Chapter 899： Norwegian Air's dilemma

"You are so sure that Bjorn can influence Mr. John Frederickson?"

Yang Cheng has a deep expression, and he is very respectful when he speaks of this name. His sense of humor, his willingness to take risks with his own funds, and his commitment to investors are all worthy of the highest respect from Yang Cheng, a junior. If you ask investors who they like to invest most, I am afraid that John Frederickson will answer John Frederickson in all likelihood. The total amount of dividends he has distributed to investors in his lifetime exceeds tens of billions of dollars.

Recosta nodded heavily. "Mr. John Fredriksen is still a Norwegian shareholder, and he invested money when Norwegian Air was formed. It can also be said to be a co-founder. Now Norwegian Airways is facing The predicament is not small. If we help out, Bjorn will certainly accept this favor and take the lead in the project for the landing of the oil depot."

Yang Cheng vaguely remembered that he had heard of this project before, and he knew that Recosta would not dare to lie to him about this kind of thing.

"Talk about the specific situation~"

He was asking how to "help" Bjorn.

Bjornjos, who was talking to Ian El, seemed a little absent-minded. He had already noticed the small movements of Yang Cheng and Recosta. With his shrewdness, he couldn't guess what the two parties were talking about, but Yang Cheng's expression managed It's done well, and there is no flaw at all.

Over there, Recosta informed Yang Cheng of the information he had learned one by one, without concealing it at all. “Norwegian is a low-cost airline operating both narrow-body and wide-body aircraft. It currently has nearly 150 aircraft, including 122 Boeing 737 and 27 Boeing 787.

Norwegian Air also has the youngest fleet in the world, with an average service of 3.6 years, and it is expected that there will be 250 additional aircraft including Boeing 737-800s, Boeing 787 Dreamliner, Boeing 737MAX8 and Airbus 320 to join the company's fleet in the future.

The ever-expanding fleet size is the main reason for its losses. Although Norwegian Air's capacity has grown rapidly with the introduction of wide-body aircraft, the passenger load factor has remained at around 85% without much fluctuation.

At the same time, the revenue per passenger per kilometer for each passenger will drop by about 6%, which will ultimately lead to a decrease in passenger transportation revenue, a decrease in main business revenue, and an increase in the cost of usable seat kilometers without fuel, and losses are inevitable.

Bjorn is too radical~"

Yang Cheng did not listen to Recosta’s last comment. He was not a businessman and could not understand this radical approach. Yang Cheng could understand that since the beginning of the new century, the aviation industry can be said to be one of the fastest growing fields. If no accidents occur. This development will continue. In order to gain a foothold in the market or even cut a larger piece of cake, some risks must be endured.

But Yang Cheng predicts that Norwegian Airways is likely to reverse its loss in the next few years and produce high profits because oil prices continue to fall.

The profit margin of airlines has always been closely related to oil prices. When oil prices are low, profits will naturally go up. When oil prices are high, operating profits will inevitably decrease. Of course, at this point, the impact of large airlines will be relatively small. The focus is relatively small.

Recosta added, “In addition, in my investigation, I also found that with the continuous expansion of the fleet size, the introduction of new aircraft models and the opening of new routes, other operating costs and personnel costs are There are different degrees of increase, which eventually led to a year-on-year increase of about 10% in unit cost. This is a pretty staggering ratio. If Norwegian’s inherent basic disk had not collapsed, this ratio would be enough to crush any company."

Yang Cheng knew it, "Then what do I need to do?"

Recosta narrowed the joy of his eyes, and Yang Cheng let it go. It was easy to deal with this matter. Seeing this, he apparently agreed with Bjorn before he came.

Hurriedly said, “Norwegian has always been a strong competitor in the long-distance low-cost market, but recently there has been a spoiler. British Airways’ parent company IAG has launched its low-cost brand Level, preparing to use Barcelona as its base. It competes with Norwegian Airways in different degrees in the South American and transatlantic route markets.

As far as I know, due to Argentina’s ZF’s protection policy, most routes are operated by the Argentine flag carrier (PS: flag carrier means literally, airlines carrying national flags are also state-funded airlines) -Argentine Airlines monopoly.

However, with the liberalization of the Argentine aviation market in recent years, Argentina has become the focus of most airlines, especially low-cost airlines, and Buenos Aires is also the second most popular region from Europe to South America after Sao Paulo. Travel destination.

In order to seize the market demand of Buenos Aires, IAG established the Level brand and opened a route from Barcelona to Buenos Aires before Norwegian Air.

Similarly, the Barcelona-Los Angeles and Auckland routes were also given the opportunity by Level, while Vueling Airlines, the third-largest low-cost airline in Europe and occupying the profit of landlords, has a much higher market share in Barcelona than Norwegian Air. The route network is connected, and Level's long-distance flights have a sufficient source of passengers.

Therefore, on Buenos Aires or US routes, IAG will pose a certain threat to Norwegian Air whether it is capacity launch or market demand.

In addition, Norwegian Airways opened an international route to Singapore last year. Previously, the main carriers on this route were British Airways and Singapore Airlines.

Norwegian Air’s involvement in the Asian market puts a certain pressure on British Airways’ earnings on this route.

However, as the low-cost subsidiaries of Lufthansa and Singapore Airlines have entered the Asian market, Norwegian Air is under unprecedented pressure. If it cannot find a way out in time, Norwegian will not be able to escape the fate of being acquired and may even go bankrupt directly. IAG has already initiated a takeover offer to Norwegian Airways, but more than John does not let go, IAG can only put more pressure on the commercial level. "

Yang Cheng listened very seriously. In the process of acquiring Delta Air Lines, he did not know much about the aviation industry. He must have a deeper understanding of airlines than Recosta. IAG’s attempt to acquire Norwegian Air Lines was definitely not because of the United Kingdom. Aviation is under competitive pressure. In fact, in the face of the huge British Airways, Norwegian Air only competes on a few routes, and it can't even touch the hair of IAG.

Apart from anything else, British Airways has one of the most profitable routes in the world-New York Kennedy Airport to London Heathrow Airport, with an annual revenue of about US$1 billion. The revenue of one route alone is enough to buy Norwegian Air.

In Yang Cheng’s view, the reason for trying to acquire Norwegian Airline is that, on the one hand, for IAG, it is helpful to the development of its long-distance low-cost route network. Due to the long time period for opening new routes, higher operating costs and Higher risk, and if the layout is carried out through acquisitions, the time period can be shortened to a certain extent, avoiding the loss of revenue due to new entry into the market. Under the mainstream trend of low cost, IAG will be more important in the three major European aviation groups. Have advantages

On the other hand, for Norwegian Airlines, joining IAG can turn competition into cooperation and form cooperation or even alliances with its Vueling and Level Airlines to make up for the gaps in its existing route network. In Yang Cheng’s view, this is the only one. It is unwise to fight desperately on the right path. Of course, he wouldn't say this. After all, people came to ask for help instead of letting Yang Cheng be a lobbyist.

Yang Cheng squeezed his chin and thought to himself, "Norwegian's development model can be regarded as a precedent for low-cost airlines. The acquisition by IAG also shows that its business model and future growth trends have great potential.

However, in the context of the development of low-cost airline groups, if Norwegian Airlines continues to accelerate its expansion by relying on its own route network, future development will face huge challenges. What if Delta Air Lines acquires it? "

It's a shame that he didn't say what he was thinking, or Bjorn would have sipped whiskey on his face. It was too shameless to take advantage of the danger!

Yang Cheng didn't have this consciousness, the egoist was just like that.

But this matter is not in a hurry. Now that I say it, Bjorn must turn his face away, so he asked, "So what does Bjorn want from me?"

The embarrassment on Recosta’s black face was swept away, and after staring at Yang Cheng, he didn’t find any abnormalities on his face. This suppressed his inner anxiety and said, “He wants Norwegian Airways and Delta Air Lines in some international Joint venture cooperation on the route."

Yang Orange rolled his eyes. If it weren’t for the person’s presence, he really wanted to swear, the joint venture is not impossible but it is also scoring objects. If it is British Airways, there is no problem. The status of the two parties is equal. This is the right to talk about cooperation, otherwise it is called poverty alleviation.

Knowledge is not learned in vain. Since the other party’s method does not work, Yang Cheng can only propose a plan on his own. This is still up to Recosta’s face, there is no way, he is the first British guan to rely on himself, early investment It has already been given. If you want to get more returns in the future, the demand must be met.

Yang Cheng thoughtfully said, "What do you think of this? I know that Norwegian Air's fleet size has expanded, resulting in increasing debt. Over time, capital expenditure will exceed operating business cash flow. Norwegian Airways will Can't hold on, let alone any cooperation.

It just so happens that there is an aircraft leasing company under my name. Norwegian Airways can increase the proportion of leased aircraft in the fleet in a planned way, increase the company’s cash flow by selling aircraft and leaseback, and further reduce capital expenditures. The gap between operating business cash flow.

Of course, this method is a typical symptom and not the root cause. Even if the liquidity of assets is improved in this way, Norwegian Air’s funds are still relatively lacking. If it fails, it can only be financed. "

()