The one thing you can always say about Norwegian is that the entire group is financially inventive.
It’s defied take over demands from IAG – in part because it’s share price spiked because of the IAG buy-in, followed by interest from Lufthansa.
It sells off its older aircraft to pay off debt and make a small profit while taking on new more efficient aircraft through a group owned leasing company, financed by a group-related bank.
It has 220 aircraft on order and is using those aircraft to leverage finance for itself, by offering to sell or lease the aircraft it takes delivery of, to airlines who want them quicker.
Many leasing companies are chewing at the bit to get hold of aircraft faster – and Norwegian Group is prepared to sell them at a profit to the cash rich leasing firms as soon as it takes delivery.
The airline has also set new examples of aircraft utilisation that break the usual mould. This winter it’s excess aircraft will be deployed to Argentina for the southern summer – Norwegian has set up the first airline in the desperately under served market to fly long distance domestic routes.
It’s an incredibly sensible idea – in many ways Argentina isn’t unlike Scandinavia in terms of population distribution and difficult over-land transport routes. Flying is far more sensible. It’ll be interesting to see how it works out.
None of this however changes my overview that the entire company is a giant wooden dollar machine that’s never going to make consistent profits.
It’s just a matter of time before the notorious airline business cycle takes another nose dive. I’m still not anywhere near convinced Norwegian will survive it.