Chapter 899 The Dilemma of Norwegian Air

"Are you so sure that Bjorn can influence Mr. John Frederickson?"

Yang Cheng has a deep expression, and he is very respectful when he mentions this name. His sense of humor, his willingness to take risks with his own funds, and his commitment to investors all deserve the highest respect from Yang Cheng, a junior. If you ask investors who is their favorite investment object, I am afraid that nine out of ten will answer John Frederickson. The dividends he distributed to investors in his life add up to more than tens of billions of dollars.

Recosta nodded heavily, "Mr. John Fredericksen is still a shareholder of Norwegian Air, and he invested money when Norwegian Air was formed. It can also be said that he is a co-founder. Now Norwegian Air is facing The predicament is not small, if we help, Bjorn will definitely accept this favor and take the lead in the project to get the oil depot landed."

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

"Tell me 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 were talking about, but Yang Cheng's expression managed It's done very well, and there are no flaws at all.

Over there, Recosta told Yang Cheng all the information he had learned, 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 737s and 27 Boeing 787s.

Norwegian Air also has the youngest fleet in the world, with an average service life of 3.6 years. It is expected that another 250 aircraft including Boeing 737-800s, Boeing 787 Dreamliner, Boeing 737MAX8 and Airbus 320 will 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 remains at around 85%, without much fluctuation.

At the same time, the income per passenger per kilometer will drop by about 6%, which will eventually lead to a decrease in passenger revenue, a decrease in main business income, and an increase in the cost of ASKs excluding fuel. Losses are inevitable.

Bjorn is too aggressive~"

Yang Cheng didn't listen to Recosta's last comment. He is not a businessman, so he can't understand this radical approach, but Yang Cheng can understand it. Since the beginning of the new century, the aviation industry can be said to be one of the fastest growing fields. If there is no accident , this development will continue, in order to gain a foothold in the market and even cut a bigger piece of cake,

Some risks must be taken.

But Yang Cheng predicted that in the next few years, Norwegian Air is likely to reverse its losses and generate high profits, because oil prices continue to fall.

The profit margin of airline companies has always been closely related to oil prices. When oil prices are low, profits will naturally increase. When oil prices are high, operating profits will inevitably decrease. Of course, the impact on large airlines will be relatively small at this point. The key point is that it 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 types and the opening of new routes, other operating costs and personnel costs of Norwegian Air have been reduced. There are different degrees of increase, which eventually led to a year-on-year increase in unit costs of about 10%, which is quite an astonishing ratio. If Norwegian Air’s inherent fundamentals did not collapse, this ratio would be enough to crush any company.”

Yang Cheng understood, "Then what do I need to do?"

Recosta restrained the joy in his eyes, and Yang Cheng let go of his mouth, and the matter would be easy to deal with. From this look, it was obvious that he had made an agreement with Bjorn before coming here.

Hastily said, "Norwegian has always been a strong competitor in the long-range low-cost market, but a disruptor has recently appeared, that is, IAG, the parent company of British Airways, has launched its low-cost brand Level and plans to use Barcelona as the base Competes to varying degrees with Norwegian in the South American and transatlantic markets.

As far as I know, due to the protection policy of the Argentine government, most of the routes are taken by Argentine flag carrier airlines (PS: flag carrier airlines means literal understanding, airlines carrying national flags, that is, airlines funded and established by the state) - Aerolineas Argentinas monopoly.

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

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

Similarly, the route from Barcelona to Los Angeles and Auckland was also taken advantage of by Level, while Vueling Airlines, the third largest low-cost airline in Europe and a landowner, has a much higher market share in Barcelona than Norwegian. The route network is connected, and Level's long-distance flights have sufficient source of customers.

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

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

Norwegian's involvement in the Asian market has put some pressure on BA's earnings on the route.

However, as the low-cost subsidiaries of Lufthansa and Singapore Airlines entered the Asian market one after another, Norwegian Air was under unprecedented pressure. If it could not find a way out in time, Norwegian Air could not escape the fate of being acquired, and might even go bankrupt directly. IAG has already launched an acquisition offer to Norwegian Air, but Bijohn is not letting go, and IAG can only put more pressure on the commercial level. "

Yang Cheng listened very carefully. During the process of acquiring Delta Air Lines, he learned a lot about the aviation industry. He must have a deeper understanding of airlines than Recosta. IAG's attempt to acquire Norwegian Air was definitely not because of the British Aviation is under pressure from competition. In fact, in the face of the huge British Airways, Norwegian Air only competes on a few routes, and it can't even touch IAG.

Among other things, 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 income from one route alone is enough to buy Norwegian Air.

In Yang Cheng's view, the reason for trying to acquire Norwegian Air is, on the one hand, for IAG, it will help the development of its long-range low-cost route network. Due to the long period of time to open 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, and the loss of revenue due to new market entry can be avoided. Under the mainstream trend of low cost, IAG will become more and more popular among the three major European aviation groups. have advantages;

On the other hand, for Norwegian Air, if it joins IAG, it can turn competition into cooperation, form a cooperation or even an alliance with its subsidiaries Vueling and Level Airlines, and make up for the gaps in its existing route network. In Yang Cheng’s view, this is the only way On the right path, it is unwise to fight desperately. Of course, he would not say this. After all, people came to ask for help, not to let Yang Cheng be a lobbyist.

Yang Cheng squeezed her chin and thought to herself, "Norwegian Airline's development model can be regarded as a pioneer of low-cost airlines, and IAG's acquisition also shows that its business model and future growth trend have great potential.

However, under the background of low-cost airline group development, if Norwegian Airlines relies on its own route network to continue to accelerate its expansion, its future development will face huge challenges. What if it is acquired by Delta Air Lines? "

It's a good thing he didn't say what was in his heart, otherwise Bjorn would have spit whiskey on his face, it's too shameless, taking advantage of others' danger!

Yang Cheng didn't have this awareness, egoists are so pissed.

But this matter is not urgent, telling it now will definitely make Bjorn turn his face and leave, so he asked, "So what does Bjorn want from me?"

The embarrassment on Recosta's black face was swept away, and he stared at Yang Cheng from the corner of his eye, but he didn't notice anything unusual on his face, so he suppressed his inner anxiety and said, "He wants Norwegian Air and Delta Air Lines to operate in some international airlines. Carry out joint venture cooperation on the route.”

Yang Cheng rolled his eyes. If the other party was not present, he really wanted to yell at him. Joint venture cooperation is not impossible, but it is also possible to score points. If it is British Airways, there is no problem. The status of the two parties is equal, so they are eligible to discuss 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 by himself. This is still for Recosta's face. There is no way. He is the first British official to rely on him. It has already been given out. If you want to get more returns in the future, the demand must be met.

Yang Cheng said thoughtfully, "What do you think of this? I know that the expansion of Norwegian Air's fleet has led to increasing debts. Over time, capital expenditures will exceed operating cash flow. If you can't keep going, let alone cooperate.

Coincidentally, I have an aircraft leasing company under my name. Norwegian Air can increase the proportion of leased aircraft in the fleet in a planned way, increase the company's cash flow by selling aircraft for leaseback, and further reduce capital expenditures. The difference between the two operating cash flows.

Of course, this method is a typical solution to the symptoms rather than the root cause. Even if the liquidity of assets is improved in this way, Norwegian Air still lacks funds in general. "

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