We suspect Norwegian Air, which is in weaker financial shape than most passengers might expect, will survive 2019. But the first quarter will be an important harbinger of things to come. It's always a rough period for European airlines because leisure demand is slow.
Would you buy a ticket for summer travel on Norwegian Air?
It’s a question I’m struggling with as I plan the great Sumers European family vacation of 2019. From Los Angeles, Norwegian is not only the cheapest, but also often the most convenient. While legacy carriers fly only to their hubs, Norwegian flies to cities tourists want to visit, including, in our case, Copenhagen.
But will Norwegian be around come July?
Just before Christmas, while most of us were not paying attention, Norwegian told investors it would tweak its network, while selling five of its Airbus aircraft. The airline seeks to stem early-year losses, the most difficult for European airlines because leisure customers dig in for winter. An aviation analyst told Bloomberg, “It could be a very tough winter and first quarter.”
My gut tells me Norwegian will survive. International Airlines Group still owns almost 5 percent of it, and its trenchant CEO, Willie Walsh, is not likely to keep an investment in an airline he knows will fail. Plus, the mid-2018 fuel panic has subsided, so Norwegian’s costs should be significantly lower than feared. But who wants to buy a ticket in January for a flight that may, or may not, depart six months later?
What do you think? Should we buy? Or wait to see how the world’s largest long-haul, low-cost airline navigates the first quarter?
Stories of the Week
Norwegian Air Says It Has Enough Cash to Get By in Slower Winter Months: Struggling Norwegian Air continues to assure investors while mapping out its future. One thing is nearly certain: 2019 will bring changes to the once-high-flying industry disrupter. Bloomberg tells us how.
United Airlines’ New Employee Bonuses Factor In Customer Satisfaction: At most companies, changes in employee bonuses don’t resonate much beyond corporate headquarters. But airlines are different, and United Airlines created a global public relations saga in March when it decided to alter how it allotted extra money to employees. It’s not a surprise the airline walked it back.
Why Airlines Can’t Get Enough of the Sunshine State: As a California resident, I don’t understand the world’s fascination with Florida. But visitors from the United States, Europe, and Latin America love visiting the state, which is why it is so important to airlines on three continents. Jay Shabat of Skift’s Airline Weekly goes deep on how many airlines view the Florida market.
Europe’s Airlines Approaching U.S.-Like Levels of Profitability: This is another meaty piece by Shabat, perhaps the world’s most knowledgable airline industry analyst. He notes that while European carriers have trailed U.S. carriers in recent years in profitability, they are catching up. It’ll probably get better for European airlines if the continent sees more consolidation, as many analysts expect.
Top 10 Airline Developments in 2018: The year 2018 was a good one collectively for the world’s airline industry. It can thank, among other things, robust premium demand on long-haul routes, Shabat writes in this year-end recap.
Canada Will Get Yet Another Discount Airline: Several ultra-low-cost carriers have started or are in the planning stages in Canada, and many are in some state of disarray. But the market has potential, and if there’s anyone who can figure it out, it’s Bill Franke. The man has built discount airlines worldwide, and he has an impressive track record. Franke’s Indigo Partners will create this new Canadian discount airline.
Best Travel Writing of the Year, Our Favorite Stories From 2018: These are the Skift staff’s favorite stories of 2018. Only one of them — mine — is about airlines, but no matter. I think you’ll enjoy all of them.
Skift Senior Aviation Business Editor Brian Sumers [[email protected]] curates the Skift Airline Innovation Report. Skift emails the newsletter every Wednesday. Have a story idea? Or a juicy news tip? Want to share a memo? Send him an email or tweet him.
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Photo credit: Norwegian Air, which flies the Boeing 787 seen here, will have a slow first quarter. PeS-Photo / Flickr