CNN report on Norwegian Air

I'll second Frank II's "doesn't look good." This is the time of year Norwegian should be massively padding its year-long numbers, not trying to cut deals on debt. Here is the press release from Norwegian that serves as the basis for the CNN story, for those who want to read it for themselves.

I meant to put up an analysis of Norwegian's Q2 earnings conference call and earnings report, but I got caught up planning a trip, which I am on now (Slovenia is great, by the way). A little late, but here are some interesting Q2 bits...

1. Available cash was down Q2 2019 (1.7 billion kroner) relative to Q2 2018 (3.7 billion kroner) despite a 3 billion kroner cash infusion in January. That's a lot of cash burn. The good news at that time was that receivables were up quite a bit (12.7 million vs 7.9 million), but some of that was related to credit card hold backs -- funds the credit card companies do not make available immediately (as is typical) but instead make available after the flight is completed (in case the airline goes belly up and the credit card companies have to refund money for services not received [i.e., flights not taken]). It seems like all those receivables should have begun hitting the balance sheet after all those summer flights were completed, making Norwegian feel warm and fuzzy, not feel like it needs to restructure its debt. It makes one wonder if the credit card companies are increasing holdbacks.

2. It was interesting that Norwegian reported that for the first time, it got a higher percentage of its revenue from the US than from Norway in a quarter where its primary competition in Norway (SAS) was riddled with labor problems, including a pilot's strike, which should have allowed Norwegian to sell a lot of last-minute, higher-priced airfares. Senior VP Lars Sande has commented elsewhere that Norway has historically been a "cash cow" but bookings have been down; perhaps Flygskam is a force with which to be reckoned.

3. Norwegian executives identified several silver bullets for dealing with its upcoming bond payment on the earnings conference call. If they get bondholders to get on board with the proposal in the link above, they will all be used, except for the promised announcement of some sort of mysterious joint venture that is in the works (mentioned again in today's press release). The July 14th comment on the joint venture:

...first of all, on joint venture, that is progressing. We are still
having a dialogue with the same partner. We have progressed and we do
expect to have clarity on this within weeks, not within months, but
within weeks. There's no guarantee that this will materialize, but we
are optimistic. I think that's what we can say.

Ok..............

Capt Smith: Mr Lightoller, move the deck chairs over there

First Officer Lightoller: Aye aye Capt., ......

Pay by credit card.
https://skift.com/2019/04/28/norwegian-air-suffers-as-credit-card-companies-hold-back-ticket-revenue/

For air passengers, the nice thing about booking a ticket with your
credit card is knowing you can probably get your money back if the
carrier goes bust before you travel.

For cash-strapped airlines, the arrangement has a downside. If card
providers are worried about a particular carrier’s finances, they can
withhold more money on ticket sales from the company, potentially
making its liquidity problem worse.

These so-called “credit card hold-backs” contributed to Flybe Group
Plc’s cash troubles earlier this year, as well as Frontier Airlines’
Chapter 11 filing a decade ago. They’ve been a big headache too for
Norwegian Air Shuttle ASA.

Anyway it goes, Norwegian Air has had airfares half that or even lower than the big legacy air carriers. And because of their competition, many of us have been able to go to Europe every year or even twice per year.
No matter what happens, we are thankful that they have afforded us to travel so much.
And the airline industry always needs good competition to keep the "big boys" honest in pricing.
Thankfully, my wife spotted a 2 hour sale to Berlin in April for $436 round trip on British Air--non-stop from our home airport thru LHR.

Looks I am going to restart my relationship with SAS and continue more with Aer Lingus.

Norwegian is in loss trouble since years. They now wnated to change strategy from growth to profitability. Maybe too late.