IAG Takes Stake In Norwegian & Considers Making A Bid For The Airline

IAG, the parent of British Airways, Iberia, Aer Lingus and Vueling, has taken a 4.61% stake in Norwegian Air Shuttle and is considering whether to make a bid for the entire airline.

Norwegian started as a mainly short-haul airline providing flights within and to/from Nordic Countries but has recently expanded operations in London and Barcelona that are both IAG’s strongholds.

Here’s an excerpt from Reuters (access their piece here):

IAG said on Thursday that it has acquired a 4.61 percent stake in Norwegian and that it planned to start talks with the airline which included the possibility of a full offer for the company being made.

“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,” IAG said in its statement. Norwegian declined to comment.

Here’s Norwegian’s route map from Gatwick:

Singapore and Buenos Aires are the two services that are outside of this map area.

Here’s Norwegian’s route map from Barcelona:

Norwegian has expended their flights from Vueling’s base too.

Conclusion

Buying Norwegian outright would be one way for IAG to deal with the low-coast headache and price competition out its two hubs. Not sure how interested they would be in the Nordic short-haul flying?

I would say that this purchase would be overall bad for the consumer as there would be less choice and it would inevitably lead to higher prices as there would be less competition.

I have flown with Norwegian few times and most recently year ago between ORY-HEL. There is really no difference between them and former full service airlines besides that they don’t have lounges, no business class cabins in short haul (premium economy in long-haul flights) and no lounge access (short-haul).

Certainly interesting to see how this will play out.