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IAG confirms it will open talks with Norwegian to buy the airline

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IAG, the parent of British Airways, Iberia and Aer Lingus, made a statement to the Stock Exchange on Thursday to confirm rumours that it intends to open negotiations with Norwegian Air Shuttle to buy the airline.  An initial share purchase has already been made.

Norwegian shares have jumped sharply on the news.

This is obviously a major development.  Norwegian has a brand new fleet and has proved an increasingly strong competitor to IAG in the UK.  LEVEL and Vueling are weak low cost competitors in comparison.

International Airlines Group to buy Norwegian Air

With Norwegian recently launching Singapore and Buenos Aires from the UK, it was likely to prove an increasingly strong competitor to British Airways – so why not buy it and snuff it out, at least from the UK?

With Gatwick getting increasingly slot constrained, this would also give IAG an exceptionally strong grip on that airport following the recent purchase of the Monarch slots.  It is also possible that, for monopoly reasons, a Gatwick slot sale would be required.

There is clearly potential to roll LEVEL and Vueling, which has a bad reputation, into Norwegian.

I would expect British Airways to very quickly close its Oakland and Fort Lauderdale routes if any deal does go through, since they are only operated to annoy Norwegian.  Loads on Oakland are reportedly under 50 passengers on some days.

This is the emergency statement issued by IAG after Bloomberg reported the share purchase:

“International Airlines Group (IAG) notes the recent press speculation that it is considering making an offer for Norwegian Air Shuttle ASA (Norwegian).

IAG considers Norwegian to be an attractive investment and has acquired a 4.61 per cent ownership position in the airline (minority investment). 

The minority investment is intended to establish a position from which to initiate discussions with Norwegian, including the possibility of a full offer for Norwegian.

IAG confirms that no such discussions have taken place to date, that it has taken no decision to make an offer at this time and that there is no certainty that any such decision will be made.

A further announcement will be made if appropriate.”

Norwegian has stated in response that it had no knowledge until this morning that IAG had bought any shares in the company and that it has not had any contact from the airline so far.

It is worth noting that the 72-year CEO, Bjorn Kjos, has a 27% shareholding and it will be virtually impossible for IAG to acquire 50.1% without his consent.  The Norwegian state investment fund has a further 9.9% and may vote tactically.  Whatever happens is likely to take a number of months, but the Aer Lingus acquisition proved that IAG is prepared to play a long game.


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Comments (99)

  • Rob says:

    Anika reviewed Premium to Boston if you do a search. Miles ahead of BA / Virgin PE.

    • Tom says:

      Seconded. The 787s are lovely, seats spacious and nicely reclining. Good service, lounge access, decent-ish food (for PE).

      Also much much cheaper if you don’t want to stay a Saturday night. And the early morning Gatwick service to NYC is like time travel..you arrive in NYC in time to do almost a full day of work!

  • Mike G says:

    No! Awful news. The last thing Norwegian needs is to be taken over by the cretins ergo run BA.

    Very sad ????

  • Will says:

    This is really depressing. As soon as a low-frills alternative (which is essentially what BA is in cattle anyway) comes to the market with interesting planes & pricing models, BA have to wave the cash to ensure life is boring & as uncompetitive as possible again from LHR & LGW.

    I’ve not flown Norwegian but they offer something new to that market and choice.

  • Howard says:

    Apart from their problems in the NYC route, Norwegian seem to have been great and, in our experience, really challenged the status quo. BA still haven’t changed their longhaul model to offer properly priced single fares.
    We’ve flown to Denver return with both BA and Norwegian in the last 6 months: BA more expensive on a decrepit 747, Norwegian cheaper in a Dreamliner …. that’s our 3rd transatlantic with Nor. …. they have our vote!!!
    This feels like really bad news, particularly for leisure travellers.

  • Aharon says:

    Wonder what Virgin Atlantic’s management take on this would be?

  • chris medler says:

    Hei!
    I fly regularly on Norwegian………

    So much so that the Captain of one flight last year said that I could fly the plane, next time !!!!

    Cheers/skål, Jagmanchris.

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