Norwegian customers benefit from well over 2 billion in earned bonus points which can now be used.
VIKA (Nettavisen Økonomi): A week ago, the news came that Norwegians were removing the restriction on earned cash points through the benefit program Norwegian Reward.
As long as Norwegian has been under heavy pressure with the threat of bankruptcy hanging over it, the customer has not been able to use their earned bonus points. In total, Norwegian in the Nordic region has 4.3 million customers with cash points to their credit, of which 1.8 million are Norwegians.
When asked to Norwegian boss Geir Karlsen about what signals he will give to air passengers in the future, he answers:
– First and foremost, we are very happy that we have been able to remove all the restrictions on the benefits program. From November 1, there are no restrictions on using ATMs. It was very important for the company to get rid of those restrictions, but the management had a discussion about whether it was too early, because the aviation market is not properly back.
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Karlsen says at Norwegian customers a total of 2.4 billion outside ATMs. As a cash point is worth NOK 1, the benefit customers have flights worth NOK 2.4 billion.
But many customers would instead have the money back for their prepaid flights which were canceled during the corona pandemic. Karlsen says 99.6 percent of this has now been repaid.
– But here we are talking about customers who in a very difficult situation for us chose to take cash points instead of getting cash back. We have had a bad conscience for them, he admits.
Norwegian has also extended the expiration date on points from New Year 2021 until 31 December 2022.
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But whether customers can now use the bonus earnings, it asks how freely they can travel. A resurgence of the corona pandemic in Europe may place restrictions on the pent-up desire to travel.
– It can absolutely do that. Europe is not open in its entirety. We see in certain parts of Europe that the infection is flourishing again, and there are even more restrictions in some countries. We follow this from day to day based on the capacity we have, where we choose to fly, how many planes we have to deploy, the frequency of the planes, etc.
– We are so realistic that here it can flourish up, but without a wave coming, says Karlsen.
He and Norwegian have also got a new competitor to deal with, Flyr. They have said that they will dump the price from the start and offer the websites tickets in southern Norway all the way down to 193 kroner one way.
SAS is the main competitor
– How do you feel about the competition from Flyr?
– We follow the competition picture every single day, but our main competitor is SAS, there is no doubt about that. We also notice the price pressure from Flyr, and sometimes we fight with them on price, sometimes we do not.
– We actually do the same with SAS, even though they have not competed very much on price. But now we see that they do it to a greater extent in the future, says Karlsen.
He will increase today’s fleet in Norwegian from around 50 aircraft to 67-70 aircraft by next summer.
– I think you will see that we invest the capacity evenly distributed between the domestic market in the Nordic region and from the Nordic region to Europe. We have 260 routes for sale next summer, and that’s yours for the 67-70 planes to fly.
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– But do you fear increased climate policy risk for the aviation industry, even if there are more environmentally friendly aircraft?
– This will apply to our industry in line with many other industries. As we look at it, we must find solutions that allow us to be at the forefront. A bit of a problem today is producing far too little environmentally friendly jet fuel throughout the market.
– Biofuels are definitely a solution. Today’s aircraft engines can actually use it, Karlsen answers.
On Thursday, Norwegian presented quarterly figures that showed a clear improvement, but there is still an operating loss. The positive thing is that the cash flow in the quarter – underlying payments and withdrawals – was positive by DKK 442 million.
– It was a new better quarter than we have set the previous quarters. The top line is OK, but not fantastic. We continue to work with the structure of the company’s operations and the legal organization, Karlsen said at a presentation in Oslo on Thursday morning.
– We are not satisfied with the booking and the dividend. The booking is not back to the levels from before the pandemic, but it is going in the right direction, and the dividend in October was significantly up, said the Norwegian boss.
The yield means income per. kilometers pr. passengers. The higher the yield, the better. In the third quarter, the yield to Norwegian low was 53 øre. This is sharply down from 88 øre in the same quarter last year and much lower than with the main competitor SAS.
– We are not satisfied with the dividend, but the market is not back. In the previous quarter, Denmark was the best market, mainly as a result of Denmark opening up, Karlsen commented.
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Norwegian currently has a fleet of approx. 50 aircraft, of which they own a handful themselves. The rest are chartered aircraft.
According to Karlsen, the newest introductory planes can be rented at a lower cost than the existing ones. Norwegian payer only rents when the planes are in the air, called power per hour. And before the high season for the summer, capacity must be increased with 15-20 new aircraft.
– We will fly at full capacity in October, and we are extremely ready for the high season next year, but we will have the capacity through the winter. The winter season is being challenged, it’s no secret.
– But we will see a cost level in the company that is significantly lower in 2022 than what we have today, said the Norwegian boss to those present at the presentation. In June, the former CFO took over as top manager after Jacob Schram, who did not trust the new store owners.
Karlsen wants to reduce the fast unit costs in Norwegian, and then he needs a larger fleet and distribute the costs.
The goal is to offer as many as 29 billion available seat kilometers for passengers by 2022, spread over the 67-70 aircraft. An aircraft with 200 passengers on 1 kilometer, produces 200 seat kilometers.