Published: Fri, April 13, 2018
Economy | By Melissa Porter

British Airways owner contemplates Norwegian bid

British Airways owner contemplates Norwegian bid

British Airways owner International Airlines Group (IAG) has confirmed that it is exploring a potential acquisition of low-priced carrier Norwegian Air Shuttle.

The IAG movement has been a surprise to market considering that Norwegian competes directly with both Level and Vueling, both brands of British group.

As well as British Airways, IAG also owns Spanish low-priced airline Vueling and recently launched a budget long-haul operator dubbed Level.

In its communiqué, IAG points out that "Norwegian is an attractive investment" and announces that it has acquired a "minority investment" of 4.61% in that company, "destined to establish a position from which to start conversations with Norwegian, Including possibility of formulating an offer of acquisition on whole "of airline". In the long haul low-priced segment, both NAS and LEVEL started recently and the combination of both carriers and its short-haul counterparts could generate an interesting offering of connections for intercontinental travelers.

As a result, the stock price of Norwegian surged to over 40 percent on Thursday, after a rough year of decline following stockholders concerns about the profitability, the level of debt and expansion rate of the carrier.

Shares in Norwegian rose sharply today after IAG purchased a 4.6% stake in the budget airline.

Highlighting the hard state of Norwegian's finances, the airline last month raised $168 million in a share sale after warning of a larger than expected first-quarter loss.

The buy-up caught Norwegian by surprise.

Norwegian said in its statement on Thursday (April 12) that it had no prior knowledge of IAG's actions, but welcomed the investment.

A spokesman for Norwegian did not comment on the airline's stance towards a takeover bid, but said that IAG's interest "confirms the sustainability and potential of our business model and global growth".

Last month Aer Lingus launched its 14th transatlantic route with service between Dublin and Philadelphia that will be followed by a new Seattle link next month.

British Airways' parent company said Thursday it is considering making an offer for the low-priced carrier.

IAG's interest in Norwegian would see a wave of consolidation in European air travel which started previous year extend its reach to long-haul travel.

Like this: