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British Airways’ parent company IAG is considering a bid on Norwegian
According to Bloomberg, confidential information was leaked earlier today, stating that IAG (who also own British Airways) may wish to buy Norwegian.
Norwegian has become quite big in the British market, and especially on long-haul out of Gatwick. British Airways fears it is losing passengers to Norwegian, tempted by low-cost flights over the Atlantic, as well as to Asia. This morning it was confirmed that IAG has already purchased a 4.61% share in Norwegian, perhaps with a view to buying the entire airline later on.
Following the news, the Norwegian share price has risen by 26%. Bjørn Kjos, CEO of Norwegian, recently told Bloomberg that he has no intentions to sell the airline in the near future. Whether all shareholders will agree is a different matter.
IAG stated in a press release that they are aware of the speculations in the press about their possible attempt to buy Norwegian. They confirm that they see Norwegian as compelling investment and that they could be interested in ownership of Norwegian, but that no decision has been made at this time.
We are following the story closely…
I sincerely hope this doesn’t come to fruition. It’s only in the last year that I discovered how good Norwegian can be from a value perspective, in comparison to mediocre airlines like BA. BA is a bit like the NHS, you think it’s the best until you’ve tried the equivalent from any other first world country (US excepted) and realise how far behind it is.
If IAG buy Norwegian they will certainly ruin what is currently a great option and the main reason would obviously be to kill the competition from an upstart that’s cannibalising their revenues.
I note that the Financial Times had an article recently about how much money Norwegian had been haemorrhaging in 2017 (especially in Q4) and they questioned whether Norwegian’s expansion drive was sustainable. A sad end if the IAG vulture comes to finish off one of the better options out there.
Agreed, I can’t see anything much good from a consumer perspective if IAG did manage to buy Norwegian.
I’m not as pessimistic as others.
First of all, if Norwegian went bust, that would be even worse for consumers.
Secondly, everybody in the “regions” has been moaning about BA abandoning them. So Norwegian joins IAG and continues to run those secondary airport to secondary airport routes to the extent they aren’t complete money traps. Undoubtedly there will be somewhat less long-haul price competition from Gatwick, but BA aren’t giving up those slots or young 787s in a short-sighted strategy to “shut down” Norwegian. Besides, there’s still a lot of competition TATL from Virgin/Delta and United/Air Canada, etc.
If done right, and it’s a big IF with IAG, Norwegian can be for long haul what Vueling is for short haul… a way for IAG to profit from the trend towards lower prices, lower comfort. With any luck that might allow for BA to reposition itself as a bit more premium.