IAG considering a take-over bid of Norwegian Air Shuttle

Norwegian air
Photograph: Julian Herzog

Yesterday (April 12th) saw International Airlines Group (IAG), the owner of British Airways, announce that it had acquired a 4.61% stake in Norwegian Air, the low-cost rival that has been disrupting Europe’s airline industry by launching cheap long-haul flights.

In a press release IAG confirmed that it had purchased the stake in the Norwegian carrier, for the purpose of initiating discussions with Norwegian “including the possibility of a full offer”. However, stressed that no discussions had yet taken place.

IAG has taken advantage of a recent weakness in Norwegians shares, as the low-cost airline has faced increased questions about its finances. The rapid growth of the airline has put pressure on costs; it continues to lose money despite the rest of the industry being in good shape.

Although IAG gave no reason for their move on the Oslo-based carrier, analysts have quickly homed in on its rapidly expanding low-cost long-haul operation based at London Gatwick, with fairs as low as £143.

With lots of legacy costs making it difficult for BA to build low-cost long-haul operations, such a move by IAG would be a good fit.

It will be interesting to see how developments unveil, with such a move having the potential to stop the “race to the bottom” that has been occurring in recent years.

Ross Slater

Ross Slater

Ross is Expert with Points' main contributor. Sharing his knowledge of various travel reward schemes, to help your travelling go further.

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