 minute drive away. Airlines like Norwegian on the other hand seem to have missed that the Oslo airport have moved from Fornebu to Gardermoen at the opposit end of the city. Not only that but they are paying rent at what is rumoured to g

The one part of Norwegian's top leaders that seems to be doing ok even in Corona times is Finance represented by Geir Karlsen. But then he was the CEO for a few months. On the other hand this concurrent story of delayed aand abandoned presentations of the current staate of affairs is wearing a litle on the mantle gained during the financial restructuring of the airline. Operations is not doing well in neither running an airline consiting of a fleet of 7 planes. Nor can they organize the and neither do they have a plan for how to expand and test the waters for other possiblilities. With that we can put a minus on the PR and press handling department because the way they have defended this shambles reminds us of the days of Comical Ali. Engineering also seems pretty distant if they think having only 7 planes in action instead of rotating the whole fleet to keep it current and avoid massive maintenance costs at the end. And what about that other Dreamliner fleet where nothing is m

Not issuing refunds means airlines have been living on unearned revenue and were for all sense and purpose trading while technically bust even before this crisis. The longer they are allowed to go without paying back what they haven't earned, the longer they are in reality now trading on their passengers money as well as their other creditors. All this money should technically have been in a similar to escrow account until either the airline earned it or they refunded it. These airlines have been paying out dividends and share buybacks with money that wasn't theirs. I know large amount of cash sitting in bank accounts are very tempting but when one do a lot of advanced sales is it part of being an honest business. This goes also for they who don't normally issue refunds. The unexpected will always arrive. Hoping it won't arrive during your time at the helm is not an example of good leadership. Prudent is not a negative word in finances.