BA Parent IAG Considering Offer For Norwegian

Airline group IAG has bought a 4.61 percent stake in Norwegian Air Shuttle as a precursor to talks that may lead to an offer for the low cost Scandinavian airline.

IAG said in a statement that it considers Norwegian to be an attractive investment, and the minority investment “is intended to establish a position from which to initiate discussions.”

IAG confirmed that no discussions have taken place to date, but future talks could include the possibility of a full offer for Norwegian.

Norwegian said it had no prior knowledge of IAG’s acquisition in the company, nor had it been in any discussions with IAG about it.

Norwegian has been expanding rapidly, following up its successful entry into a number of European markets with an increasing push into low cost long-haul operations. The rapid roll out and low ticket prices it has offered to establish itself, particularly in the trans-Atlantic market, has stressed its balance sheet leading to a share sale last month.

IAG, parent of Aer Lingus, British Airways, Iberia and Vueling, has been feeling the heat of Norwegian’s competition on its profitable trans-Atlantic routes. It launched its own low cost long-haul airline LEVEL last year to compete in that segment.

British Airways, one of the dominant airlines across the Atlantic, this week launched a new lower cost ‘Basic’ fare on some long-haul international routes, alongside its partner airlines American, Finnair and Iberia.