The right buyer is welcome to take over Norwegian, according to major owner and CEO Bjørn Kjos.
”All companies on the stock exchange are for sale,” he says.
At the same time, he expects the company's results to improve in 2019.
”"What is a prerequisite for me is that whoever comes in and buys Norwegian must be good for all my employees and all our passengers. The company must not go to someone who is bad. That is the important thing for me," says Bjørn Kjos in a TT interview.
The 72-year-old Norwegian is not only Norwegian's CEO, but also one of the founders and major owners of the airline. Together with his older brother Tore Kjos and Norwegian's chairman Bjørn Kise, he owns more than a quarter of the airline through the holding company HBK Invest.
”"I'm just one of the owners and if the other owners want to sell Norwegian, I'm not the one to say no, never in the world," says Bjørn Kjos.
Kjos confirms that several serious interested parties have been in contact with Norwegian to discuss a deal, alongside British Airways owner IAG, which earlier this year declared that it no longer wants to buy the company. However, such talks have been put on hold since Norwegian at the end of January asked for capital from its owners of three billion Norwegian kroner in a guaranteed new share issue.
”"All that has to be put on hold, then we'll see. We do what's best for the customers and what's best for the shareholders," says Kjos.
Norwegian's huge loss last year is related, among other things, to high costs due to problems with the Dreamliner aircraft's Rolls Royce engines and a misstep in Norwegian's attempts to secure reasonable fuel prices.
”We wouldn't have been so far from making a profit if we hadn't hedged the oil price and we hadn't had the engine problems,” says Kjos.
In a compensation agreement, the details of which are secret, Rolls Royce has promised additional back-up aircraft in 2019. Kjos expects this to help lift Norwegian's results.
At the same time, Kjos sees a significantly lower risk of the oil price going up again after last year's accounting blow of approximately two billion as a result of a price hedge at a price level that would prove to be far too high.
The business press describes Norwegian's situation as a "financial meltdown." The Wall Street Journal has analyzed the risk of bankruptcy, and the CEO of competitor Ryanair, Michael O'Leary, has had the opportunity to repeat his doomsday prophecy that Norwegian will go under.
Kjos dismisses this:
”"He's been saying that for 18 years, I think, or 16 anyway.".
According to the Norwegian boss, the company has now reached a suitable size and is aiming for a positive result in 2019.
”In 2019, we said we would be profitable,” he says.
”"Now we have the production volume we want and we have the scale we want, so now it's full concentration on making what we're doing profitable. We're going to leave the airlines that aren't profitable," he adds.
However, Norwegian's loan-financed and rapid expansion has inflated its net debt to 32 billion, and according to several analysts, the company's so-called equity ratio is approaching the floor in the airline's agreement with lenders.
”"We don't want to be at those levels. That's why we're now going out and raising new capital," says Kjos.
TT: But you're not close to bankruptcy?
”"No, we're not close to that.".
TT: Can I be sure if I buy a ticket that I will get the trip?
”"Yes, you can be sure of that.".
To strengthen profitability, Norwegian has started selling aircraft and launched ”Focus 2019”, a program that will reduce costs by two billion Norwegian kroner. Agreements with subcontractors will be negotiated, among other things. There is also talk of spinning off large parts of the aircraft fleet into a separate company.
But the company will not abandon its low-price profile.
TT: So SAS can't breathe?
”"No, we have significantly lower costs than SAS," says Kjos, promising continued price pressure.
But he has no ambition to knock out SAS.
”"There will always be room for both, if you ask me. And we are doing very well alongside SAS here in Scandinavia and I would much rather have SAS as a competitor than many others.".
Source: TT
