Just before the new year, it was revealed that Norwegian was clinging to life.
The airline’s loans were coming due, and if it didn’t have a cash injection or prove that its business model (of low-cost long-haul air travel) was sustainable, it would soon be bankrupt.
Now that day has come, and many are asking for an update on one of the world’s most beloved airlines.
What is Norwegian’s current situation?
To shore up some cash, the airline has decided to sell five of its Airbus aircraft and tweak it’s route network to allow their planes to be flying more often (rather than sitting around on the tarmac).
This has led to investors relaxing and the airline appears to have stabilized for now.
After all, we do know that IAG (International Airlines Group, owner of British Airways) is very keen to secure Norwegian and has thus far bought 5% of the shares on the market. They have not sold these shares and not raised any concerns about the operation of the airline (which, ironically, as investors, they would have every right to).
And it seems that the bulk of the winter fuel rise is over and that if Norwegian was going to fail, it would have already. We saw the rapid collapse of several airlines leading up to Christmas (such as Primera Air and Cobalt Air) and many industry commentators, including the CEO of Ryanair, suggested Norwegian would be next.
It doesn’t help that they have a jet stranded in Iran, unable to fly.
Norwegian however, seems to have been very flexible and has managed to starve off their creditors. They did this by firstly employing a large fleet of fuel-saving aircraft, such as the Boeing 787 Dreamliner, on their most expensive international routes. Secondly, they have aggressively chased after monopoly routes such as the London to Rio route that was exclusively operated by One World British Airways.
Thirdly, Norwegian has also expanded into international markets that their business model can easily take advantage of. Places like Argentina, who only recently allowed the domestic aviation market to become deregulated.
Lastly, the recent sale of these five Airbus aircraft to pay back their most urgent loans seems to have bought them enough time to remain in the skies.
What about in the future?
Norwegian has really proven themselves to be dynamic and unstoppable, and we at Simple Flying think they will be solvent a little longer. This is including the Christmas disruption at Gatwick Airport due to drones a week ago, in which Norwegian hired the HiFly A380 to help customers proves that they have the working capital to solve problems that might stump other airlines.
What do you think? Will Norwegian last another six months? Let us know in the comments