Norwegian henter NOK 400m

[BudFox]

In order to partly finance the 10 first aircraft
to be purchased from Boeing (see Stock Notice
dated 30 August 2007) and strengthening of the
working capital position, the Board of Directors
has proposed to call for an extraordinary general
meeting on 5 August 2008 to resolve a share
capital increase, in the form of a rights issue,
in the amount of NOK 400 million (the `Rights
Issue`).

The proposed share capital increase will be
conducted as a Rights Issue with pre-emptive
rights for existing shareholders in Norwegian Air
Shuttle ASA (`Norwegian`) as per 5 August 2008.
Norwegian is proposing a Rights Issue in order to
avoid unnecessary dilution of existing
shareholders. The shares are expected to be traded
ex subscription rights from on or about 6 August
2008. The subscription price per share in the
Rights Issue has been proposed to be set at a 30 %
discount to the volume weighted average trading
price on Oslo Børs during the last five trading
days prior to the day of the extraordinary general
meeting (the `VWAP Period`), but not higher than
the latest closing price registered in the VWAP
Period.

The proposed share capital increase has been fully
underwritten by a consortium consisting of
existing shareholders and new investors. Each
underwriter has undertaken, pro rata to his share
of the underwritten amount, to subscribe for those
shares not validly subscribed for within the
subscription period of the Rights Issue. Any
shares subscribed for in the Rights Issue will be
deducted from underwriter`s duties under the
underwriting agreement.

The following primary insiders and related parties
are participating in the underwriting consortium:

- Bjørn Kjos
NOK 30.000.000
- Ojada AS (Erik Braathen)
NOK 30.000.000

If the underwriting consortium has not been called
on to subscribe for the shares in the Rights Issue
by September 15, 2008 at the latest, the
commitments of the consortium will terminate
automatically.

The guarantee consortium has been established by
ABG Sundal Collier Norge ASA and Arctic Securities
ASA who will act as Joint Lead Managers in the
Rights Issue.

Norwegian will prepare a prospectus for the Rights
Issue which is subject to approval from Oslo Børs.

The calling up notice for the extraordinary
general meeting is expected to be distributed on
10 July 2008.

For further information, contact
Frode Foss, Chief Financial Officer:
+47 916 31 645

[CK]

det er jo perfekt tid å hente inn frisk kapital til et flyselskap....

[RIBRO]

Originally Posted by CK

det er jo perfekt tid å hente inn frisk kapital til et flyselskap....

Aner jeg litt ironi her, CK?

[EB]

Vil tro at dette vil gå greit for Norwegian...om andre vil ha like stor sukses med å hente inn cash er et annet spørsmål.

[CK]

De fleste sliter med å hente inn cash på Oslo Børs om dagen, da kan jeg ikke helt forstå hvorfor det skulle være så mye enklere for NAS?

[BU662]

It is all about future expectations...

[EB]

Man betaler/investerer jo også for merkevaren - og den er ikke akkurat synkende hos Norwegian.

[CK]

nå er denne garantert av et konsortium, og med en rabatt på 30% til eksisterende eiere, så dette skulle nok gå bra. Det vil bli VELDIG spennende å lese prospektet, når det kommer.

[Discus]

Her har man hvertfall hatt en descend i dag (tirsdag 8. juli 10:21)

Kurs i NAS (Norwegian Air Shuttle)
Siste Endring Endr%
44.80 -6.20 -12.16

[LN-MOW]

Originally Posted by BU662

It is all about future expectations...

Og de er i beste fall usikre. Hvis de av analytikerene som antyder over $200 fatet faar rett, vil neppe Norwegian klare seg. Og markedet for nye - og brukte - fly vil toerke inn ..... saa det blir ikke lett aa kvitte seg med produksjonsslots helelr.

[BU662]

The higher the crude price, the more urgent the need to replace old metall. We have something like 1.000 737 from the 2nd generation needing replacement as well as the first Airbus A320s now reaching their targeted lifetime cycle number of 48.000 and getting retired. There will be plenty of demand, and it will be spurred by higher crude prices.
On top of that, the demand in Asia is still very strong, especially China once again outpacing any forecast. It can not surprise anyone that even very early 737-800s are easy to place in China at rather good lease rates.
With deregulation to increase in Asia, demand will increase dramaticly there.

We had the discussion with Top Level Airbus marketing folks last week, and they are not worried at all about their Narrowbody orderbooks. There is just too much old metal still around flying that needs replacement.


Regarding the Situation Norwegian is in.
They have started raising prices and they will do continue as crude prices climb - just in line as their main competitors. SAS increases, Easy increases, Air Berlin adds fuel surcharges and booking fees. At the end of the day, people may fly less, but they still will fly. That could result that we - at least for a certain period - may see smaller fleets, but it will not lead to people stop flying.
And with people feeling the earnings crunch, the low-fare airlines may have a slight advantage. Not because they really are cheaper all the time, but because they do have that image and that will lead people to book with them, even if they are slightly more expensive than the competition.

[Tommy777]

Originally Posted by BU662

The higher the crude price, the more urgent the need to replace old metall. We have something like 1.000 737 from the 2nd generation needing replacement as well as the first Airbus A320s now reaching their targeted lifetime cycle number of 48.000 and getting retired. There will be plenty of demand, and it will be spurred by higher crude prices.
On top of that, the demand in Asia is still very strong, especially China once again outpacing any forecast. It can not surprise anyone that even very early 737-800s are easy to place in China at rather good lease rates.
With deregulation to increase in Asia, demand will increase dramaticly there.

We had the discussion with Top Level Airbus marketing folks last week, and they are not worried at all about their Narrowbody orderbooks. There is just too much old metal still around flying that needs replacement.


Regarding the Situation Norwegian is in.
They have started raising prices and they will do continue as crude prices climb - just in line as their main competitors. SAS increases, Easy increases, Air Berlin adds fuel surcharges and booking fees. At the end of the day, people may fly less, but they still will fly. That could result that we - at least for a certain period - may see smaller fleets, but it will not lead to people stop flying.
And with people feeling the earnings crunch, the low-fare airlines may have a slight advantage. Not because they really are cheaper all the time, but because they do have that image and that will lead people to book with them, even if they are slightly more expensive than the competition.

Many things here. First of all, the challenges that Norwegian faces are many. Contrary to what you have claimed earlier, there will be less demand if ticket prices are doubled. DY needs to raise prices to survive, I hope we can agree on that.
This means the end of 198NOK tickets and the end of that little extra weekend trip everyone takes because prices on flights are so dirt cheap. We didn't see a 40% increase from last year when DY presented their June number, the growth is not still skyrocketing, this is a reality DY needs to deal with - demand will slow when prices rise. DYs fleet is mostly 737-300s, an aircraft CO and UA among others have decided to retire immediately. DY doesn't have a magical formula to make these aircraft profitable like Southwest. They are profitable for Southwest because Southwest is paying almost half the price for gas than DY is, that's the only success formula. So retiring the 737-300s will need to be a top priority for DY. That presents another dilemma: The capacity of the 737-800s is a lot greater than the -300s and in a market with falling demand (and trust me, this fall it will come) it will be a challenge to sell all the seats on these aircraft on thinner routes. This means that the DY management need to rethink and redo their entire route structure and also reduce frequency on some routes that doesn't have a foundation to support a 189 seat aircraft (example EVE, TOS, ALF, KKN, BOO, KRS, BDU). Also, Poland needs to go, I'm sure they will end this operation soon, a very smart move: http://e24.no/boers-og-finans/article2527928.ece

And when it comes to selling the aircraft and world demand for new equipment: China and India has kept up demand for oil due to government subsidized fuel. Both countries have recently raised the fuel prices with 20% meaning that demand will drop substantially and a lot more than countries like the US where people have more buying power and living standard than China and India. If oil was sold at market prices in these two countries, demand would drop dramatically. So demand for new aircraft in that region will definitely drop if the oil price stays at the current level. By the time DY will start having delivery slots they won't need themselves, I bet Boeing can deliver 737s to any customer and meet demand for new sales with no problem. Some analysts doubt the oil price will reach 200 USD soon, in fact, it has fallen 10 dollar the last 24 hours. If 200 USD becomes a reality, ticket prices will need to triple and demand will fall even more. I hope that will not be the case, but it is something every airline will need to take in to account.

And since DY is raising capital covered to finance their new aircraft, everyone knows that this capital increase was not initially planned. Face it, if DY was not loosing millions every day, they wouldn't need to get more cash to finance these aircraft. DY is worth less than 3 MIA now, they are getting 400 mill.. Do the math.... And we know that DY can't afford to loose 250 mill+ a quarter, they don't have a battle reserve like many of their competitors.

I'm sure DY will survive, but the growth bonanza is over and I'm sure their management will do the proper adjustments to secure their onward existence.

Originally Posted by EB

Vil tro at dette vil gå greit for Norwegian...om andre vil ha like stor sukses med å hente inn cash er et annet spørsmål.

Norwegian er verdt det Oslo Boers sier de er verdt..

[Flyer]

Originally Posted by Tommy777

They are profitable for Southwest because Southwest is paying almost half the price for gas than DY is, that's the only success formula. So retiring the 737-300s will need to be a top priority for DY.

Bra innlegg med god analyse, men jeg har ett spørsmål: 300ene er utrolig billige å lease, og DY fikk sikkert en kanon-deal på dem siden de startet leasene på et svært gunstig tidspunkt. Når de nå faser ut disse billige maskinene, og erstatter dem med 800er som koster 3-4 ganger så mye pr. måned, hvorfor lovpriser alle dette som redningen?

Problemet her er jo at pengene renner ut. Om utgiften er fuel eller lease har jo ikke noe å si. Man sparer selvsagt enorme summer på å redusere fuel-cost med 30%, men når lease øker med 300% samtidig veier jo det også på vektskåla...?

[Superhai]

Originally Posted by Flyer

Når de nå faser ut disse billige maskinene, og erstatter dem med 800er som koster 3-4 ganger så mye pr. måned, hvorfor lovpriser alle dette som redningen?

De kjøper de og leaser de maskinene ikke?

[Tommy777]

Originally Posted by Flyer

Bra innlegg med god analyse, men jeg har ett spørsmål: 300ene er utrolig billige å lease, og DY fikk sikkert en kanon-deal på dem siden de startet leasene på et svært gunstig tidspunkt. Når de nå faser ut disse billige maskinene, og erstatter dem med 800er som koster 3-4 ganger så mye pr. måned, hvorfor lovpriser alle dette som redningen?

Problemet her er jo at pengene renner ut. Om utgiften er fuel eller lease har jo ikke noe å si. Man sparer selvsagt enorme summer på å redusere fuel-cost med 30%, men når lease øker med 300% samtidig veier jo det også på vektskåla...?

Takker.

Jobber ikke i administrasjonen i noen flyselskap og har ikke den kunnskapen mange andre har her. Det er vel en grunn til at UA og CO parkerer sine -300? Andre kan vel gi en forklaring paa hvorfor

[Flyer]

Originally Posted by Superhai

De kjøper de og leaser de maskinene ikke?

De har vel en blanding av lease og kjøp, men maskinene skal jo betales for - enten man kjøper eller leaser, og cost for en ny 800 er uansett 3-4x cost for en 18 år gammel 300

Ihht. børsmeldingen i dag skal de hente inn 400 MNOK nettopp for å betale for nye fly. Ergo hadde de formodentlig ikke trengt 400 MNOK om de fortsatte å fly med sine eksisterende 300...? Eller?

[BU662]

Tommy, a few of your assumptions are just plain wrong.

Even with China and India having relaxed the fixed prices of gasoline, the crude oil demand will certainly not fall. And if you look a bit into that region and see Indonesia, Vietnam and the other Tigers, then you understand that the demand from that side of the world will be increasing. Simply due to the fact that the middle class there is growing rapidly.

Accussing Southwest of beeing profitable only for the hedge is just wrong. Southwest is well managed, therefore they are profitable. They secured fuel like many other airlines, and they did factor that costs into their CASM, unlike many of the other airlines.
CO failed to do hedging right and lost millions, Lufthansa does hedge 85% of its fuel and it is profitable. Do you wanna say that Lufthansa is only profitable due to the hedging? SAS is securing 50-60% of its fuel, but is not profitable. The trick is not to have hedges or not, the trick is to know your costs well in advance and charge the customer what it costs and still fill the seats. And - as written many times before, most airlines have no real clue what the jetfuel that they fill in today is really costing them in these very moments.

You write that Norwegian could not adapt capacity if needed as they would have only -800s to do so? Who said that? If the -800s proves too big and if the -300s get retired or returned to lessors in bigger numbers, I am pretty sure we will see DY doing a Virgin Blue approach and get themselves a 100 seter for the thinner routes.
Capacity adjustments are pretty easy with 25 leased aircraft...

Absolutely agree that the growth bonanza is over for the time being. But, I am old enough to remember the 1998 and onwards, then the downturn after 9-11 and then the upwards trend until somewhen early this year (by the way, with ever increasing oil prices).
Now, we will see a period of consolidation. Changes will come, actors will go, business models will be adapted. At the end of that period, and that will be no indefinate period, a new growth period will come. Just as bullish as the last one. Why? Because that is the industry behaved like all the time, no matter what the crude price was.

[Tommy777]

Originally Posted by BU662

Tommy, a few of your assumptions are just plain wrong.

Right back at you

Originally Posted by BU662

Even with China and India having relaxed the fixed prices of gasoline, the crude oil demand will certainly not fall. And if you look a bit into that region and see Indonesia, Vietnam and the other Tigers, then you understand that the demand from that side of the world will be increasing. Simply due to the fact that the middle class there is growing rapidly.

Even if I'm not an airline executive or engineer, I do have some economic education. This is just hogwash.... What middle class are you talking about?? I just took a quick peek at my company's salaries for the exact same jobs in the US compared to India, China, Philippines and Vietnam. An Account Manager (AM) in India makes 14% of what a US AM, China 16%, Philippines 10% and Vietnam 8%.. And we are known for paying well..

Here are the GDPs for the emerging markets that you are counting on for enormous growth.

China: $5,300 pr. year
India: $2,700 pr. year
Philippines: $3,400 pr. year
Vietnam: $2,600 pr. year
Norway: $53,000 pr. year
US: $45,800 pr. year

Of course, the emerging markets are increasing, but with income average like these, most of the population will never set their foot on a plane in their lifetime with fuel prices over 130USD. Of course, fuel price like this will reduce demand even more in countries with low income.

Like it or not, these emerging markets also have their growth and are dependent on the US economy since US companies have huge presence and use the cheap labor to produce for the US market. So AGAIN, the high fuel prices will reduce demand for oil in all countries, also emerging markets. It will slow demand for aircraft, new or old.

Originally Posted by BU662

Accussing Southwest of beeing profitable only for the hedge is just wrong. Southwest is well managed, therefore they are profitable. They secured fuel like many other airlines, and they did factor that costs into their CASM, unlike many of the other airlines.
CO failed to do hedging right and lost millions, Lufthansa does hedge 85% of its fuel and it is profitable. Do you wanna say that Lufthansa is only profitable due to the hedging? SAS is securing 50-60% of its fuel, but is not profitable. The trick is not to have hedges or not, the trick is to know your costs well in advance and charge the customer what it costs and still fill the seats. And - as written many times before, most airlines have no real clue what the jetfuel that they fill in today is really costing them in these very moments.

Southwest runs a top notch operation, but to accuse all other US carriers of being idiots is even more wrong... W9 has earned a lot of money this decade, to say that fuel hedging is not a very important factor is wrong. SAS has secured 40% at 89 USD a barrel, so a lot less than LH and W9. Of course there are other factors, but when fuel now stands for 30-40% of your cost, it's the largest cost there is and therefor a lot more critical than anything else?? This thread is about DY, they are of course more vulnerable than SAS. They are not hedging at all and have little money in the bank.

Originally Posted by BU662

You write that Norwegian could not adapt capacity if needed as they would have only -800s to do so? Who said that? If the -800s proves too big and if the -300s get retired or returned to lessors in bigger numbers, I am pretty sure we will see DY doing a Virgin Blue approach and get themselves a 100 seter for the thinner routes.
Capacity adjustments are pretty easy with 25 leased aircraft...

They need to make a move long before proving that the -800 will be to big. DY will be out of business long before then if they don't do the right things and the proper adjustments immediately. I agree that they are in a good position now with many leased aircraft, but they will never take delivery of all the 40 something -800 that are currently on order with Boeing

Originally Posted by BU662

Absolutely agree that the growth bonanza is over for the time being. But, I am old enough to remember the 1998 and onwards, then the downturn after 9-11 and then the upwards trend until somewhen early this year (by the way, with ever increasing oil prices).
Now, we will see a period of consolidation. Changes will come, actors will go, business models will be adapted. At the end of that period, and that will be no indefinate period, a new growth period will come. Just as bullish as the last one. Why? Because that is the industry behaved like all the time, no matter what the crude price was.

Fair enough.. But this situation is different. The only relief is an oil price under USD100. As for consolidation, I'm sure you are right. But SAS needs a competitor in Norway and I hope and believe the DY management will do what's necessary to adjust to this whole new scenario to do business in.

[Discus]

Originally Posted by Flyer

De har vel en blanding av lease og kjøp, men maskinene skal jo betales for - enten man kjøper eller leaser, og cost for en ny 800 er uansett 3-4x cost for en 18 år gammel 300

Ihht. børsmeldingen i dag skal de hente inn 400 MNOK nettopp for å betale for nye fly. Ergo hadde de formodentlig ikke trengt 400 MNOK om de fortsatte å fly med sine eksisterende 300...? Eller?

Det første har vel også vært oppe her ifht. vedlikehold m.m. på 300-ene. Er vel en del tyngre vedlikehold som forfaller på dem etter hvert, og også sikkert andre ting. Og så ville jo DY få opp kapasiteten også - det var et av argumentene når de kjøpte dem.

Vedr. innhenting av 400MNOK, så er det sikkert enklere å hente det inn til innkjøp av nye fly, enn drift av gamle i så tilfelle. Om de hadde trengt det uansett vet jeg ikke, men man kan jo spekulere......

[plane-spotter]

Norwegian er en ganske lur aksje å kjøpe nå , Ja NAS er verdt det kursen er verdt... Men reelt sett stemmer ikke det helt med verdien av selskapet selvom jeg her motsier meg selv litt... hehe.... Det er klart mange selger seg ut med gevinst når de hører om en oljekrise. mange som da selger rett og slett for å ikke være med ned og så opp igjen.... hvis noen fortstår hva jeg mener Jeg er ikke akkurat Expert på det her:P